Illinois Sales
Tax Rate

Illinois applies a 6.25 percent state sales tax rate to general merchandise in 2026, then adds local taxes that vary by location. Major 2026 changes include elimination of the state 1 percent grocery tax and removal of the 200-transaction economic nexus threshold for remote retailers and marketplace facilitators.

Illinois Sales Tax Is a Group of Occupation and Use Taxes

Illinois uses the term sales tax as a practical label for several related taxes. Retailers' Occupation Tax applies to retailers selling tangible personal property, while Use Tax applies to the purchaser's use of taxable property acquired at retail. Service Occupation Tax can apply when tangible personal property is transferred as part of a sale of service.

This structure is more complex than a single state sales tax imposed at the register. The taxable base, sourcing method plus local rate depend on the type of transaction.

The Illinois State Rate on General Merchandise Is 6.25 Percent

General merchandise is subject to a 6.25 percent state rate before applicable local occupation taxes are added. The combined rate can therefore be materially higher than 6.25 percent in many Illinois locations.

Local Illinois Sales Tax Rates Vary by Location

Illinois municipalities, counties and transportation districts can impose local taxes that increase the combined rate on general merchandise. Rates can change on January 1 or July 1, so a statewide average is not a substitute for a location-specific lookup.

The Illinois Department of Revenue directs retailers to the MyTax Illinois Tax Rate Finder for current location-specific rates. Businesses should determine the correct sourcing location before applying the local rate.

Illinois Eliminated the State Grocery Tax on January 1, 2026

Illinois eliminated the state 1 percent sales and use tax on qualifying grocery sales beginning January 1, 2026. This did not guarantee a zero grocery tax everywhere because municipalities and counties can impose a local grocery tax of exactly 1 percent by ordinance.

Local grocery ordinances can take effect on January 1 or July 1 when the filing deadlines are met. Transportation district taxes on qualifying groceries can also remain in effect. Retailers should therefore use the 2026 grocery rate files or Tax Rate Finder for the transaction location.

What Counts as Grocery Food for the 2026 Illinois Rule?

For the local grocery tax rules, groceries generally mean food for human consumption intended to be consumed off the premises where it is sold. The definition excludes alcoholic beverages, adult-use cannabis food, soft drinks, candy plus food prepared for immediate consumption.

Items outside the grocery definition can remain subject to the general merchandise or other applicable rate. A retailer should classify the product before assuming the 2026 grocery tax change applies.

How to Calculate Illinois Sales Tax

Start with the taxable selling price, identify whether the item is general merchandise, a low-rate medical item or qualifying grocery food, then determine the correct state and local rate for the sale location. Multiply the taxable price by the combined rate.

Illinois Services Are Not Taxed Like General Merchandise

Illinois does not impose a broad retail sales tax on the labor component of every service. Service Occupation Tax applies when a serviceperson transfers tangible personal property as part of a sale of service, while the service component itself remains nontaxable under the 2026 guidance.

This means a service invoice can require a different analysis from a retail product sale. The taxable amount can depend on the property transferred, the serviceperson's method plus the sourcing rules that apply to the transaction.

Remote Seller Nexus Changed on January 1, 2026

Beginning January 1, 2026, Illinois uses only the $100,000 gross receipts threshold for determining whether a remote retailer or marketplace facilitator has economic nexus for destination-based Retailers' Occupation Tax. The prior 200-transaction threshold no longer applies.

A remote retailer is generally an out-of-state retailer with no physical presence in Illinois. Once the $100,000 threshold is met for the lookback period, destination-based tax is calculated using the rate at the Illinois delivery or possession location for qualifying sales sourced outside Illinois.

Marketplace Facilitators Use the Same $100,000 Threshold in 2026

Marketplace facilitators are also subject to the 2026 $100,000 gross receipts threshold under the updated rules. When the facilitator is responsible for a marketplace sale, it can collect and remit the applicable Illinois state and local tax for the transaction.

Marketplace sellers should still understand which direct sales they make outside the platform. A marketplace collection arrangement does not automatically remove every Illinois registration or filing obligation for the seller's own transactions.

Illinois Use Tax Applies to Untaxed Out-of-State Purchases

Use Tax applies when taxable tangible personal property is purchased at retail and used in Illinois without sufficient Illinois tax being collected by the retailer. The state use tax rate on general merchandise is 6.25 percent.

A remote retailer that does not have a mandatory collection obligation can sometimes register as a voluntary use tax collector. Illinois purchasers remain responsible for use tax when a taxable out-of-state purchase is not properly taxed by the seller.

Illinois Sales Tax Returns Use Form ST-1

Retailers generally report sales and use tax on Form ST-1. The return plus payment is due by the 20th day of the month following the end of the assigned reporting period.

IDOR can assign monthly, quarterly or annual filing based on liability. MyTax Illinois is used for electronic filing. Form ST-2 can be required for businesses reporting multiple locations or destination-based local tax sites.

Sales Tax Is Separate From Illinois Income Tax and Payroll Withholding

Illinois sales tax applies to taxable transactions, while Illinois individual income tax applies to taxable income and payroll withholding applies to wages. A retailer with employees can therefore have sales tax filing obligations plus separate payroll and income tax obligations.

For annual individual tax rules, see the Illinois income tax guide. For employee take-home pay, the Illinois paycheck calculator handles payroll deductions rather than customer sales tax.

For lawful payroll documentation after wages are finalized, the main online paystub generator can organize genuine compensation and deduction records.