Volvo

Velde Volvo Cars of Peoria

2200 W. Pioneer Parkway Directions Peoria, IL 61615-1382

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Volvo Leasing

    

 

 

2015 State of Illinois

Long-Term Vehicle Leasing

Tax Legislation

 

Revised from Illinois Automobile Dealers Association.

 

 

Synopsis

Amends the Use Tax Act to provide that the tax base for automobiles subject to lease agreement of one year or more in length is 6.25% of the lease receipts, rather than the entire selling price of the vehicle.  Eliminates the use of customer and dealer trade-in credits in lease transactions.

 

Background

Under current Illinois tax laws, there is a difference in the tax treatment of short-term leases, (defined as one year or less), and long-term leases, (defined as over one-year). 

 

In 2014, for short-term leases, tax obligation is based on monthly receipts.  For long-term leases, tax is paid at the inception of the entire lease on the selling price of the vehicle plus related charges.  Prior to 2015, a consumer pays the same amount of tax to lease a vehicle for 2 or 3 years as he or she would pay to buy the same vehicle.

 

The changes made which take effect in 2015 now will charge the consumer on the monthly tax payment .  The monthly payment tax requires that consumers only pay tax on the part of the vehicle that he or she actually uses.

 

Under the Illinois law prior to 2015, if a consumer decided to purchase the vehicle at the end of the lease, the consumer would pay tax again on what is called the 'residual value' of the lease, (the value of the vehicle at the end of the lease), even though the consumer has already paid tax on the amount when the vehicle was originally leased.  In other words, consumers are paying tax twice on the same vehicle.  The previous tax structure on long-term vehicle leases in Illinois was viewed at anti-consumer and unfair.

 

Examples of Savings

A consumer leasing a new Volvo in 2015, in the surrounding Central Illinois area will now only pay the exact amount of taxes for the period of the lease term.  For a $32,000 new Volvo  vehicle, which is leased for two years, the monthly lease rate will decrease on average by $60 per month.  See a Velde of Peoria Leasing Consultant for further information and precise details on the New Illinois Vehicle Leasing Laws or call 1.877.360.9931.

 

Contact a Velde of Peoria Leasing Consultant Here.

    

 

Informative Articles & Illinois Law on Long-term Vehicle Leasing in Illinois

 

New Illinois Motor Vehicle Leasing Act 815 ILCS 636/1

 

Illinois Tax Rate Finder - Illustrates Tax Rate by City & County

 

Illinois Attorney General's Office - On Vehicle Leasing

 

Inquire about Leasing at Velde Volvo Cars of Peoria Here

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