Buying guide

Buying a yacht and keeping it in Illinois: the 6.25% Watercraft Use Tax, family transfers, the 30-day rule for documented yachts, and IDNR title and registration

Updated November 3, 2026 · Written by the House of Biz & Company Editorial Team · General information, not legal or financial advice

A yacht of your own on Lake Michigan is your skyline, your harbor, your summer. For an owner who keeps it in Illinois, the state has its own say on how that yacht was acquired, and when the seller is not a dealer it arrives after the handshake, as a return you file yourself. Here is how the discerning owner reads the Watercraft Use Tax, the family-transfer rule, the 30-day count for documented yachts, and the state title and registration, from the statute and the state’s own forms.

The tax that follows the yacht home

A yacht on Lake Michigan is one of the finest things a Chicago summer can offer: the skyline from the water, a quiet harbor at dusk, a weekend that starts at the dock. For an owner who keeps the boat in Illinois, the state has its own say on how that yacht was acquired, and it often arrives after the handshake rather than at it. When the seller is a private owner, an owning company, or anyone else who is not in the business of selling boats, no one collects Illinois tax at closing. The buyer owes it, on a return, within 30 days, and the Department of Natural Resources won’t title or register the boat until the tax is paid or shown not to be due [1][2]. Not registering doesn’t make the tax go away: the department says plainly that failing to title or register does not prevent it from imposing the tax, and the regulation says the tax applies whether or not the boat is actually registered [2][6]. Here is how the rules read, from the statute and the state’s own forms, so the boat arrives at its slip as smoothly as it left the seller’s.

1. Which boats the Watercraft Use Tax reaches

The Watercraft Use Tax is a tax on the privilege of using in Illinois a watercraft acquired by gift, transfer, or purchase after September 1, 2004 [4]. “Watercraft” here has a precise meaning: Class 2, Class 3, and Class 4 watercraft under the Boat Registration and Safety Act, plus personal watercraft such as jet skis [3][6]. The classes are set by length [6][15]:

A yacht of any real size is Class 3 or Class 4. So is the logic for its toys: a jet ski that comes with the yacht is a personal watercraft in its own right [3], while a small powered tender under 16 feet that isn’t a personal watercraft is Class 1 and needs no tax return when bought from an individual [16][18]. The tax base, as section 3 explains, also includes the value of any motor sold with the boat [3].

2. Who sold it to you decides the form

Illinois uses a different return depending on who the seller is, and each has its own clock [2][17]:

A purchase from a registered Illinois dealer is taxed under the Retailers’ Occupation Tax Act, not the Watercraft Use Tax [1]. The Watercraft Use Tax is for the private and non-retail side of the market, which is where many fine pre-owned yachts change hands.

Buying through a yacht broker. The department sets out three cases [2]. If the broker never takes title and the seller is a private owner, you report the purchase on RUT-75. If the broker never takes title and the seller is a retailer, the purchase is a retail sale and the retail forms apply. If the broker takes title and sells the boat to you, a retail sale has occurred, and again the retail forms apply. Before you sign, ask whose name will be on the bill of sale to you. Our guide to Coast Guard documentation, title, and liens covers the federal record that goes with it.

3. What the 6.25% is charged on

The rate is 6.25% of the purchase price [5][9]. Four rules shape the number.

• Everything you gave counts, motor included. The purchase price is the reasonable consideration paid, whether in money or otherwise, including cash, credits, property, and services, and including the value of any motor sold with the boat [3]. The regulation’s own example: a corporation that pays for a yacht partly in cash and partly in its own stock owes tax on the yacht’s fair market value, unless it can show that a different value is reasonable [6].
• Never less than fair market value, as a rule. Except for transfers between immediate family members, reasonable consideration ordinarily means the fair market value on the date the boat was acquired or the date it was brought into Illinois, whichever is later, unless you can show that a different value is reasonable [3][6]. To judge a lower price, the department considers the date and place of sale, the condition of the boat and motor, the type and make, evidence of similar sales, and whether the boat came from an estate sale or a public auction [6]. It may also share the reported price, hull number, year, make, model, purchase date, and hours of operation with contractors who help it test reported prices [6].
• No trade-in allowance. The department states that there is no provision for a trade-in allowance under the Watercraft Use Tax [9], and the regulation adds that in a swap both buyers owe tax on what they received [6].
• Shares are taxed on the share, but liability is shared too. When you acquire an ownership share, the tax is on the price of that share [5]. All owners are jointly and severally liable for the tax due on a purchase, gift, or transfer of a share [5][6]. If you are buying into a yacht with partners, that is worth a clause in your agreement.

By way of illustration only: on a hypothetical $1,200,000 private-party purchase at or above fair market value, 6.25% is $75,000. Attach a copy of the purchase agreement or invoice, which must state the purchase price and any tax previously paid clearly and separately [7].

The retail return reads differently. On RUT-25, a trade-in credit can be claimed if it is shown on the dealer’s bill of sale [8]. Its rate follows the address you give: the instructions say to use 6.25% unless otherwise instructed, and list higher rates for Cook County (7.5% beginning August 1, 2026), for DuPage, Kane, Lake, McHenry, and Will counties (7.25% beginning August 1, 2026), and for parts of Madison and St. Clair counties [8]. Those instructions cover every item the form is used for and do not set watercraft apart, so confirm your rate with the department.

4. Family transfers: the rule the aircraft tax doesn’t have

Illinois treats a yacht passing within a family more gently than almost any other transfer. “Immediate family member” means a spouse, mother, father, brother, sister, or child of the transferor [6]. Two rules follow [3][6][7]:

• A sale within the family is ordinarily taxed on the consideration actually paid, not on fair market value, unless the facts show that the primary motivation was avoiding tax. The regulation’s example is a father selling his boat to his son below its value: the tax is ordinarily on the price the son paid [6].
• A gift within the family owes no tax unless the facts show that the primary motivation was avoiding tax [6][7].

The limits matter as much as the relief. A gift to anyone outside that list, a fiancé in the regulation’s example, is taxed on fair market value [6]. A partnership that dissolves and hands its yacht to one partner owes tax on fair market value [6]. And the regulation describes the arrangement it will not accept: a relative buys the boat elsewhere and “sells” it on for a token sum; the department treats that as tax avoidance and taxes the full value [6]. RUT-75 has a box for a transfer between immediate family members, and the department says that if its review shows the primary reason for the transfer was to avoid tax, it will bill the tax, penalties, and interest [7]. The one outright exemption for inheritance is narrower: a gift to a surviving spouse in the administration of an estate [4]. For an aircraft, by contrast, a lifetime family gift is taxed on fair market value, as our Illinois aircraft use tax guide explains.

5. The documented yacht and the 30-day rule

This is where Lake Michigan owners need the calendar. Many larger yachts carry a federal Coast Guard document rather than state numbers, and many visit Illinois while numbered in another state. Illinois does not require either to be numbered here for a time, but the tax and registration rules count days differently [4][6][10]:

• Registration counts 60 days. A boat with a valid Coast Guard document doesn’t need Illinois numbers, but if it is used on Illinois waters for more than 60 days in any calendar year, the owner must register it here [10][14]. A boat numbered in another state is exempt from Illinois numbering if it won’t be in Illinois for more than 60 consecutive days [10].
• The tax counts 30 days. A boat that isn’t required to be numbered is generally outside the Watercraft Use Tax, but that exemption is lost for a Coast Guard-documented boat, a boat numbered under federal law or another state’s approved system, a boat from another country temporarily using Illinois waters, certain federally numbered classes, and racing boats, once the boat is used on Illinois waters for more than 30 days in any calendar year [4]. The regulation counts the days as accumulated over the year [6].

The regulation’s own example makes the point: a documented yacht used on Illinois waters for 35 days in a calendar year owes Watercraft Use Tax, even though it doesn’t have to register in Illinois until it passes 60 days [6]. An Illinois owner who keeps a documented yacht in a neighboring state’s harbor and brings it to Chicago for the season should keep a log of the days on Illinois waters. A nonresident who brings a boat here briefly is in a different position, because the Law also exempts uses the Use Tax Act excludes to prevent multistate taxation [4]; ask the department how those provisions apply to your facts before relying on either.

A few boats stay exempt regardless of time on Illinois waters: those owned by a government and used solely for official purposes, and a vessel used only as a ship’s lifeboat [7][10].

6. The exemptions, and tax paid elsewhere

Beyond the numbering rules, the tax does not apply in a short list of cases [1][4][6]:

• the use is already taxed under the Use Tax Act, for example a purchase from an out-of-state retailer reported on RUT-25 [1];
• the buyer is a governmental body, or a charitable, religious, or educational organization with an active Illinois exemption number [1][4];
• the boat is acquired by an interstate carrier for hire for use as rolling stock [1];
• the boat is a gift to a surviving spouse in the administration of an estate [4];
• the boat was acquired outside Illinois, stored here temporarily, and is then removed and used solely outside Illinois [1];
• the boat is used primarily, more than 50%, in production agriculture, such as fish farming [1].

Credit for tax paid to another state. If you acquired the boat outside Illinois and paid tax on it in another state, Illinois gives credit to the extent the tax was properly due and paid there [6][9]. “State” here means a U.S. state, territory or possession, the District of Columbia, or Puerto Rico, and the regulation is explicit that taxes paid in a foreign country earn no credit: its example is a yacht bought from an individual in Europe, which owes the full Illinois tax on arrival [6]. If you are buying abroad, our guide to importing a yacht covers the federal duty, and our Florida yacht tax guide explains why a Florida purchase under the nonresident exemption leaves nothing to credit.

Moving to Illinois with a boat you own. The department’s guidance turns on how you first acquired it [2]. If you bought it after September 1, 2004 from a private party or other non-retailer, you report it on RUT-75: tax is on the amount paid if the transaction was between immediate family members, and otherwise on the purchase price or fair market value on the date it was purchased or brought into Illinois, whichever is later. If you bought it from a dealer, lender, leasing company, or other retailer, you use RUT-25; if it was registered in another state for more than three months, RUT-25 shows that no tax is due. That three-month exemption applies only to individuals moving in, not to businesses, leasing companies, lessees, or military members whose home of record is Illinois; they pay tax with credit for tax properly paid to another state and an allowance for depreciation for prior out-of-state use [2][8].

7. Title and registration with IDNR

The tax and the paperwork with the Department of Natural Resources run side by side, on different clocks:

• Apply within 15 days. IDNR says state law requires the purchaser to submit the registration and title application within 15 days after purchase [13]. The tax return is due within 30 days [7], but the department advises filing and paying by the due date even if the title application isn’t complete, sending the return and payment directly to it, and showing proof of payment when you apply [2].
• Title over 21 feet. Every owner of a watercraft over 21 feet that must be numbered in Illinois must apply for an Illinois certificate of title, and IDNR won’t issue, transfer, or renew numbers without a title or a title application [11]. Titling is optional under 22 feet [13]. A boat covered by a federal number is exempt from Illinois titling [11]; a documented yacht that passes 60 days on Illinois waters is registered, not titled [14].
• What you send. For a used Class 2, 3, or 4 boat or a personal watercraft bought from an individual, IDNR lists the application, the original out-of-state title or registration card or the original Illinois title (or a power of attorney form and, if applicable, a lien release letter), the registration fee, Form RUT-75, and copies of the bill of sale [16][18]. For a brand-new boat, the original manufacturer’s statement of origin goes with the dealer’s ST-556 or your RUT-25 [16]. For a documented yacht changing to an Illinois title, add the Coast Guard deletion letter [14].
• Two payees. The tax is paid to the Illinois Department of Revenue; title and registration fees are paid to IDNR, separately [2][17].
• Fees. IDNR’s current fee chart lists, for a new or transfer registration, $28 for Class 1, $60 for Class 2, $160 for Class 3, and $210 for Class 4; renewals are $18, $50, $150, and $200; registration for a Coast Guard-documented vessel is $50, $150, or $200 for Classes 2 to 4; and duplicate or corrected titles and title searches are $7 each [15]. IDNR adds a $2.00 processing fee to every watercraft application [13]. The statute sets the base registration fees [12].
• Three-year term. Registration is valid for three years and expires on September 30 at the end of the period [19]. A documented yacht registered in Illinois displays its expiration decal on either side of the documented vessel name [19].
• Before the decals arrive. IDNR says you may go boating with the temporary permit copy of your application or the online receipt page on board until the paperwork is processed [13].

One more tool for the careful buyer: IDNR’s title search, $7, shows previous owners and lienholders on record, subject to its confidentiality limits [13][15]. It is the Illinois counterpart to the Coast Guard abstract of title described in our documentation guide.

8. Filing on time, and what lateness costs

RUT-75 can be filed through MyTax Illinois. An individual filing with a Social Security number needs a prior-year IL-1040 on file and the prior-year adjusted gross income; a business enters its name and federal employer identification number; payment is made electronically, in full, with the return; and the department asks you to allow one business day before applying for registration, and three to five business days for payment requests to process [1][17]. Late filing and late payment carry penalties and interest [7]. The return is signed under a verification that a willfully false return can bring a fine of up to $1,000, up to one year in jail, or both, and a willfully false or incomplete return is a Class A misdemeanor [6]. When you pay, ask for the department’s receipt: the Law says it relieves you of further liability for the tax it covers [6].

If the boat will also be your second home, our guide to the yacht mortgage-interest deduction covers the federal side; if you plan to charter it out, read our yacht charter guide on passenger-for-hire rules first.

Before you close: a checklist

1. Identify the seller type, and whose name will be on the bill of sale, before you sign [2].
2. Match the return: ST-556 from an Illinois dealer, RUT-25 from an unregistered out-of-state retailer, RUT-75 from a private owner, company, or gift [2][17].
3. Diary both deadlines: the IDNR application within 15 days, the tax return within 30 [7][13].
4. Make sure the purchase agreement states the price, including any motor, and any tax already paid, clearly and separately [3][7].
5. Don’t count on a trade-in reducing the Watercraft Use Tax [9].
6. Buying within the family? Check the relationship against the regulation’s list and keep the reasons for the transfer on file [6].
7. Keeping a documented or out-of-state yacht? Log every day on Illinois waters: more than 30 in a calendar year brings the tax, more than 60 brings registration [4][10].
8. Run an IDNR title search on an Illinois-titled boat, and get lien releases before closing [13][18].
9. Keep the receipt, the returns, and the attachments with the boat’s papers [6][7].

Frequently asked questions

Sources

1. Illinois Department of Revenue: Watercraft Use Tax
2. Illinois Department of Revenue: Illinois Tax Requirements for Watercraft and Snowmobiles
3. 35 ILCS 158/15-5, Watercraft Use Tax Law: definitions (purchase price, immediate family, watercraft)
4. 35 ILCS 158/15-10, Watercraft Use Tax Law: tax imposed and exemptions (incl. the 30-day rule)
5. 35 ILCS 158/15-15, Watercraft Use Tax Law: rate of tax and ownership shares
6. 86 Ill. Adm. Code Part 153, Watercraft Use Tax (sections 153.101 to 153.120, with examples)
7. Illinois Department of Revenue: Instructions for Form RUT-75, Aircraft/Watercraft Use Tax Transaction Return
8. Illinois Department of Revenue: Instructions for Form RUT-25, Vehicle Use Tax Transaction Return (R-07/26)
9. Illinois Department of Revenue: Use Tax Rates (Watercraft Use Tax)
10. 625 ILCS 45/3-12, Boat Registration and Safety Act: exemption from numbering (documented and out-of-state boats)
11. 625 ILCS 45/3A-1, Boat Registration and Safety Act: certificate of title required
12. 625 ILCS 45/3-2, Boat Registration and Safety Act: identification number application and fees
13. Illinois Department of Natural Resources: Watercraft Frequently Asked Questions
14. Illinois Department of Natural Resources: USCG Vessel in Illinois
15. Illinois Department of Natural Resources: Watercraft Transaction Fees
16. Illinois Department of Natural Resources: Registering a New Boat in Illinois
17. Illinois Department of Natural Resources: Tax Requirement on Watercraft
18. Illinois Department of Natural Resources: Illinois Registered Watercraft (transfers)
19. Illinois Department of Natural Resources: The Handbook of Illinois Boating Laws and Responsibilities (PDF)

Related guides

• Buying a pre-owned yacht: documentation, title, and liens
• Buying a yacht in Florida: the tax cap and the nonresident exemption
• Financing a yacht as your second home
• Buying a private jet or helicopter and keeping it in Illinois