Car Sales Tax Exemption in Illinois
Which vehicle transfers are exempt from Illinois sales tax — family gifts, inheritance, trade-ins, nonprofit use, and military status.
Current Illinois Vehicle Sales Tax Rate
6.25% state + local (Chicago metro up to 10.25%)
Exemption Summary
| Exemption Type | Illinois |
|---|---|
| Family Gift Transfer | ✓ Exempt |
| Inherited Vehicle | ✓ Exempt |
| Trade-In Credit | ✓ Credit Available |
| Nonprofit / Charity | ✓ Exempt (501(c)(3)) |
| Military Exemption | ✓ Partial Exemption |
Exemption Details
Family Gift Transfer
Illinois exempts vehicle transfers to spouses, parents, brothers, sisters, and children. The recipient must be an immediate family member to qualify.
Inherited Vehicle
Illinois exempts vehicles transferred through an estate by will or intestate succession from use tax.
Trade-In Credit
Illinois offers a trade-in credit on dealer purchases — taxable price reduced by trade-in value up to $25,000 maximum credit.
Military Exemption
Illinois active-duty military members domiciled outside Illinois may qualify for an exemption from Illinois use tax on vehicle purchases.
How to Document an Exempt Transfer
- ✓Sign the title with the relationship or reason clearly noted (e.g., "GIFT — Mother to Son")
- ✓Include a bill of sale showing $0 consideration for gifts, or inheritance documentation
- ✓Complete any state-required exemption forms (e.g., Texas Form 14-317 Gift Affidavit)
- ✓Bring estate documents (will, letters testamentary) for inherited vehicle transfers
- ✓Keep copies of all documents — the exemption can be audited years later
Illinois Note
Illinois has a $25,000 cap on the trade-in credit. For expensive vehicles, the cap means you still pay tax on value above the $25,000 trade-in credit maximum.
Frequently Asked Questions
- Can I give my car to a family member without paying sales tax in Illinois?
- Yes. Illinois exempts vehicle transfers to spouses, parents, brothers, sisters, and children. The recipient must be an immediate family member to qualify.
- Is an inherited car taxable in Illinois?
- No. Illinois exempts vehicles transferred through an estate by will or intestate succession from use tax.
- Does Illinois offer a trade-in credit for car purchases?
- Yes. Illinois offers a trade-in credit on dealer purchases — taxable price reduced by trade-in value up to $25,000 maximum credit.
- Is there a military car sales tax exemption in Illinois?
- Yes. Illinois active-duty military members domiciled outside Illinois may qualify for an exemption from Illinois use tax on vehicle purchases.
- How do I document a tax-exempt vehicle transfer?
- You need: (1) the signed title clearly indicating the relationship or reason for exemption, (2) a bill of sale noting "$0 consideration" or "GIFT" for gift transfers, (3) any state-specific exemption form required by the revenue department or DMV, and (4) estate documentation for inherited vehicles.
- What is the sales tax rate on car purchases in Illinois?
- Illinois sales/use tax on vehicle purchases is 6.25% state + local (Chicago metro up to 10.25%). This rate applies to the taxable purchase price after any applicable exemptions or trade-in credits.
Document the Transfer Properly
A properly completed bill of sale — including $0 consideration or exemption reason — is essential documentation for any tax-exempt vehicle transfer.
Generate Illinois Bill of Sale