Stay Prepared: Changes to Illinois Sales Tax Rates – July 1, 2026

Karen Snodgrass

CPA | CK Principal

Illinois businesses, take note. Effective July 1, 2026, dozens of taxing jurisdictions across the state will impose new local sales taxes or update their existing rates on general merchandise sales. Whether you operate a storefront, sell remotely, or facilitate marketplace transactions, now is the time to review your obligations and update your systems.

What’s Changing?

The following local sales taxes will be affected by the July 1, 2026, changes:

• Business District Sales Tax
• County Public Safety Tax
• Home Rule Municipal Sales Tax
• Metro-East Mass Transit District (MED) Sales Tax – new addition for 2026
• Non-Home Rule Municipal Sales Tax

Also note: The Illinois Department of Revenue (IDOR) will issue a separate bulletin covering changes to the Municipal and County Grocery Occupation Tax, effective July 1, 2026. Food items previously grouped under the general exemption language are addressed separately in this cycle.

What’s Being Taxed?

Locally imposed sales taxes apply to the same items of general merchandise reported on Line 4a of Forms ST-1 and ST-2 that are subject to State sales tax.

Locally imposed sales taxes do not apply to:

• Sales of drugs and medical appliances reported on Line 5a of Forms ST-1 and ST-2; or
• Items requiring a title or registration by an agency of the Illinois State government and reported on dealer-filed transaction returns.

What Steps Should I Take Before July 1, 2026?

• Update Your Systems

Make sure any cash registers and computer programs are updated to reflect the new tax rates beginning July 1, 2026. If a software vendor manages these processes, contact them immediately to begin implementing the changes.

• Verify New Rates

Use the MyTax Illinois Tax Rate Finder here to verify your new combined sales tax rate (State and local sales taxes). Be sure to select rates for July 2026.

• Understand Your Reporting Obligations

If a prior sale was subject to a sales tax rate different from the current rate, report this on Line 8a of Forms ST-1 and ST-2. Note: Line 8a is used only for sales subject to a different tax rate; no other use is permitted.

What About Business District Sales Taxes?

Your business address determines whether business district sales tax applies to your sales. Remote retailers and marketplace facilitators who meet the $100,000 tax remittance threshold should pay extra attention to those taxes. Refer to the MyTax Illinois Tax Rate Finder for a full list of business district addresses and applicable rates.

Don’t Get Caught Off Guard

Avoid headaches and prepare now for this sales tax rate update. If you have questions or need assistance navigating these changes, Cray Kaiser is here to help. Contact your trusted advisors at (630) 953-4900 to ensure you’re ready for the July 1, 2026, rollout.