The Illinois sales tax starts with a 6.25% state rate on general merchandise, and local governments, counties, and regional transit districts add their own taxes on top. Combined rates run from just the state 6.25% in some small towns to 10.25% in Chicago through mid-2026, climbing higher when a scheduled transit tax increase takes effect. What you actually pay depends on where the sale happens and what you buy.
The State Rate and What It Covers
For general merchandise like clothing, electronics, and furniture, the state rate is 6.25% of the selling price.1FindLaw. Illinois Code 35 ILCS 120/2-10 – Rate of Tax Of that 6.25%, a slice of 1.25% flows back to the municipality and county where the sale took place, so every retail transaction already helps fund local services before any local government adds its own tax.
Vehicles, watercraft, aircraft, trailers, and manufactured homes are still taxed at the 6.25% state rate, but sellers report them on Form ST-556 as transaction-specific returns rather than folding them into monthly filings.2Illinois Department of Revenue. Sales and Use Taxes
Reduced Rates and the 2026 Grocery Change
Some categories are taxed well below the general rate. Prescription and nonprescription medicines, medical appliances, insulin, syringes, blood sugar testing materials, and doctor-prescribed Class III cancer treatment devices are taxed at 1% instead of 6.25%.1FindLaw. Illinois Code 35 ILCS 120/2-10 – Rate of Tax Grooming products like shampoo, toothpaste, and sunscreen do not qualify for the reduced rate even when they carry health claims, and are taxed at 6.25%.3Illinois General Assembly. Illinois Administrative Code 86-130-311 – Drugs, Medicines, Medical Appliances, and Grooming and Hygiene Products
Groceries changed significantly on January 1, 2026. Illinois eliminated the state’s 1% sales tax on qualifying grocery food, dropping the state-level rate to zero.4Illinois Department of Revenue. Illinois Grocery Tax Changes Effective January 1, 2026 The same law lets municipalities and counties impose their own 1% local grocery tax by ordinance, so whether groceries carry any tax where you shop depends on whether your local government adopted the option. Existing local taxes on grocery sales within the Regional Transportation Authority and Metro East Mass Transit District were not affected by the state-level elimination and still apply.
The grocery definition covers food for human consumption eaten off the premises. Soft drinks, candy, alcoholic beverages, and prepared food do not count and remain taxed at the full general merchandise rate.
The Candy and Flour Rule
Illinois defines candy as a preparation of sugar, honey, or other sweeteners combined with chocolate, fruits, nuts, or flavorings in bars, drops, or pieces. If a sweet product contains flour of any kind, it is not candy under Illinois law regardless of how sweet it is.5Illinois Department of Revenue. Tax Rate Information for Retail Sales of Food and Medicine A plain chocolate bar is candy taxed at the high rate. A chocolate-covered pretzel made with flour is a grocery item. Cookies fall on the grocery side for the same reason.
Why Local Rates Vary So Much
The size of your local addition depends heavily on whether your city or county has home rule authority. Home rule municipalities impose local sales taxes in 0.25% increments with no maximum rate cap.6Illinois Department of Revenue. Home Rule and Non-Home Rule Sales Taxes That is why cities like Chicago can stack levies that push combined rates well above 10%.
Non-home rule municipalities can impose sales taxes in the same 0.25% increments, but the total is capped at 1%.7FindLaw. Illinois Code 65 ILCS 5/8-11-1.3 – Non-Home Rule Municipal Retailers Occupation Tax Act Non-home rule counties face the same 1% ceiling and must win voter approval through a referendum before imposing or increasing any local sales tax; even lowering the tax and later reimposing it requires a new referendum.8FindLaw. Illinois Code 55 ILCS 5/5-1006.5 – Non-Home Rule County Retailers Occupation Tax Law Home rule counties levy their own taxes in 0.25% increments without the ceiling that restricts non-home rule jurisdictions.9FindLaw. Illinois Code 55 ILCS 5/5-1006 – Home Rule County Retailers Occupation Tax Law
Regional Transit and Mass Transit Districts
Special districts add another layer. The Regional Transportation Authority covers the northeastern part of the state and funds Chicago-area transit.10FindLaw. Illinois Code 70 ILCS 3615/4.03 – Taxes Through the first half of 2026, the RTA rate is 1.00% in Cook County and 0.75% in the five collar counties (DuPage, Kane, Lake, McHenry, and Will). Beginning in mid-2026, those rates are scheduled to increase to 1.25% in Cook County and 1.00% in the collar counties under recently enacted legislation.
The Metro East Mass Transit District imposes a similar tax in parts of Madison and St. Clair counties for regional transportation.11Illinois Department of Revenue. Mass Transit District Taxes District boundaries follow their own geographic lines rather than city limits, so crossing a district boundary along a single road can shift the rate immediately.
What a Combined Rate Looks Like in Chicago
A general merchandise purchase in Chicago carries the 6.25% state tax, a 1.75% Cook County tax, a 1.25% Chicago municipal tax, and a 1.00% RTA tax, totaling 10.25% through mid-2026. When the scheduled RTA increase to 1.25% takes effect, that combined rate will climb to 10.50%. A purchase in a small non-home rule town outside any transit district might total 6.25% plus a modest 0.25% local addition, or just the state rate alone if the town has not imposed any local levy. For businesses operating near jurisdictional borders, a short drive can mean a meaningfully different tax obligation.
Online and Remote Sellers
Two rules determine your obligations if you sell to Illinois buyers from outside the state. As of January 1, 2026, any remote retailer or marketplace facilitator with $100,000 or more in cumulative gross receipts from sales to Illinois buyers during the lookback period must collect and remit Illinois sales tax.12Illinois Department of Revenue. Destination-Based Retailers Occupation Tax Changes Illinois previously also had a 200-transaction threshold, but that was eliminated for 2026, leaving the dollar amount as the sole trigger.
The local rate applied to a remote sale is now the rate at the Illinois address where the goods are shipped or picked up, not where the seller sits. This destination-based sourcing applies to remote retailers, marketplace facilitators, and in-state retailers making sales sourced from outside Illinois. If a seller cannot provide enough information to pin down the correct delivery location, the Department of Revenue will assess tax on those receipts at a default rate of 15%.13Illinois Department of Revenue. Destination-Based Sales Tax Assistance
Platforms that facilitate sales for third-party sellers carry the collection and remittance responsibility. A marketplace facilitator that also makes its own direct sales must register for two separate tax accounts, one for its own sales and one for all marketplace sales. Sellers whose goods move exclusively through a marketplace should not include those sales on their own Form ST-1, since the facilitator is already handling the tax. Inventory stored in Illinois solely to fulfill marketplace orders does not create physical-presence nexus for the seller.14Illinois Department of Revenue. FAQs for Marketplace Facilitators, Marketplace Sellers, and Remote Retailers
Common Exemptions
Buying for Resale
Businesses buying goods for resale can avoid paying sales tax on those purchases by giving the seller a Certificate of Resale (Form CRT-61). The certificate must include the buyer’s name, address, Illinois retailer or reseller account ID, a description of the goods, and a signed statement that the purchase is for resale.15Illinois Department of Revenue. CRT-61 Certificate of Resale Instructions Sellers verify the buyer’s account number through MyTax Illinois and keep the certificate on file for at least three and a half years. Blanket certificates covering all future resale purchases from the same buyer are allowed but must be renewed at least every three years.
Nonprofits and Government
Qualifying nonprofits operated exclusively for charitable, religious, educational, or governmental purposes can apply for a sales tax exemption number (an E-number) through the Department of Revenue.16Illinois Department of Revenue. Sales and Property Tax Exemptions There is no fee. Organizations submit Form STAX-1 with articles of incorporation, bylaws, a narrative of activities, and the most recent financial statement. Processing can take up to 90 days and is not retroactive, so any purchases made before the E-number is issued still owe tax.
Manufacturing Machinery
Manufacturers can claim an exemption on machinery and equipment used primarily in manufacturing or assembling goods for sale, including production-related tangible personal property.17Illinois Department of Revenue. How Do I Properly Document an Exempt Sale or Purchase The exemption also extends to graphic arts machinery used primarily for graphic arts production.
Registering and Filing as a Business
Any business selling tangible goods at retail in Illinois must register with the Department of Revenue before making sales. Registration is handled online through MyTax Illinois, and applications are typically processed in one to two business days.18Illinois Department of Revenue. How to Register Your Illinois Business You will need your Federal Employer Identification Number and will receive an Illinois Account ID on approval.
Your filing frequency is assigned based on your average monthly tax liability:19Illinois Department of Revenue. Form ST-1 Instructions
- Annual filing if your average monthly liability is under $50. The return is due January 20 of the following year.
- Quarterly filing if your average monthly liability is between $50 and $200. The return is due on the 20th of the month following the quarter.
- Monthly filing if your average monthly liability is over $200. The return is due on the 20th of the following month.
- Quarter-monthly (accelerated) filing if your average monthly liability is $20,000 or more. Payments are due on the 7th, 15th, 22nd, and last day of each month.2Illinois Department of Revenue. Sales and Use Taxes
Retailers who file on time and pay by the due date can keep a small vendor’s discount as compensation for collecting the tax. That discount is capped at $1,000 per month for returns due on or after January 1, 2025.20Illinois Department of Revenue. Retailers Discount for Sales Tax Missing the deadline by a day forfeits the discount for that period.
Penalties and Interest for Missed Deadlines
The Department imposes escalating consequences for missed filings and late payments. Even a zero-tax return filed late triggers a penalty.21Illinois Department of Revenue. Penalties and Interest for Illinois Taxes
- A late-filing penalty of the lesser of $250 or 2% of the tax due on the return.
- An additional late-filing penalty if you still have not filed within 30 days of receiving a nonfiling notice: the greater of $250 or 2% of the tax shown due, up to a $5,000 maximum.
- A late-payment penalty of 2% of the unpaid amount if paid 1 to 30 days late.
- A late-payment penalty of 10% of the unpaid amount if paid 31 or more days late.
- A flat $100 transaction return penalty for retailers who fail to file a required transaction return like an ST-556 by the due date.
Unpaid balances also accrue simple daily interest. Through at least June 30, 2026, the interest rate is 7%, calculated daily and reviewed twice a year to track federal underpayment rates.22Illinois Department of Revenue. Interest Rates The 10% late-payment penalty and 7% annual interest add up quickly on a forgotten quarterly return. If you realize a deadline has slipped, filing and paying immediately keeps the damage at the 2% tier rather than the 10% tier that kicks in after 30 days.