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Lower Taxes for Vehicle Leasing?

Lower Taxes for Vehicle Leasing?

Photo: clipart.com

A bill being considered in the Illinois House could lower the tax on leasing a car.

Unlike most states, if you lease a car in Illinois, you have to pay tax on the full purchase price. Under the proposal sponsored by state Rep. Mike Zalewski (D-Riverside), customers would instead pay tax only on their monthly payment. Auto dealers believe that will make leasing more attractive to car shoppers, and provide more tax revenue to the state.

“The average vehicle that’s on the road out there is 11 years (old),” said Joe McMahon, director of government affairs for the Illinois Automobile Dealers Association. “So the state gets a one-time sales tax in that 11-year span.  If leasing was just a little more attractive, and the tax was based on usage versus purchase price, you could have that same customer coming in three different times in that 10-year period.”

The Illinois Department of Revenue supports the change, saying the state won’t lose out on any tax revenue.

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