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Sales and use taxes

Taxable goods

What goods are subject to sales and use tax in your state (at both state and local level)?

Illinois and its localities impose tax on the occupation of selling at retail tangible personal property and on the use of tangible personal property purchased from a retailer (see, e.g., 35 ILCS 120/2; 35 ILCS 105/3; 65 ILCS 5/8-11-1 (Home Rule Municipal Retailers’ Occupation Tax Act); 65 ILCS 5/8-11-6 (Home Rule Municipal Use Tax Act)). Additionally, sales and use tax is imposed on tangible personal property acquired as an incident to the sale of a service (see, e.g., 35 ILCS 115/3; 35 ILCS 110/3; 65 ILCS 5/8-11-5 (Home Rule Municipal Service Occupation Tax Act)).

State rate

What is the state sales tax rate?

The state sales tax rate is 6.25% on sales of tangible personal property other than sales of some food (generally grocery food items), drugs, and medical appliances, which are taxed at 1% (35 ILCS 120/2-10).

Local rates

What is the range of local sales tax rates levied in your state?

Local sales tax rates generally range from 0.1% to 2.5%, depending on the taxing jurisdiction. See ST-62 (R-01/18) for a list of local sales tax rates administered by the Department of Revenue. See also the Tax Rate Database on the Department of Revenue’s website to find local sales tax rates by location.

Exemptions

What goods are exempt from sales and use tax?

Generally, sales and use tax is imposed on retail sales of tangible personal property. In order for goods to be tax exempt, they must qualify for a specific exemption. For example, Illinois exempts from sales and use tax certain items of machinery, equipment, personal property, and vehicles (see, e.g., 35 ILCS 120/2-5 & 35 ILCS 105/3-5 (listing exemptions); see also 86 Ill. Admin. Code § 150.301 (sales tax exemptions apply to use tax)).

Services

Are any services taxed?

Pure services are not taxed in Illinois. Under the service occupation and use taxes, tangible personal property transferred incident to sales of service from servicemen is taxed (see, e.g., 35 ILCS 115/3; 35 ILCS 110/3).

Filing requirements

What filing requirements and procedures apply?

In general, retailers making taxable sales in Illinois must file with the Illinois Department of Revenue a sales and use tax return (ST-1) on a monthly basis (see 35 ILCS 120/3). The preceding month’s return is due by the 20th of the following month (35 ILCS 120/3). The Department of Revenue’s sales and use tax forms and instructions are available at www.revenue.state.il.us/TaxForms/Sales/.  Retailers making sales for resale must collect and maintain certificates of resale from their buyers to support the conclusion that tax was not owed on the sale. Charitable organizations must obtain certificates of sales tax exemption from the state and supply a copy of the certificate to their retailers in order to avoid sales tax.

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