Illinois Sales Tax Rate & Rules (2026)

Last updated: 2026-03-27

What is the sales tax rate in Illinois?

What is taxable in Illinois?

How do you register to collect sales tax in Illinois?

What is the economic nexus threshold for Illinois?

How to register for sales tax in Illinois

Before you can collect sales tax, you need to register with the Illinois Department of Revenue. Here is the step-by-step process.

1. Register online through MyTax Illinois at mytax.illinois.gov
2. Submit Form REG-1 with your FEIN or SSN, business entity type, and location details
3. Registration is free — Illinois does not charge for a Certificate of Registration
4. Illinois may require separate registration for different tax types (ROT, SOT, UT, SUT)
5. Most online applications are processed within 10-15 business days

How to collect sales tax in Illinois

Once registered, you are responsible for charging the correct amount of sales tax on every taxable transaction. Here is how the collection process works in Illinois.

1. Determine taxability — Illinois has four different sales-related taxes: Retailers' Occupation Tax (ROT), Use Tax, Service Occupation Tax (SOT), and Service Use Tax (SUT)
2. Calculate the correct combined rate based on location — Illinois uses origin-based sourcing for general merchandise and destination-based for titled goods
3. Groceries and medications are taxed at a reduced 1% state rate
4. Charge the correct rate at the point of sale and itemize on receipts
5. Accept Illinois resale certificates (Form CRT-61) from qualifying buyers
6. Keep detailed records by jurisdiction and rate category for at least 3 years

How to file and remit sales tax in Illinois

Filing your sales tax return on time is critical to avoid penalties. Illinois requires electronic filing for most businesses.

1. File electronically through MyTax Illinois at mytax.illinois.gov
2. Filing frequency is monthly or quarterly based on your average tax liability
3. Monthly returns are due on the 20th of the following month; quarterly returns on the last day of the month following the quarter
4. Report gross receipts, nontaxable sales, and taxable sales by rate category
5. Pay electronically — Illinois requires electronic filing for most businesses
6. Retain all records for at least 3 years (the state recommends 6 years)

What is exempt from Illinois sales tax?

Not everything is subject to sales tax. Illinois provides exemptions for certain products, buyers, and uses. Always verify the specific exemption requirements with the Illinois Department of Revenue.

• •Sales for resale with a valid Illinois resale certificate (Form CRT-61)
• •Groceries and medications (taxed at reduced 1% rate, not fully exempt)
• •Manufacturing and assembly machinery and equipment
• •Farm chemicals, seeds, feeds, and farm machinery
• •Sales to government agencies and qualifying nonprofits
• •Gasoline and diesel fuel (subject to separate motor fuel taxes)
• •Qualifying enterprise zone purchases

What are the highest combined sales tax rates in Illinois?

Because Illinois allows local jurisdictions to add their own sales taxes on top of the state rate, combined rates vary by location. Here are some of the highest combined rates in major Illinois cities.

What is use tax in Illinois?

Illinois use tax applies when you purchase tangible personal property from out-of-state vendors who do not collect Illinois tax. The use tax rate depends on the type of property and ranges from 1% (qualifying food and drugs) to 6.25% (general merchandise). Businesses must report use tax on Form ST-1 or through MyTax Illinois. Common triggers include online purchases, out-of-state equipment, and catalog orders.

Does Illinois have marketplace facilitator rules?

Illinois requires marketplace facilitators with cumulative gross receipts of $100,000 or 200 transactions in Illinois to collect and remit ROT on behalf of third-party sellers. This law, sometimes called the Leveling the Playing Field for Illinois Retail Act, covers Amazon, eBay, Etsy, and similar platforms. Note: marketplace facilitators collect the Use Tax (not ROT) on behalf of remote sellers, which can affect local tax distribution.

What are the penalties for sales tax non-compliance in Illinois?

Illinois imposes a late-filing penalty of 2% of the tax due for the first 30 days, plus 2% per additional 30-day period (up to 20% total). Late-payment penalty is the greater of $250 or 2% of tax due per month. Interest accrues at the underpayment rate set quarterly. Fraud penalties are 50% of the underpayment. Criminal penalties for willful evasion include Class 4 felony charges.

This is general information, not legal or tax advice. Tax rules change frequently — always verify with the official state agency. Sources: Illinois Department of Revenue.