Illinois Sales & Use Tax

Physical Nexus

Your business has physical nexus if it has any of the following items within the state of Illinois:

Physical offices or storefronts
Employees reside in the state
Affiliates who refer business either directly or indirectly to the retailer of tangible products
Tradeshow presence

Here is a more extensive list of what the state of Illinois considers instances of creating sales tax nexus.

Taxability

Typically, services are not taxable, however, services such as repairing or producing a product will create sales tax liability. Physical products are taxable in-state with a few exceptions. Taxability can change state to state and often depends on how your product/services are defined.

Determine whether software and SaaS are subject to taxation here.

Like much of sales tax, this can often be difficult to manage alone. Reach out if you need help understanding the taxability of your products/services.

Collecting Sales Tax

As an origin-based sales tax state, unlike the majority of other states, Illinois requires sellers in-state to charge the rate at which the seller is located. This may include state, county, city, and district tax rates. So if you operate your business from Illinois, you collect origin-based sales tax at the Illinois rate and your local tax rate.

Sellers based outside of Illinois selling into the state are required to charge sales tax based on the buyer's location.

Illinois' state sales tax rate is 6.25%.

When Are Sales Taxes Due?

Sales tax returns are dependent upon the state's due dates and the vendor's filing frequency. If the seller exceeds the economic threshold, they are liable to file on a monthly basis. If the seller does not exceed the threshold, then returns could be due quarterly or annually.

Sales tax returns are due by the 20th of the month following the reporting period. Illinois requires an extra business day to process payments and as a result, the "payment" is due a day earlier than the filing date.