Illinois – IL Sales Tax Calculator: User Guide

Illinois State is a land of wonderful opportunities, natural wonders, attractions, and more, located in Midwestern and Great Lakes region of the United States. The state has the sixth-largest population, fifth-largest gross domestic product (GDP), and the 25th largest land area of all U.S. states, offering unmatchable opportunities for business persons, entrepreneurs, and job seekers.

So, if you are planning to start, relocate, or expand your business in Illinois, you should know how to deal with sales tax. To assist you with Sales Tax, our experts have created a fantastic Sales Tax Calculator backed with a comprehensive guide to educate you with all the essentials related to Illinois Sales Tax. So let's get started!

Illinois Sales Tax Facts:

• The statewide sales tax charged in Illinois is 6.3%. On the top of State sales tax, many counties also levy local sales tax ranging between 0% and 2.25%. Moreover, 198 out of 1314 cities also collect city sales tax ranging from 0% to 2.75%.
• In some special cases, special sales tax may also be charged, with rates ranging between 0% and 1.1%.
• You may also be charged with local-level tax (varying from city to city) like water commission, home rule, public facilities or transportation, non-home rule, business district, mass transit, park district, county public safety, and county school facility tax.
• 25% is the lowest possible combined sales tax in the state, charged in cities including Clare, Illinois.
• 11% is the highest possible combined sales tax in the state, charged in cities including Clare, Illinois.
• Illinois State has a lower state sales tax rate than 80% of the US States.
• The average combined sales tax rate charged in Illinois is 7.729%.
• In Illinois, sales tax is divided into four significant divisions: Retailers' Occupation Tax, Use Tax, the Service Use Tax, and Service Occupation Tax.
• The Retailers' Occupation Tax and Use Tax collectively make up leading sales tax in Illinois, where Retailers' Occupation Tax is charged on businesses and Use Tax is charged on the consumers.
• The Service Occupation Tax and the Service Use Tax is applied on any tangible property exchanged or used in a service transaction.
• Groceries, Prescription Drugs, and Non-prescription drugs are no exempted yet subjected only to a special sales tax rate of 1%. However, Newspapers, magazines, and any legal tender (such as gold) are wholly exempted from sales tax.
• Vehicles in Illinois are charged with sales tax rates ranging from 6.25% to 8.50%, depending on the location of purchase.
• Prepared Food is subject to a higher state sales tax of 8.25% than other items in Illinois.
• In Illinois, goods purchased for resale, improvement, or as raw materials by Individuals and companies are exempted from sales tax.
• You are supposed to pay Illinois Use tax on the 6.25% sales tax on online and out-of-state purchases that are not subjected to Illinois Sales Tax.

How to calculate Sales Tax in Illinois?

Businesses and Sellers who have Nexus are required to register for Sales tax to Illinois (state and local) on the sale of tangible personal property and some services. They are required to register, collect, manage, and transfers it to the Illinois Revenue Department while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Location and Products or Services: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city in Illinois.
3. Exemptions: Almost all goods are eligible for sales tax regulation. However, products like Newspapers, magazines, and any legal tender (such as gold) and few more are exempted under Illinois Law. So you should check with Illinois state government as to which goods and services sold in Illinois are subject to sales tax.

To calculate Sales Tax in Illinois, follow the steps below:

Step 1 – Determine your Nexus:

As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Illinois State. And to determine your Nexus in Illinois, you must have any of the following:

• A physical location like office, warehouse, or retail store.
• An employee, salesperson, contractor, agent, or representative working in this state.
• A third-party affiliate in Illinois.

Step 2 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Illinois, next is to deduce the Sales Tax rate (State + Local Sales Tax) applicable on your product, for which you can refer the tables below:

Illinois Sales Tax Rates by Location:

The state-wide Sales Tax rate in Illinois is 6.30%. Besides, many cities and counties levy additional local sales tax on tangible personal property and certain services.

Following are the Sales Tax rate on State, County, and city-level in Illinois:

Illinois Sales Tax Exemptions:

• Vehicles are charged at different sales tax rates ranging between 6.25% to over 8.50%, depending on the location of purchasing a vehicle.
• Groceries, Prescription Drugs, and Non-Prescription Drugs are charged with a special sales tax rate of 1%.
• Prepared Food is charged with a comparatively higher sales tax rate of 8.25%.
• Newspapers, magazines, and any legal tender (such as gold) are entirely exempted from sales tax in Illinois.

Step 4 – Calculate Sales Tax:

After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.

Example # 1:

For instance, you are selling an Air Conditioner at your store in Berwyn, Illinois, having a net price tag of $470. The amount that a buyer has to pay (including sales tax) on a check out would be:

Manual Method:

Net Price (amount before Tax) of an Air Conditioner: $470

Total Sales Tax rate: 1.750% (Berwyn) + 2.750% (Cook County) + 6.250% (Illinois State) = 10.750%

Total Sales Tax amount = $470 x 10.750% = $50.5

Gross Price (Amount after Tax) = 470 + 50.5 = $520.5

It means the buyer has to pay for an Air Conditioner on a cash counter, which would be $520.5.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $470 Net Price of an Air Conditioner as Amount Before Tax
2. Input or select 750% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much sales tax buyer has actually paid on a product or you may want to check the accuracy of the sales tax indicated on your item's receipt.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Illinois Sales Tax Calculator can perform this calculation like a Pro.

Example:

Your buyer has paid $170 for an Air Heater at your store in Normal, Illinois. Now the buyer is inquiring how much the Air Heater actually cost before the sales tax was added. So you need to follow the steps below to determine the amount before tax (net price) of an Air Heater:

Gross Price (Amount after Tax) of Clothes Dryer Machine: $170

Total Sales Tax rate: 2.50% (Normal) + 0.00% (McLean County) + 6.250% (Illinois State) = 8.750%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

170 = [Net Price x ((8.75/100) + 1)]

170 = Net Price x 1.09

$156 = Net Price

So the original Price (net price) of the Air Heater was $156.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

1. Input the $170 Gross Price of Air Heater as Amount after Tax
2. Input or select 750% of combined Sales Tax Rate on the Tax Rate menu.

Our calculator will automatically calculate the result and represents it in 3 different forms.

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