Written By: Mark Gallegos, CPA, MST, Partner & Rachel VonDrasek, CPA, MST
On June 16, 2025, Governor Pritzker signed House Bill 2755, the Fiscal Year 2026 Revenue Omnibus Act, into law. In addition to income-tax updates, HB 2755 enacts several important changes to Illinois’ indirect and sales-tax regime. Most become effective mid-2025 through early 2026. Below is an overview of the headline sales-tax provisions and what they mean for your business.
Sports Wagering Tax
- What Changed: As of July 1, 2025, interactive sports-betting licensees owe a flat $0.25 tax per wager on the first 20 million wagers each year, rising to $0.50 on every wager thereafter.
- Takeaway: Operators must upgrade reporting systems to track wager counts by license and prepare for a step-up in per-bet tax liability once the 20 million threshold is reached.
Telecom & Hotel Taxes
(A more detailed deep-dive on this topic to follow in its own article.)
- Telecom Excise Tax: Increased by 1.65 percent, with revenues dedicated to funding the 9-8-8 mental health crisis hotline.
- Hotel Operators’ Occupation Tax: Expanded, effective July 1, 2025, to cover short-term rentals (e.g., Airbnb, VRBO).
- Takeaway: Telecom providers and hotel/short-term-rental hosts should confirm registration status, update point-of-sale configurations, and adjust remittance workflows for the higher rate and broader tax base.
Remote-Retailer Nexus Threshold Simplified
- What Changed: Effective January 1, 2026, Illinois eliminates the previous 200-transaction threshold for out-of-state sellers. The $100,000 gross-receipts threshold remains, assessed on a rolling quarterly basis.
- Takeaway: Smaller online sellers no longer need to count individual transactions against a hard cap, only total receipts. Marketplace facilitators must aggregate and report both direct and facilitated sales each quarter to determine which sellers meet the $100,000 mark.
Sales-Tax Sourcing & Documentation Penalty
- What Changed: As of June 16, 2025, a new 15 percent “gross-receipts tax” applies in place of traditional penalties whenever a seller or marketplace facilitator fails to produce the required documentation to substantiate sourcing (e.g., proof of delivery location, transfer of possession within Illinois).
- Takeaway: Businesses need to tighten up their sourcing records such as signed delivery receipts or system-generated geolocation data to avoid this steep new charge in lieu of a penalty.
Local Grocery-Tax Transition
- What Changed: The statewide 1 percent grocery tax is repealed January 1, 2026. Municipalities and counties, however, may enact up to a 1 percent local grocery tax, provided their governing bodies pass ordinances by October 1, 2025.
- Who’s Affected: Grocery-store operators, online grocery-fulfillment services, and consumers.
- Takeaway: Retailers should prepare systems to track and remit potentially varying local grocery taxes. Consumers may notice no change at the shelf if local rates mirror the former state rate, but remittance will shift jurisdiction by jurisdiction.
Other Notable Provisions
HB 2755 also includes a suite of more targeted technical and industry-specific changes, such as:
- The American Hostage Tax Liability Postponement Act
- New rolling-stock sourcing rules for limousine services
- Adjustments to marketplace-facilitator and serviceman sales-tax treatment
- An LLC-filing-fee exemption for certain small businesses
- Updates to motor-fuel and motor-vehicle excise taxes
- Revisions to assessor procedures and levy calculations for property tax
- Increases in tobacco and cigarette-tax rates
Closing
As these sales-tax reforms roll out, now is the time to assess your systems, sharpen your documentation processes and recalibrate your compliance checklists. Whether you’re a retailer adapting to new sourcing-documentation rules, a marketplace facilitator tracking quarterly thresholds, or a municipality weighing local grocery-tax adoption, early preparation will minimize risk and streamline your operations.
Our Porte Brown sales-tax specialists are ready to partner with you, bringing expertise in nexus analysis, rate-setting and remittance workflows to turn these regulatory changes into an operational advantage. Please reach out today to discuss how we can support your team through this transition.
