IL Illinois State sales tax rates
STATEWIDE SALES TAX RATE
ECONOMIC SALES THRESHOLD
Do you need to collect sales tax in Illinois?
You’ll need to collect sales tax in Illinois if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Illinois?
Illinois considers a seller to have physical nexus if you have any of the following in the state:
- A physical presence, like an office, warehouse or place of business
- An employee, contractor, salesperson, agent or representative in Illinois
- A 3rd party affiliate in Illinois
Do you have economic nexus in Illinois?
Effective October 1, 2018, Illinois considers vendors who make more than $100,000 in sales in the previous four quarters in the state or more than 200 transactions in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state.
Is what you’re selling taxable?
Services in Illinois are generally not taxable. However, if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Illinois, with a few exceptions, such as some machinery, equipment and building materials that will be used for certain projects.
Is SaaS taxable in Illinois?
SaaS is considered a non-taxable service in Illinois.
Collecting Sales Tax
The sales tax rate you collect in Illinois depends on whether you are based in Illinois or out-of-state.
Illinois is an origin-based sales tax state. So if you live in Illinois, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located. Illinois state sales tax rate is 6.25%.
If you have more than one location in Illinois, then you would base the sales tax rate you charge on the point of origin of your sale.
How to Collect Sales Tax in Illinois if you are Not Based in Illinois
In Illinois, “The Leveling the Playing Field for Illinois Retail Act” became effective on January 1, 2021. This act introduces changes in sales tax collection for remote sellers and marketplace facilitators.
The changes require remote sellers and marketplace facilitators to collect and remit the state and locally-imposed Retailers’ Occupation Tax (ROT) for the jurisdictions where the product is delivered (destination sourcing) rather than collecting and remitting solely the state use tax.
The only way a seller can report sales at just 6.25% is if they have a physical location in Illinois and have sales being shipped from out of state. Those sales would be subject to the Illinois use tax only.
Should you collect sales tax on shipping charges in Illinois?
Shipping is generally taxable in the state of Illinois.
When are Returns Due?
When you file and pay Illinois sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Illinois?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Illinois, you will be required to file and remit sales tax either monthly, quarterly or annually.
Illinois sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.