Total Range for 2025
| Base state sales tax rate | 6.25% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Local rate range | 0%-4.75% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Total rate range | 6.25%-11% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Economic sales nexus threshold | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | |
| Transactions threshold | N/A | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Sales tax return filing due date | 20th of following month | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
The base state sales tax rate in Illinois is 6.25%, but since the local rates range from 0-4.75% the total sales tax range is 6.25-11%.
How to calculate your sales tax rate
Use our online sales tax calculator to determine the combined state and local sales tax rate for each location where you have a physical or economic nexus. Just enter your state and ZIP code to get your sales tax rate.
Example of using the sales tax rate in a tax calculation:
Chicago clothing store, jacket costs $59.99 before tax. Chicago has an additional 1.75% local tax (check your rate!).
Calculation:
- Total Sales Tax Rate: 6.25% (state) + 1.75% (local) = 8%
- Sales Tax Amount: 8% x $59.99 = $4.80 (round to two decimals)
- Final Price: $59.99 + $4.80 = $64.79
Customer pays $64.79 (jacket + $4.80 sales tax).
Nexus: Why do you need to collect sales tax in Illinois?
If you’re selling goods and services in Illinois then sales tax might apply! To determine your obligation, we need to understand “nexus,” which ties businesses to states for tax purposes.
Two types of nexus exist:
- Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Illinois, triggers this type. If you do, you likely need to collect sales tax.
- Economic Nexus: This kicks in when your sales within Illinois exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.
Services
- Generally, services are not taxable in Illinois.
- However, there are some exceptions, such as repairs, amusement park admissions, and cleaning services.
Goods
- Tangible personal property sold in Illinois is generally taxable. This includes most physical products you might sell.
Freight/Shipping
- Generally, shipping charges are not taxable in Illinois.
- However, if the shipping cost includes any taxable service (such as packing or installation), that portion may be taxable.
Clothing
- Clothes are subject to sales tax Illinois
Electronics
- Electronics are taxable in Illinois
SaaS
- SaaS is considered a service and is therefore not taxable
Digital Products
- In general, information or data downloaded electronically, such as e-books, musical recordings, newspapers, or magazines, is not subject to Illinois sales and use tax.
Software
- It may or may not be taxable depending on the specific service offered.
- SaaS can be a grey area, so it’s best to consult with the Illinois Department of Revenue (IDOR) or a tax professional for specific details on your service.
How to register for sales tax in Illinois
Here’s a step-by-step guide for registering for a sales tax permit online through MyTax Illinois:
- Navigate to MyTax Illinois:
- Go to the Illinois Department of Revenue’s website: https://mytax.illinois.gov/
- Register for a MyTax Illinois Account (if you don’t have one):
- Click on “Register for an Account” and follow the prompts. You’ll need basic information like your name, address, and Social Security number (SSN) or Employer Identification Number (EIN).
- Once logged in, locate the business registration section:
- Look for options related to “Business registration” or “Sales tax.” These might be under a “Businesses” tab or section.
- Find the “Register a New Business (Form REG-1)” option:
- Click on the option to initiate the online application process.
- Complete the online application
- Review and submit your application:
- Carefully review all the information you entered for accuracy.
- Receive confirmation:
- You should receive confirmation of your application submission immediately.
- Processing times may vary, but the online method is generally faster than mailing a paper application.
Alternative Method: Paper Application
- Download Form REG-1, Illinois Business Registration Application, from the IDOR website (resources might be available online).
- Complete the form accurately with all required information.
- Mail the completed form to the address specified on the form.
- Processing times for paper applications are typically longer than online submissions.
How to collect sales tax in Illinois
- Determine the Correct Tax Rate
- Include Sales Tax in Your Prices
- You can choose to display prices including tax (inclusive pricing) or exclude tax (exclusive pricing). Be consistent throughout your sales process.
- If you choose exclusive pricing, clearly indicate that sales tax will be added at checkout.
- Collect the Sales Tax at the Time of Sale:
- This can be done manually by adding the sales tax to the base price or using a point-of-sale (POS) system programmed with the correct tax rate.
- Keep Records of Your Sales Tax Collections:
- It’s crucial to maintain accurate records of your sales and the amount of sales tax collected. This will be necessary when you file your sales tax return.
How to get a sales tax permit/license in Illinois?
To obtain a sales tax permit in Illinois, you need to register with the Illinois Department of Revenue. Begin by gathering key information, including your business name, address, contact details, Employer Identification Number (EIN) or Social Security Number (SSN), and business type. Apply for the permit online through the MyTax Illinois website, where you can complete the application for a Sales Tax Registration.
Once your application is processed and approved, you’ll receive your Sales Tax Registration Certificate, which must be displayed at your place of business. This permit authorizes you to collect and remit sales tax on taxable sales in Illinois.
When are Illinois’s sales tax returns due?
The filing frequency for Illinois sales tax returns depends on your average monthly sales tax liability:
- Monthly Filing:
- If your average monthly sales tax liability is greater than $200, the Illinois Department of Revenue (IDOR) may notify you that your filing frequency has been changed to a monthly requirement.
- Quarterly Filing:
- This is the most common scenario. If your average monthly sales tax liability is between $50 and $200, you’ll likely file quarterly.
- Annual Filing:
- Businesses with an average monthly liability of less than $50 per year can file annually.
No matter the filing frequency (monthly, quarterly, or annually), Illinois sales tax returns are always due by the 20th day of the month following the end of the reporting period.
Is anyone exempt from sales tax in Illinois?
Yes, there are certain categories of people and organizations exempt from paying sales tax in Illinois. Here’s a breakdown:
- Tax-Exempt Organizations:
- Exclusively charitable organizations (standards differ from federal non-profit status)
- Religious organizations
- Educational organizations
- Governmental bodies (federal, state, and local)
- Some senior citizen organizations
- Purchases for Resale:
- Merchants with a valid reseller permit can purchase goods tax-free from wholesalers or distributors with the intent to resell them.
- Manufacturers can buy materials tax-free to use in manufacturing a taxable product (becomes taxable when sold).
- Contractors can purchase materials tax-free to use in projects where they collect sales tax from the client.
- Other Exemptions:
- Certain goods are exempt from sales tax, such as:
- Fuel for international flights
- Gold bullion issued by qualifying governments
- Newspapers and magazines (in some cases)
- Certain goods are exempt from sales tax, such as:
Do I Have to Collect Sales Tax from Illinois Customers if I Sell on Amazon, Walmart, Ebay, or Etsy?
No.
Marketplaces like Walmart and eBay must collect sales tax on behalf of third-party sellers in Illinois.
If you have a sales tax nexus in Illinois, don’t forget that you must still collect sales tax on your other non-marketplace Illinois sales.
