Illinois Sales Tax Changes

Are you looking for more relief during these trying times? Illinois put out several informational bulletins explaining how they are going to assist in putting more money back into consumers pockets. Illinois suspends the inflation increase on motor fuel tax, eliminates the 1% grocery tax, implicated a sales tax holiday, and eliminates the $10,000 cap on vehicle traded in.

Motor Fuel Tax

The County Motor Fuel Tax Law (55 ILCS 5/5-1035.1) allows counties to impose a tax on the sales of motor fuel used in motor vehicles operating on Illinois public highways and in recreational type watercraft on Illinois waters.

From July 1, 2022 through June 30, 2023 the county motor fuel tax rate for DuPage County will be 8.5 cents per gallon, Lake County 4.2 cents per gallon, Kane, McHenry, and Will county will be 4.4 cents per gallon.

Grocery Tax

On July 1, 2022 through June 30, 2023 locally imposed sales and use tax on groceries normally taxes at the 1% low rate will be 0%. Groceries taxed at the low rate include food for human consumption off premises from where they are sold. This does not include alcoholic beverages, foods infused with cannabis, soft drinks, candy, and food that has been prepared for immediate consumption. See 86 III. Admin. Code Section 130.310 for a full list of items taxes at the 1% rate.

Sales Tax Holiday

August 5, 2022 through August 14, 2022 there will be a sales tax holiday. A sales tax holiday is where for a 10-day period consumers can purchase certain clothing and school supply related items at a reduced rate. The states portion of sales tax due throughout the holiday is reduced by 5% from 6.25% to 1.25%. Items include qualifying clothing, footwear with a retailer selling price less than $125 per item and certain school supplies are not subject to the $125 threshold.

Some of the qualifying items for the reduced sales tax rates includes binders, book bags, calculators, crayons, colored pencils, and scissors. Some specifically excluded items include reference books, computer cases, computer cables, printers, and briefcases.  A full list of qualifying and excluded items can be found in information bulletin FY 2022-24.

Vehicle Trade-in 10,000 Cap

Lastly, Illinois has made changes to the trade-in credit allowed for first division motor vehicles effective January 1, 2022. Public Act 102-0353 amends the Retailers’ Occupation Tax Act to remove the $10,000 trade-in credit limit for sales and purchases of first class division motor vehicles. What this means is starting January 1, 2022 the credit on the return for the trade-in of first division motor vehicles will now reflect the full value or credit given for the trade-in on.

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