Illinois
How 2023 Sales Tax are calculated in Illinois
The state general sales tax rate of Illinois is 6.3%. In addition to the state-level sales tax, cities and municipalities in Illinois have the authority to levy their own sales tax rates. These local rates can add up to 2.75%, resulting in a combined maximum sales tax rate of 11.5% in certain regions.
Every 2023 combined rates mentioned above are the results of Illinois state rate (6.3%), the county rate (0% to 2.25%), the Illinois cities rate (0% to 2.75%), and in some case, special rate (0% to 2.5%).
Overview of Illinois Sales Tax
The sales tax in Illinois is a significant source of revenue for the state, applied to the retail sale of tangible personal property and certain services. Illinois also imposes a use tax to complement the sales tax, ensuring equitable taxation for goods purchased or used within the state.
Applicable Taxes in Illinois
- Sales Tax: Levied on the sale of tangible personal property and designated services within the state.
- Use Tax: Applies to goods purchased outside Illinois but used, stored, or consumed within the state.
- Local Sales Taxes: Counties, municipalities, and certain districts in Illinois can impose additional local sales taxes.
History of Sales Tax in Illinois
Illinois was one of the first states to adopt a general sales tax, introducing it in 1933 during the Great Depression to stabilize the economy and generate revenue. Over the years, the tax structure has evolved to include exemptions for essential goods and services and changes to reflect shifting economic activities.
Taxability and Exemption List
Below is a simplified view of taxable and exempt items in Illinois:
| Taxable Items | Exempt Items |
|---|---|
| Tangible personal property (e.g., electronics) | Prescription medications |
| General merchandise and some digital goods | Groceries and unprepared food |
| Restaurant meals and prepared food | Medical devices (when prescribed) |
| Alcohol, tobacco products | Farm machinery and equipment |
| Select labor services (e.g., repair labor) | Newspapers and periodicals |
Historical Sales Tax Rate Changes in Illinois
| Year | Event/Change | State Rate | Details |
|---|---|---|---|
| 1933 | Sales Tax Introduced | 2.0% | First statewide sales tax to stabilize the economy. |
| 1955 | Use Tax Introduced | 2.0% | Ensured taxation of out-of-state purchases. |
| 1961 | Rate Increased | 3.0% | Boosted revenue for infrastructure and education funding. |
| 1969 | Rate Increased | 4.0% | Addressed growing state budget needs. |
| 1984 | Local Sales Taxes Introduced | 4.0% (state) | Allowed counties and municipalities to impose additional taxes. |
| 2003 | Expanded to More Services | 6.25% | Included services such as repair labor. |
| 2018 | Online Sales Tax Compliance | 6.25% | Required remote sellers to collect and remit tax. |
Top 5 FAQs About Illinois Sales Tax
What items are exempt from Illinois sales tax?
Common exemptions include groceries, prescription medications, and certain medical devices.Do I need to pay use tax on online purchases?
Yes, use tax applies to online purchases from out-of-state retailers if the seller does not collect Illinois sales tax.Are local sales taxes added to the state rate?
Yes, counties, municipalities, and special districts can impose additional local taxes, resulting in varying rates across Illinois.How are digital goods taxed in Illinois?
Some digital goods, like e-books and music downloads, are subject to sales tax.Are services taxable in Illinois?
Only specific services, such as repair labor and some rentals, are taxable. Most professional services are exempt.
For further details, residents can consult the Illinois Department of Revenue for up-to-date information on tax rates and exemptions.
Illinois state rate(s) for 2023
Lowest possible rate: 6.25% (e.g., Clare, Illinois)
Other common rates: 6.3% .6.5%, 6.6%, 6.75%, 6.85%, 7%, 7.1%, 7.25%, 7.35%, 7.5%, 7.6%, 7.75%, 7.85%, 8%, 8.1%, 8.25%, 8.35%, 8.5%, 8.6%, 8.75%, 8.85%, 9%, 9.1%, 9.25%, 9.35%, 9.5%, 9.6%, 9.75%, 9.85%, 10%, 10.25%, 10.5%, 10.75%, 11%, 11.25%,
Highest possible rate: 11.5% (Harvey, Illinois)
Average combined rate across Illinois: 8.089%
Other 2023 sales tax Facts for Illinois
City sales taxes: 327 out of 1314 cities (24.886%) in Illinois impose a city sales tax.ZIP code impact: 601 out of 1645 ZIP codes (36.535%) in Illinois.