Berman’s Auto Group, New Illinois Lease Tax Law Help Consumers Save Big Money in March and April
Now that the winter (and car sales) doldrums of January and February have receded for another year at Illinois auto dealerships, don’t be surprised if you see car shoppers at any of Berman Auto Group’s five locations with an extra ‘spring’ in their step as they take advantage of tremendous savings on a new or used vehicle. That’s because the ‘Rides of March’ have rolled in a trunk load of finance and lease incentives for them. Berman’s Mid City Nissan, for example, is offering a 2015 Nissan Altima 2.5 S with a MSRP of $23,580 for $18,596 and zero percent financing.
Illinois drivers interested in leasing a 2015 vehicle can save as much as 50 percent on taxes thanks to a new lease tax law that went into effect January 1st. Previously, taxes were based on the full value of a leased vehicle, even though the lessee would only be in possession of the vehicle for the length of the lease, typically 36 months. With the new law, tax is applied to each monthly payment.
Prior to January 1, 2015, Illinois taxed the entire capitalized cost of a leased vehicle, even though it was a long-term rental, and not a purchase. For instance, if you leased a $30,000 vehicle, the 8.25 percent vehicle sales tax for Cook County residents would be an additional $2,475. This amount could be paid upfront or rolled into the monthly lease payment.
Beginning on January 1st, however, Illinois law changed so that the sales tax applies only to the customer’s down payment and the monthly lease payment. For a $30,000 vehicle with a $2,000 down payment, the tax is $165. If the payment was $300 per month, the monthly sales tax would be $24.75. The total tax for a 36-month lease, then, would be just $1,056. That’s a savings of $1,419, compared to the previous lease law formula. Note that taxes vary by Illinois county, so calculations should be done accordingly.
In sum, consumers now are required to only pay taxes on the value of the lease duration, as compared to before when they had to pay taxes on the full-length value of the vehicle. That’s a big change. It means that monthly payments are now lower and it makes it easier for drivers to get into a new vehicle more often if they do choose to lease. It’s a win/win situation for both consumers and Illinois auto dealers, like Berman’s Auto Group.