The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, "The Law Q&A," ran in the Champaign News-Gazette. ILAO attorneys and subject matter experts have since updated the article to reflect changes in the law and include additional information.

Question

I’m going to buy a car in Missouri and will have to pay Missouri sales tax on that sale. Somebody told me I have to pay tax in Illinois, too. Is that correct? Why should I have to pay tax twice? If I have to pay tax in Illinois, how do I do that?

Answer

If you live in Illinois and buy a vehicle from an out-of-state dealer, and the sales tax is lower in that state, you must pay the difference in tax to the Illinois Department of Revenue. Missouri currently has a state sales tax of 4.225%, whereas Illinois has a sales tax of 6.25%. That is a 2.025% difference. Any local sales tax is added to the state tax in calculating the difference. For example, in Cook County, the local sales tax is 1%. So, on a $20,000 vehicle purchased in Missouri that will be registered in Cook County, you’d owe 3.025% in additional tax, which comes to $650.

For DuPage, Kane, Lake, McHenry, and Will counties, use 7%. For Madison and St. Clair counties, use 6.5%, except outside the Metro East Transit District, which uses 6.25%. 

These taxes must be paid when the vehicle gets registered in Illinois with our Secretary of State. You pay them and use Illinois tax form RUT-25. This form is due 30 days after the vehicle is brought into Illinois.

Several states don’t tax vehicle sales (Alaska, Delaware, Montana, New Hampshire, and Oregon). Only six states have higher vehicle sales taxes than ours, with California at 7.5%. 

Buying from an individual instead of a car dealer

Keep in mind that the steps above pertain to cars that are purchased from out-of-state dealers. If you purchase a car from an individual, or acquire it through a gift or transfer, you must pay Private Party Vehicle Use Tax. Use form RUT-50.

Instead of owing the difference in sales tax, you will pay a specified amount based on the purchase price (or fair market value) of the vehicle. These amounts can be found in the Private Party Vehicle Use Tax Chart. Your local municipality and county may charge an additional tax. The form RUT-50 is due no later than 30 days after the purchase of the vehicle.