Important changes to Illinois sales tax rates are coming your way. Effective January 1, 2025, several taxing jurisdictions in Illinois will impose new local sales taxes or update their existing rates on general merchandise sales.

What’s Changing?

The following local sales taxes will be affected:

• Business District Sales Tax
• Home Rule Municipal Sales Tax
• Non-Home Rule Municipal Sales Tax

These updates will be collectively referred to as “locally imposed sales taxes.”

What’s Being Taxed?

This locally imposed sales tax will 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 qualifying food, drugs, and medical appliances that are reported on Line 5a of Forms ST-1 and ST-2; pr
• 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 January 1, 2025?

1. Update Your Systems

Make sure any cash registers and computer programs are updated to reflect the new tax rates beginning January 1, 2025. 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).

• Understand Your Reporting Obligations

If a prior sale was subject to a sales tax rate different from the current sales tax rate, this should be reported on Line 8a of Forms ST-1 and ST-2.

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 tax remittance threshold should pay extra attention. If property is shipped or delivered to an address within a business district, the tax likely applies.

For more information, refer to the MyTax Illinois Tax Rate Finder, which provides a detailed list of business district addresses and corresponding rates.

Don’t Get Caught Off Guard in the New Year

Avoid headaches in the new year 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 January 1, 2025, rollout.