Legislation to repeal the $10,000 cap on the value of traded-in vehicles passed out of the Illinois Senate on March 10 and awaits further consideration by the House.

Senate Bill 58 has added seven House co-sponsors but has not been called for a second vote. The deadline to pass a third reading in the House is May 28, days before the General Assembly is scheduled to adjourn its spring session. It then would have to be considered by the Senate.

Supporters of the measure should contact their state representatives to appeal for its passage.

 

Capping the trade-in credit increases the cost of new vehicles and used vehicles bought at retail. Votes thus far on SB 58 have been unanimous in support, and Gov. J.B. Pritzker has voiced his backing. The cap took effect in 2020 following moves to find funding for Pritzker’s multibillion dollar state capital infrastructure plan.

 

Under SB 58, infrastructure projects would instead be funded, in part, by increasing the sales tax charged in private vehicle sales. For instance, the current $390 sales tax on a 1-year-old vehicle sold privately for less than $15,000 would increase to $465. If the same vehicle sells for $15,001-$20,000, the sales tax would be increased from $750 to $850. The tax rates for private transactions haven’t changed in more than 30 years, and the modest increases are much less impactful than a trade-in credit cap, which costs consumers hundreds of dollars and harms dealers state-wide.

If the General Assembly passes the legislation, the change to restore the full trade-in allowance on First Division vehicles would take effect 120 days after the governor signs the bill. As currently written, the trade-in credit cap exempts Second Division vehicles. 

 

According to the Illinois Vehicle Code, a First Division vehicle is designed for carrying not more than 10 persons. A Second Division vehicle is designed to carry more than 10 persons; be used for living quarters; pull or carry freight, cargo or implements of husbandry; or be a First Division vehicle remodeled for use and used as a Second Division vehicle.