Sales tax in Illinois

Question 1

What is Illinois's combined sales tax rate?

Accepted Answer

Illinois runs a 6.25% state base administered by the Illinois Department of Revenue (IDOR). On top of that, the buyer's ship-to address layers a home-rule local add-on — city, county, regional-transportation-authority, and (in a small set of places) special-purpose district rates. Most downstate Illinois shipments run 7.25% to about 8.25%; suburban Cook collar counties run 7.75% to roughly 9.00%; deliveries into Chicago run roughly 11.50% combined (city + Cook County + regional transportation authority). The overlay is collected and remitted on the same IDOR ST-1 return, not as a separate filing.

Question 2

How often does Illinois require sales tax filings, and what is the ST-1 vs. ST-2 split?

Accepted Answer

Most Illinois sellers file monthly with the IDOR on Form ST-1 (Sales and Use Tax Return), due the 20th of the month following the reporting period — for example, the September return is due October 20. IDOR may reclassify a low-liability account to quarterly (and below that, annually) once prior-12-month liability drops below IDOR thresholds; non-business / zero-sales accounts still must file ST-1 even on no-activity months. The companion filing is Form ST-2 (Use Tax Return) for stored, used, or consumed taxable items where the seller did not collect at the point of sale — confusing ST-1 (sales) with ST-2 (use) is one of the most common operator mistakes.

Question 3

When does a business need to register for Illinois sales tax with IDOR, and how do marketplace facilitators interact with it?

Accepted Answer

Illinois's Level 1 economic-nexus threshold is a two-prong test: more than $100,000 in gross receipts from Illinois-bound sales AND 200 or more separate transactions in the prior twelve-month period — both prongs required. Once crossed, the seller registers with IDOR via form STLDR-1 through the MyTax Illinois portal and receives a Certificate of Registration before the close of the month after crossing nexus. Because Illinois has required Level 1 marketplace facilitators to collect and remit on behalf of third-party sellers since 2020, remote sellers should not assume that marketplace-channel sales relieve them of registration — only the collection-and-remit obligation on facilitated sales is carved out, the seller must still register STLDR-1 and present a Form ST-587 marketplace-facilitator certificate to document the carve-out.

Question 4

What are the common operator pitfalls with Illinois sales tax, and how does the ST-587 exemption-certificate series work?

Accepted Answer

Late filings under IDOR carry a penalty plus interest, both compounding against the unpaid balance; a single missed monthly ST-1 can quickly double the original liability when the late-filing penalty stacks on top of the interest. Repeated late filings or skipped no-activity ST-1s can move an account up the IDOR audit-review list. The four most common operator pitfalls: confusing ST-1 (sales) with ST-2 (use); missing the home-rule rotation across city + Cook County + RTA add-ons; forgetting the marketplace-facilitator carve-out for own-channel direct sales; and skipping Form ST-587 exemption certificates on qualifying manufacturing-machinery and intermittent-isolated-sale exempt sales. Exempt categories include most unprepared groceries, prescription and non-prescription drugs dispensed under a prescription, most medical equipment and prosthetics, manufacturing machinery and qualifying production-related tangible personal property, and occasional isolated sales not in the regular course of business.

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