The Illinois Income Tax is based, to a large extent, on the federal income tax code. An Illinois (in-state) retailer (e.g., brick and mortar) is a retailer who makes sales of tangible personal property in Illinois. An Illinois retailer’s inventory and headquarters are generally in Illinois. They must collect and remit state and local retailers’ occupation tax at the origin rate.
Estate and Inheritance Taxes by State, 2025
DonateAs a nonprofit, we depend on the generosity of individuals like you. Taxes are an important part of the mix, and modernizing a state’s tax structure helps position it for growth. States that rank better on the Index have better-structured tax codes, and states with better-structured tax codes get Wins Above Replacement. In the spirit of change and improvement, it’s worth looking back to see which states have truly embraced tax competitiveness since 2020, and which ones have lagged behind. Americans may be surprised to see just how much they are taxed for renting a car.
Overview of Illinois Taxes
If your guest stays for 30 consecutive days or more and has paid hotel tax, your guest has a legal tax rate in illinois right to request a refund of hotel tax paid. Therefore, if requested, you should refund the amount of tax paid to your guest. If you do not refund the amount of tax paid, you are liable to pay that amount to us. Each of these items is deductible under all IDOR-collected state and Chicago area hotel taxes.
- An Illinois (in-state) retailer (e.g., brick and mortar) is a retailer who makes sales of tangible personal property in Illinois.
- IDOR does not collect any local hotel taxes other than the Chicago area taxes listed above.
- Individuals and companies who are purchasing goods for resale, improvement, or as raw materials can use a Illinois Sales Tax Exemption Form to buy these goods tax-free.
- There are also some items that are exempt from sales tax; a list of those items, including newspapers and magazines, can be found here.
- To verify your combined sales tax rate (i.e., state and local sales taxes), go to the MyTax Illinois Tax Rate Finder at mytax.illinois.gov and select rates for July 2025.
Specific Form Changes
An out-of-state seller is an out-of-state retailer who has physical presence in Illinois. For other forms of physical presence, see 35 ILCS 105/2 (1.1) and (1.2). Out-of-state sellers must determine on a sale-by-sale basis if their selling activities take place in Illinois or not. To maximize these benefits, taxpayers should maintain detailed records of all relevant expenses and credits.
Because the statutory threshold for mandated electronic funds transfer (EFT) program participation is $20,000 annual liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must complete Form RR-3, Sales and Use Tax Quarter-monthly Payment. Illinois (in-state) retailers see the Illinois (In-State) Retailer’s Sales Tax Responsibilities Flowchart to determine your tax rate liabilities.
Have Questions About Your Taxes?
- You may, however, pass hotel taxes to which you are subject on to your guests as separately stated items on your guests’ bills.
- To lookup the sales tax due on any purchase, use our Illinois sales tax calculator.
- In Illinois, there are two separate but complementary taxes upon the sale and use of tangible personal property.
- If you do not refund the amount of tax paid, you are liable to pay that amount to us.
- However, if you actually provide movies to your guests, these receipts are subject to hotel tax.
- Learn about rates, calculations, credits, and filing requirements to ensure compliance.
There income statement are four major divisions of the Illinois sales tax – Retailers’ Occupation Tax, Use Tax, Service Occupation Tax and the Service Use Tax. Illinois follows the federal characterization of LLCs, and the preceding discussions apply to LLCs falling into those classifications. You must maintain support in your books and records for specific deductions claimed. Deductions claimed on Form RHM-1 that are not properly itemized and supported in your books and records may be disallowed when reviewed by IDOR. You must keep books and records of your business as a hotel operator to show taxable rentals separately from non-taxable rentals under the Hotel Operators’ Occupation Tax Act. Failure to keep separate books and records will result in the operator being liable for all tax due from the proceeds of a particular hotel.
Illinois provides the WebPay portal for all taxpayers to electronically file their IL-1040 forms. If you eFile your taxes, you can expect to receive your income tax refund sooner and will be able to get instant verification of your tax return submission. Illinois collects a state income tax at a maximum marginal tax rate of %, spread across tax brackets. Unlike the Federal Income Tax, Illinois’ state income tax does not provide couples filing jointly with expanded income tax brackets.
Property Tax
Interest on unpaid taxes accrues from the original due date, with a current rate of 3% per annum. Severe cases of intentional tax evasion may lead to criminal charges under Illinois law. Use the Tax Rate Database to determine the corporation income and replacement tax rates. Units of local government may impose taxes or fees, which the department does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees not listed below.
Business vs. Individual Tax Brackets
Using a street address helps to ensure more accurate rates and calculations when compared to relying on broader geographic indicators. If you do not properly identify a deduction you claim on Form RHM-1, you will be automatically assessed for the tax due, plus penalty Travel Agency Accounting and interest. If the deduction is allowable, you must file Form RHM-1-X, Amended Hotel Operators’ Occupation Tax Return, identifying the allowable deduction you are claiming. If, after reviewing your return, the deduction is allowed, the assessment will be withdrawn in full.