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Thinking about starting a business in Illinois or just trying to make sense of the sales tax laws? Whether you’re selling products or shopping locally, this guide breaks down the tax rates, rules, and must-know facts to help you stay informed and compliant.
Key takeaways
- The Illinois 2025 sales tax rate ranges from 6.25% to 11.0%, depending on the location. It comprises a base rate of 6.25% plus a mandatory local rate of 0% to 4.75%.
- All businesses with a physical presence in Illinois are required to collect and remit sales tax.
- All remote businesses that have more than $100,000 in sales or 200 transactions (with some exemptions) from the previous 12 months must collect and remit sales tax.
- The penalty for late filings or payments typically ranges from 2% to 10%. In some cases, the penalty can exceed 10%.
- Most goods are subject to Illinois state tax, but the tax rate varies depending on the type of good and the jurisdiction.
Illinois sales tax rates: overview
The Illinois sales and use tax rates range from 6.25% to 11.0%, depending on the location. It comprises a base rate of 6.25% plus a mandatory local rate of 0% to 4.75%.
However, some rates vary depending on the goods or location. For example, qualifying food, drugs, and medical appliances are taxed at 1% (low rate).
Municipalities, counties, and other local jurisdictions in Illinois determine local sales tax rates, which can vary depending on the location and the type of tax imposed. In some cases, the sales tax rate range can exceed 11.0%. To determine the local sales tax rate for a specific area, use the MyTax Illinois Tax Rate Finder.
List of local sales tax rates in Illinois
Illinois' sales tax rates differ by city and county. Below is an example of some local rates:
Note that these are the combined state and local sales tax rates. They include state, county, city, and in some cases, the Chicago Regional Transportation Authority (RTA) tax.
Sales tax rates are subject to change. It's always advisable to consult the Illinois Department of Revenue's Tax Rate Database for the latest rates.
Sales tax 101
Do you purchase goods or services in Illinois? Do you run a business in Illinois or sell to Illinois-based customers? If so, you might be liable to pay or collect sales tax.
When you buy certain goods or services, state and local governments collect sales tax as part of the purchase. As a consumer, you pay local and state sales tax to the business you are purchasing from, or submit use tax to the state of Illinois.
If you're running a business that sells taxable products or services, it's your responsibility to collect sales tax from your customers and send it to the Illinois Department of Revenue.
Keep in mind, the sales tax your business collects doesn’t belong to you — it belongs to the state. If you don’t pay the correct amount on time, you could face penalties and interest.
Recent tax changes in Illinois
Tax rates are generally updated on January 1st and July 1st each year, but this isn't always the case.
As of July 1, 2025, Illinois will update 7 tax laws. Here are the most recent updates:
- Locally imposed sales tax changes
- Local sales tax updates on aviation fuel
- Motor fuel tax rate changes
The Illinois Department of Revenue (IDOR) publishes Informational Bulletins that outline upcoming tax rate changes. Local rates vary and may include state, county, city, and Regional Transportation Authority (RTA) tax. We recommend staying up-to-date with these changes to ensure compliance with the latest regulations.
If you're concerned about understanding Illinois' complex tax code and ensuring your business remains compliant, you don’t have to figure it out on your own. Numeral simplifies your tax workflow and puts sales tax on autopilot. We help you stay compliant — without the hassle.
Do I need to collect Illinois sales tax?
If you sell products and services, whether locally or online, you must register in Illinois if you have physical or economic nexus.
Nexus in Illinois: What it means and how it affects your business
Physical nexus
Physical nexus refers to having a physical presence in the state. If you either reside in the state where you conduct your business, hire a state-based employee, store inventory in the state, or sell at state-based trade shows, you have physical nexus.
Economic nexus
Let's say you reside in Connecticut (and you don't have physical nexus in Illinois), but you sell to customers based in Illinois. You still need to register to collect and remit Illinois sales tax if you meet the economic nexus thresholds.
Below are the economic nexus thresholds in Illinois:
- $100,000 in cumulative gross receipts from sales of tangible personal property to purchasers located in Illinois; or
- 200 separate transactions for the sale of tangible personal property to purchasers in Illinois
Once you hit either of those thresholds for the previous 12 months, you must register for an Illinois seller's permit and charge and remit applicable sales tax based on the buyer's location.
There are some exemptions to the economic nexus threshold.
- Sales for resale
- Sales of tangible personal property to purchasers in Illinois that a remote retailer makes through a marketplace
- Occasional sales
Visit the Illinois Department of Revenue website for more details on economic nexus thresholds and exemptions.
Remote sellers
You live in Ohio, but you sell your goods at an annual Illinois trade show. Are you still required to collect and remit sales tax? Yes. You must get a sales tax permit if you meet the sales tax nexus thresholds, even if you conduct temporary sales activity in Illinois.
Is Illinois sales tax destination-based or origin-based?
Illinois functions as an origin-based state for Illinois-based sellers and a destination-based state for remote sellers (a hybrid).
What’s the difference between destination-based and origin-based sales tax states?
With an origin-based sales tax state, your business's physical location determines the sales tax rate. A destination-based sales tax state requires you to collect and remit sales tax based on the purchaser's location.
Regardless of whether you are an in-state or out-of-state seller (you sell goods to customers in other states), if you have physical nexus in Illinois, you must collect and remit tax at the origin rate (based on the seller's location).
If you are a remote seller (you don't have physical nexus in Illinois), but you sell to customers located in Illinois, you must charge tax at the destination rate (based on the purchaser's location).
How do you know whether to collect and remit Illinois state taxes at the origin or destination rate? The Illinois Department of Revenue published these helpful flowcharts.
Remote sales and out-of-state sellers flowchart
In-state retailer's flowchart
What's taxable in Illinois?
Let’s look at the products and services that are taxable and exempt in Illinois.
Which ecommerce goods are taxable?
Most retail sales of tangible personal property are taxable in Illinois unless specifically exempt. Some everyday taxable items include:
- Clothing and footwear
- Furniture and home furnishings
- Prepared food
- Soft drinks
- Cleaning supplies
- Pet supplies
Are groceries and food taxable in Illinois?
As of July 1, 2023, Illinois charges a 1% state grocery tax (low rate). Higher-rate food items (e.g., prepared foods, candy, soft drinks, alcohol) are taxed at 6.25% plus local sales tax rates.
However, as of January 1, 2026, the State of Illinois will remove the 1% sales and use tax rate on retail grocery sales (food consumed off-premises). The IDOR will publish more details at a later date.
Tip: Groceries fall under the category of "food prepared for consumption off the premises where sold," while food consumed at restaurants falls under "food prepared for immediate consumption." The state of Illinois taxes these differently.
Food and beverage tax
Food prepared for immediate consumption is taxed at the high rate (6.25%), plus any applicable local taxes.
The state permits certain local governments to enact food and beverage taxes under specific legislative provisions. For example, the IDOR administers the MPEA (Metropolitan Pier and Exposition Authority) Food and Beverage tax on local jurisdictions within MPEA boundaries.
Is clothing taxable in Illinois?
Yes, clothing and footwear are generally taxable in the state of Illinois.
Are digital products taxable in Illinois?
Yes, digital products classified as tangible personal property are subject to taxation. Downloadable software products are generally taxable if they are prewritten (canned), as they also constitute tangible personal property. Custom software is exempt from sales tax.
The tax code on digital products is nuanced. Visit this resource for more detailed information on specific scenarios.
Is software-as-a-service (SaaS) taxable in Illinois?
SaaS is not taxable in Illinois unless it transfers tangible personal property to the customer. However, certain SaaS transactions could be taxable in the city of Chicago.
Tip: SaaS businesses with customers in Chicago may be required to collect and remit the Personal Property Lease Transaction Tax (PPLTT). Software as a Service (SaaS) is classified as a "non-possessory computer lease" under the PPLTT and is subject to an 11% tax rate.
Are services taxable in Illinois?
Illinois does not tax most services. However, some services may be taxable if they involve tangible personal property. See the IDOR for more information.
Illinois sales tax exemptions
- Prescription medicines
- Manufacturing equipment
- Farm equipment and supplies
- Newspapers and magazines
- Government organizations
- Educational organizations
- Charitable and religious organizations
Although these items and organizations are typically exempt, certain conditions and required documentation may still apply. See the Illinois Department of Revenue website for a complete list of sales tax exemptions.
Excise taxes in Illinois
Local governments impose excise taxes on specific goods or services separate from general sales and income taxes. Excise taxes vary from city to city.
Illinois charges excise taxes on:
- Liquor
- Cigarettes and other tobacco products
- Motor fuel
- Adult-use cannabis
See this resource for a complete list of Illinois excise taxes.
Sales tax rates for fuel products in Illinois
Illinois requires motor fuel distributors to collect and remit sales tax on fuel sold to specific retailers. See the Illinois Department of Revenue website for motor fuel tax rates and fees.
How to register for an Illinois sales tax permit
Below are the steps for registering for a sales tax permit in Illinois:
Register online through MyTax Illinois. You will need the following:
- Business information
- Owner/officer information
- Federal EIN
- Estimated monthly taxable sales
- Bank account information
After submitting the registration, you will receive a confirmation email. Wait 24 hours after receiving your confirmation email to activate your MyTax Illinois logon.
Registration costs for an Illinois sales tax license
Illinois sales tax registration is free — there is no fee to obtain a registration number.
Agencies to register within Illinois
You only need to register with the Illinois Department of Revenue for a sales tax permit. No other state agencies handle sales tax registration.
Illinois sales tax return filing schedule and due dates
Retailers and service providers must file sales tax returns and remit taxes to the Illinois Department of Revenue. File Illinois sales tax returns online through the MyTax Illinois online portal.
Sales tax return filing schedule and due dates
The Department of Revenue assigns a filing frequency, which can be monthly, quarterly, or annual. The filing period is determined based on the business’s tax liability for the previous calendar year.
Here are the due dates for each period. Your returns and taxes are due by the 20th of the month following the end of your reporting period.
Monthly:
Quarterly:
Annual:
There is another filing frequency called "Quarter-Monthly (accelerated payments)." Filers must pay on the 7th, 15th, 22nd, and last day of the month. The Illinois Department of Revenue will notify you if you reach the statutory threshold for quarter-monthly filing.
Illinois sales tax filing and payment penalties
The state of Illinois incurs penalties for both late filing and late payments.
Late filing or non-filing
Penalties for late filing equal the lesser of $250 or 2%. If you do not file a return within 30 days of receiving a notice of nonfiling, you could be fined additional penalties equal to $250 or 2% (whichever is greater), up to $5,000.
Late payment
The state calculates the late-payment penalty based on the number of days the payment is overdue, ranging from 2% to 10%. In some cases, such as when you make a payment after an audit or investigation has already started, the penalty can exceed 10%.
Late payment penalties:
- 2% of the tax due for payments 1-30 days late
- 10% of the tax due for payments 31+ days late
I didn't collect any Illinois sales tax. Do I still have to submit a return?
You must file a zero-tax return even if you did not collect any sales tax. Once you register to collect sales tax, the Illinois Department of Revenue requires you to file a tax return.
Audit & appeals process
The Illinois Department of Revenue (IDOR) audits businesses to ensure compliance with state tax laws. While the department can issue audits at its discretion, investigations typically focus on specific criteria rather than being arbitrary.
Illinois sales tax audit process — what to expect during the audit
The Illinois sales tax audit process is as follows:
- Auditor contacts the business to schedule an audit
- Auditor reviews records and tax returns
- Auditor issues a report with the findings
During the audit, the auditor will examine your sales tax records, books, returns, and source documents for the audit period. They may also request electronic records.
After the audit — appealing the results
Disagree with the audit findings? You can contest it, which will help you:
- Provide additional documentation to support your position
- Negotiate a settlement or payment plan
- Avoid further penalties and interest
Businesses can appeal the audit findings by contacting the IDOR directly, filing a petition with the Independent Illinois Tax Tribunal, or filing a complaint with the circuit court.
FAQs
Can I request an extension to file my Illinois sales tax return?
No, you must submit your sales tax return by the due date or incur penalties.
Can I amend an Illinois sales tax return?
You can file an amended return using Form ST-1-X within 30-36 months of the original return's due date, depending on when you file the amendment.
How do you calculate Illinois sales tax?
Illinois sales tax calculation:
Sales tax = (6.25% + local rate) * purchase price
For instance, if the local rate is 2% and the purchase price is $100, the sales tax would be $8.25.
Should you collect sales tax on shipping charges in Illinois?
Yes, if the products you are shipping are taxable, the shipping charge is also generally taxable in Illinois. However, there are some nuances.
For example, if you only sell online so the customer cannot pick up the item locally, the shipping is subject to Illinois state tax. However, if you own a brick-and-mortar store and also sell online, and the customer has the option of picking up the item locally or having it shipped, the shipping charges may not be subject to Illinois state tax. See the Illinois tax code for more specific examples.
Do I need an Illinois seller's permit if I’m only a wholesaler?
If you sell items to other businesses for resale, you are a reseller (wholesaler), not a retailer. The Illinois Department of Revenue has different registration requirements for resellers.
Is Illinois a streamlined sales tax state?
The Streamlined Sales and Use Tax Agreement (SSUTA) was established in 2000 to simplify sales and use tax administration and create a more uniform tax system. Many states participate in the SSUTA, but not all. Illinois is not a Streamlined Sales and Use Tax Agreement (SSUTA) member.
Information & contacts
For sales tax filing information in Illinois, contact:
- Phone number: 1-800-732-8866
- Illinois State Website
- Illinois Department of Revenue
- Illinois General Assembly (includes state tax code)
There you have it — the most comprehensive guide on Illinois sales tax for ecommerce brands. Tax code can be overwhelming and challenging to comprehend, even for experts. If you'd rather focus more on building your business instead of the hassle of managing sales tax yourself, we'd love to offer you a free demo with Numeral.
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