City of Chicago Tax Racket

Hi All,
While new to this awesome forum, I wanted to see if there’s any others in here who face the same issue I do. Chicago is notorious with our 9.5% sales tax, and then IN ADDITION we have a lease usage tax of 9%. I have been receiving quotes on 2018 Honda Accord LX with absolutely zero down (only first month due at signing) and am at $290/mo with only $290 due.

I know this is a lease heavy forum and I have always leased, but these taxes add almost $30 per month when I moved here from Ohio. Is there any way around and does that seem like a good offer or should I just pony up and finally buy/finance?

To add:
MF = .000920833 (2.21% APR)
Residual $14,189 (58% off $24,465)
Sell Price $20,700.
Am I missing any other dealer incentives to help out right now?
I am also confused how to replicate the zero drive-off quote in excel. Do I include the acquisition fee as monthly amount to generate the full capitalized cost?
lease calc

Not sure if they have tax breaks or incentives in the Chi but its one of the ways we overcome that situation in Texas.

Only way would be if you have another location outside of Chicago where the vehicle will be garaged. For example of you own a business and your office is in the suburbs.

Is there any way to back into a money factor based on the info below? I am negotiating the sell price but want to be sure I am using the right money factor for when I go in and ask for a deal. I understand this is a national promo offer, but figured I could back into the money factor that way and the only negotiating factor is the sell price.

Any help is greatly appreciated!

$319 per month for 36
12,000 Miles Per Year
MSRP $25324

Lease a new 2018 Camry LE for $319 a month for 36 months with $0 due at signing, which includes first
month’s payment, $0 down payment, $0 security deposit and $650 acquisition fee.
Does not include, taxes, license, title fees, insurance and dealer charges. Closed-end lease. Example based on model
#2532 with FE,2T. Total Manufacturer’s Suggested Retail Price $25324. Monthly payments of $319 total
$11,165. Capitalized cost of $24574 based on down payment and dealer participation, which may vary by
New Car Deals | Local Toyota Deals, Incentives & Special Offers
Leaseend purchase option is $13421.
per mile over 12000 miles per year. To qualified Tier 1+ customers through Toyota Financial Services. $0
disposition fee due at lease end unless customer purchases vehicle or decides to re-finance through
Toyota Financial Services. Subject to availability. See participating dealer for details. Offer ends 10-31-
2018. Does not include College Grad or Military Rebate. ToyotaCare covers normal factory scheduled
service for 2 years or 25,000 miles, whichever comes first.

Just ask on Edmunds forums for the MF etc

1 Like

The lease usage tax certainly makes leasing unappealing. Still can work but you have to find a very strong deal to make it worthwhile.

Definitely not worth leasing a Honda accord LX when your effective tax rate will be 18.5%. Accords don’t lease well enough to tolerate that tax rate. Does the 290 a month include that 18.5% tax rate? If so, it is not a terrible deal although I would still suggest financing it and putting the extra 25 bucks a month in tax savings into car payment.

Thanks for the feedback. That $290 was all in inclusive of the ridiculous tax. I am pretty much at the point where I either want to finance with Toyota (they have 0.9% right now on 2018 Camry) or with Honda, but I would still have to pay more in APR (2.9%). I currently lease with Toyota so I would have to pay disposition ($350) and forego my $750 lease loyalty as well. I am coming up on lease end shortly and still not sure how I can best save in Chicago.

Have you checked to see if you have any equity by selling the car to Vroom or Carvana? If positive would avoid the dispo fee.

I’m moving to Chicago in a few months and not looking forward to this lease tax, however on a $300 payment (tax included for most states) its just an extra $525 on a 24 month term, depending on the car it still makes sense to lease.

Yea I have no equity as I was over on miles. It was a Corolla with purchase price of $12,624 and Vroom offered $11,200, almost exactly what I would pay in mileage overage and dispo. I think Toyota can help me get the best offer just because of loyalty and avoiding dispo (I like the new Accord but know they don’t lease well), I also am leaning towards lease to kick the can until I can check out that new Rav4.

If you finance - look at Subaru. Good rates and they all have AWD.

The additional 9% applies only to leases?

I would def buy if that were the case.

Correct only applicable to leases as a “lease usage” tax, otherwise its just our 9.5% sales tax for purchases. What does this forum think of financing (at very low APR like on Toyota for example, and also negotiating sell price to nearly 20% off MSRP with loyalty cash) and then selling trade-in after 4 or 5 years? I would assume that I could effectively beat any lease deal if the resale value is right at any point in my ownership. So while its not financing and running into the ground, its financing for 4-5 years and then trading in. Helps me avoid the Chicago tax and still have a relatively new car.

Those are all good ingredients for a good purchase. Big discount, low APR, good resale value, etc.


You should be better off financing, sure. You will pay-off your car in 4-5 years, so will have a nice equity in it to put it down on a new one.

You are rarely going to do poorly buying a Honda or Toyota at 20% off msrp with a low interest rate. You don’t read a lot of posts about people being horribly upside down on a Toyota Camry.

No matter what you decide, take solace that your tax rate is better than mine. For my 2017 MDX lease, my effective combined state and local tax rate is going to be somewhere around 30%.