To file and pay sales tax in Illinois, register your business with the Illinois Department of Revenue (IDOR), charge the correct destination-based rate on each sale (6.25% state plus any local add-ons), and file Form ST-1 with payment through the MyTax Illinois portal by the 20th day of the month after your reporting period ends. IDOR assigns you a monthly, quarterly, or annual filing schedule based on the size of your liability, and you must file every period on that schedule even if you collected nothing.
Who Has to Register and Collect
Any business selling tangible personal property at retail in Illinois must collect sales tax if it has nexus with the state. Physical nexus comes from an office, warehouse, distribution center, sales location, employees, or inventory in Illinois. One carve-out: if your only Illinois inventory sits in a marketplace facilitator’s warehouse and is used only to fulfill sales on that marketplace, it doesn’t create physical nexus by itself.1Illinois Department of Revenue. PIO-125, Determining Physical Presence or When the Tax Remittance Threshold Has Been Met
Out-of-state sellers have economic nexus once cumulative gross receipts from sales of tangible personal property to Illinois buyers reach $100,000 or more during the preceding 12-month period. The old alternative threshold of 200 or more separate transactions was eliminated on January 1, 2026.2Illinois Department of Revenue. FY 2026-12, Destination-Based Retailers’ Occupation Tax Changes
If you sell through Amazon, eBay, Etsy, or a similar platform, the marketplace facilitator collects and remits Illinois tax on those sales for you. You remain responsible for any sales made outside the marketplace — your own website, craft fairs, direct wholesale — and you file and pay on those yourself.3Legal Information Institute. Illinois Administrative Code Title 86 Section 131.145 – Marketplace Facilitators Obligations
Registering With IDOR
You must register before making any sales. Registration produces a taxpayer ID number and a Certificate of Registration authorizing you to collect tax. There is no fee.4Illinois Department of Revenue. Business Registration
Go to mytax.illinois.gov and click “Register a New Business (Form REG-1).” Have your legal business name and address, Federal Employer Identification Number (or Social Security Number for sole proprietors), ownership details, and business start date ready. Online registration usually processes in one to two business days. If you mail a paper REG-1 instead, expect four to six weeks.4Illinois Department of Revenue. Business Registration
What Rate to Charge
The base state rate is 6.25% on most tangible personal property. Municipalities, counties, and special districts add their own taxes on top, so the combined rate at a given address can run from 6.25% to over 11%.5Illinois Department of Revenue. Taxpayer Answer Center – Why Is the Sales Tax Rate Higher Than 6.25 Percent? Illinois is destination-based, meaning you charge the rate for where the buyer receives the goods, not where your business is located. Look up any address using the Tax Rate Finder on MyTax Illinois.
Some property is taxed at a reduced 1% state rate instead of 6.25%: prescription and nonprescription medicines, drugs, medical appliances, insulin, syringes for diabetics, and qualifying FDA Class III cancer-treatment devices.6Illinois General Assembly. Illinois Administrative Code Title 86 Section 130.311 – Drugs, Medicines, Medical Appliances
As of January 1, 2026, Illinois no longer applies the 1% state tax to qualifying grocery food items. Many local jurisdictions have kept or added their own grocery taxes, so the total on food at your location may still be greater than zero. Check the Tax Rate Finder for the local grocery rate that applies to your address.7Illinois Department of Revenue. Illinois Grocery Tax Changes Effective January 1, 2026
Services are generally not taxable unless they involve fabricating, printing, or repairing tangible personal property. Consulting, legal work, and other pure-labor services fall outside the tax.
Filing Your Returns
Once registered, you file a return for every period IDOR assigns you, even if you collected zero tax. Skipping a “no sales” return is one of the fastest ways to trigger penalties.
IDOR sets your filing frequency based on average monthly tax liability:
- Monthly, if your average monthly liability is more than $200.
- Quarterly, if it’s between $50 and $200.
- Annually, if it’s under $50.
Returns are due on the 20th day of the month following the end of your reporting period. A monthly filer’s January return, for example, is due by February 20. The primary return is Form ST-1, Sales and Use Tax and E911 Surcharge Return, filed electronically through MyTax Illinois. Paper filing of ST-1 is available for taxpayers who aren’t mandated to file electronically.8Illinois Department of Revenue. Form ST-1 Instructions
Fixing a Return You Already Filed
If you find an error on a return you filed, correct it with Form ST-1-X for that specific period. Use it to pay additional tax, request a credit for an overpayment, respond to an IDOR notice, or fix line items even when the total doesn’t change. Overpayment credits cannot be applied to future returns until IDOR notifies you they’ve been approved. File ST-1-X electronically through MyTax Illinois or by mail. If your correction changes Schedule A (Deductions) or Schedule B (E911 Surcharge and ITAC Assessment), attach the amended Schedule A-X or B-X.9Illinois Department of Revenue. ST-1-X Instructions, Amended Sales and Use Tax and E911 Surcharge Return
Paying What You Owe
Payment is due at the same time as the return, on that 20th-of-the-month deadline. The standard method is electronic payment through MyTax Illinois, usually by direct bank debit. Businesses with an annual tax liability of $20,000 or more must pay electronically.10Illinois Department of Revenue. Who Must Make Electronic Payments?
Accelerated Quarter-Monthly Payments
Larger sellers pay on a faster schedule. If your combined average monthly liability under the Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, and Service Use Tax was $20,000 or more across the preceding four complete calendar quarters, you must make quarter-monthly payments due on the 7th, 15th, 22nd, and last day of each month in which liability is incurred.11Legal Information Institute. Illinois Administrative Code Title 86 Section 130.535 – Payment of the Tax IDOR looks at the prior four quarters, so a strong stretch can push you into accelerated status even after business slows.
The Vendor’s Discount
File and pay on time and you keep a vendor’s discount of 1.75% of the tax due, or $5 per calendar year, whichever is greater. The discount is capped at $1,000 per month across all returns filed in that month, including local taxes reported on the same return.12Illinois General Assembly. Illinois Administrative Code Title 86 Section 130.565 – Vendor’s Discount Cap On $10,000 of monthly tax, that’s $175. Miss the deadline and you lose it entirely.
Resale Certificates on Purchases
When you buy inventory for resale, don’t pay sales tax on that purchase. Give your supplier a completed Form CRT-61, Certificate of Resale, with the seller’s name and address, your business name and address, your Illinois retailer or reseller account ID, a description of the property, and your signature. Saying “it’s for resale” without the form doesn’t hold up. For an ongoing supplier relationship you can issue a blanket certificate covering all qualifying purchases; blanket certificates must be updated at least once every three years.13Illinois Department of Revenue. CRT-61 Certificate of Resale Instructions
On the selling side, verify a buyer’s resale number through MyTax Illinois’s “Verify a Registered Business” tool before accepting the certificate. Accepting a fraudulent or expired certificate leaves you liable for the uncollected tax.14Illinois Department of Revenue. How Do I Verify a Resale Number Is Valid and Active?
Penalties and Interest for Missing the Deadline
Late payment penalties escalate quickly:
- 1 to 30 days late: 2% of the tax due.
- 31 or more days late: 10% of the tax due.
- After IDOR begins an audit or investigation: 15% of any amount still unpaid.
- After an audit concludes: 20% of any amount not paid within 30 days after IDOR issues the amended return or findings.
Those percentages apply to unpaid tax and stack with interest. The jump from 2% to 10% at day 31 is the one to watch: getting payment in during that first month makes a real difference.15Illinois Department of Revenue. Publication 103, Penalties and Interest for Illinois Taxes
Filing late is penalized separately from paying late. A late return, even with the tax paid on time, costs 2% of the tax due, capped at $250. If you still haven’t filed 30 days after IDOR mails a nonfiling notice, another penalty applies equal to the greater of $250 or 2% of the tax on the return, capped at $5,000. A late return with zero liability carries a flat $100 penalty.15Illinois Department of Revenue. Publication 103, Penalties and Interest for Illinois Taxes
Interest runs on any unpaid balance. The annual rate for the first half of 2026 is 7%. IDOR follows the federal underpayment rate and adjusts it every six months on January 1 and July 1.16Illinois Department of Revenue. Interest Rates
Records to Keep
Keep books and records supporting your receipts for at least three and a half years after filing the original or amended return for that period. If IDOR has issued a Notice of Tax Liability or Final Notice of Tax Due for a period, hold those records until the liability is fully resolved.17Illinois Department of Revenue. What Must I Keep in My Books and Records? Four years is a comfortable buffer in practice. Keep sales receipts, invoices, resale certificates you’ve accepted, purchase records, and exemption documentation. If an auditor finds your records incomplete, they’ll estimate your liability, and those estimates rarely favor the taxpayer.