The Illinois Department of Revenue (DOR) has provided updated guidance on whether non-residents may claim an out-of-state purchaser exemption from sales tax when purchasing a motor vehicle or trailer in Illinois that will be titled in another state.
Residents of states other than Illinois may not claim the nonresident purchaser exemption on purchases of motor vehicles or trailers that will be titled in a state that does not provide Illinois residents a nonresident purchaser exemption on their purchases of motor vehicles or trailers that will be titled in Illinois. Motor vehicles leased to nonresidents using drive-away permits or transferring out-of-state vehicle registration plates are exempt, regardless of the purchaser’s state of residence.
The updated chart provided by the DOR lists each non-reciprocal state and the tax rate that must be used to compute tax due when collecting tax from purchasers from that state (as of January 2024). The non-reciprocal states in the updated chart are Arizona, California, Florida, Hawaii, Indiana, Massachusetts, Michigan, and South Carolina.
Note that watercraft, aircraft, manufactured (mobile) homes, and all-terrain vehicles (ATVs) cannot be issued drive away permits and are not exempt when a nonresident takes possession in Illinois. For additional information, including the tax rates to use for non-reciprocal states (as of January 2024), visit the Illinois DOR webpage. (ST-58, Reciprocal – Non-Reciprocal Vehicle Tax Rate Chart January 2024, Illinois Department of Revenue, December 2023, released January 2024)