Illinois sales tax guide

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Illinois sales tax in short

A sales tax is a consumption tax that is charged on goods or services. Sales tax Illinois is supervised and administered by Illinois Revenue and can be managed via MyTax Illinois.  Illinois Revenue authority defines sales tax as a combination of ‘occupation’ taxes, including state, mass transit, facilities, and other taxes. Sales tax for Illinois must be collected at the point of sale from the purchaser. The tax burden typically falls on the final consumer.

Just like in other states, to become a registered sales taxpayer in the state, a company has to establish a nexus in the state. The total sales tax rate Illinois -based businesses must collect differ depending on the local taxes. Like the sales tax, the use tax, consisting of general and local rates, must be paid by the clients of Illinois sales tax (IL) -exempt companies selling taxable goods or services.

Should you collect the sales tax?

To become a registered sales taxpayer, you will have to fulfill several official criteria for starting to charge and collect the required sales tax rate in Illinois. These are the criteria:

• Your business has a solid economic tie with Illinois (learn more about this criterion below)
• Your company sells services or goods to Illinois residents, and these goods or services are taxable
• Purchasers of your goods and/or services are required to pay sales tax by the state of Illinois

How do I establish a sales tax nexus in Illinois?

The ways that you can establish a sales tax nexus in Illinois are the following:

• Physical nexus. This nexus is triggered whenever a company is located in the state (storing or selling goods or services). Illinois-based companies have to account for sales and use tax Illinois and collect the right, origin-based Illinois sales tax percentage.
  Remote selling nexus:
• Economic nexus. If in the last 12 months a company sells over USD 100 000 (gross) to Illinois residents or makes over 200 transactions whose destination is in the state, it must register for becoming a sales tax collector and start charging the applicable Illinois sales tax rates.
• Affiliate or click-through nexus. Paying commission to an affiliate in Illinois or exceeding USD 10 000 in receipts for sales made via the representative will trigger a remote selling nexus and call for sales tax registration. The same conditions apply to referrals made via a website, or a link, such an economic tie with the state is called a click-through nexus.
• Trade shows. If you make sales while on trade shows in Illinois and participate in these events more often than two times a year (exceeding eight days of total duration during a calendar year), you trigger a nexus and must register as a taxpayer in Illinois.

Finding out if you sell taxable items:

Before learning how much is the sales tax in Illinois for your company, we recommend you check if your goods or services are taxable.

In Illinois, all goods are taxable. The general Illinois sales tax rate is applied to most tangible property. At the same time, some of the essential items such as groceries, prescription or OTC drugs are subject to a reduced Illinois state sales tax rate.

The tax authorities in Illinois tax sales of several activities, but most services in the state are sales tax-exempt. However, the list of taxable services is reviewed yearly.

How to register for Illinois state sales tax?

The most convenient way to become a sales tax-paying company in Illinois is to fill out the form for Illinois sales tax online. The Illinois Revenue oversees the registrations, which are done via the MyTax Illinois portal. There is no fee for the registration. After submitting your personal and company details, a taxpayer certificate is issued, and your company becomes eligible to collect the tax. Using the MyTax Illinois website, you can also learn updated information on what’s the sales tax in Illinois and how much sales tax in Illinois your company has to pay.

What is the sales tax rate in Illinois?

The sales tax rates Illinois -selling companies have to charge vary based on the type of item or service and the sale location. The base sales tax rate in Illinois is 6.25%. It is often combined with a local rate ranging from 0 to 4.75%. Therefore, the entire Illinois sales rate range is 6.25% to 11%. Keep in mind that some items such as prescription medicine or groceries are assigned a reduced tax rate of 1%. To find the specific sales tax rate of your goods or services, use our Sales Tax Calculator and if you have more questions about sales and use tax Illinois, contact our team.

Filing the sales tax

Illinois Revenue assigns several frequencies to file your taxes: monthly, quarterly, or annual. It is important to stick to the deadlines based on your designated frequency, as late filing can result in penalties.

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