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The 2024 Illinois Use Tax
6.25%
2024 Illinois state use tax
The IL use tax only applies to certain purchases
The Illinois use tax is a special excise tax assessed on property purchased for use in Illinois in a jurisdiction where a lower (or no) sales tax was collected on the purchase.
The Illinois use tax should be paid for items bought tax-free over the internet, bought while traveling, or transported into Illinois from a state with a lower sales tax rate.
The Illinois use tax rate is 6.25%, the same as the regular Illinois sales tax. Including local taxes, the Illinois use tax can be as high as 3.500%.
What exactly is the Illinois use tax?
The Illinois Use Tax is a little-known tax that complements the regular Illinois sales tax to ensure that purchases made outside of Illinois are not exempt from the Illinois sales tax.
Instead of taxing the sale of tangible property which takes place outside of Illinois' jurisdiction (and thus cannot be taxed), the Illinois Use Tax taxes the use or consumption of tangible property bought in other jurisdictions with a lower sales tax rate and brought back into Illinois.
How Do I Calculate How Much Use Tax I Owe?
If you made any purchases online or outside of Illinois for which you paid less then Illinois' 6.25% in sales tax, you are responsible for paying Illinois a use tax on those purchases equal to 6.25% of the total purchase price less any sales taxes already paid to other jurisductions.
Example 1: If $100 worth of books is purchased from an online retailer and no sales tax is collected, the buyer would become liable to pay Illinois a total of $100 × 6.25% = $6.25 in use tax.
Example 2: If a $10,000 boat is purchased tax-free and then brought into a jurisdiction with a 4.25% sales tax rate, the buyer would become liable to pay Illinois a total of (6.25% - 4.25%) × $10,000 = $625.00 in use tax.
Example 3: If $1,000 worth of goods are purchased in a jurisdiction with a 7.25% sales tax rate, no use tax is owed to Illinois because the foreign jurisdiction's sales tax rate is greater then or equal to Illinois' 6.25% sales tax.
How do I pay the Illinois use tax?
In many states, an optional field for remitting use tax is included in the state income tax return. A use tax return form may also be available on the Illinois Department of Revenue website for calculating and paying use tax.
Above: Example use tax field on a state income tax return
Use tax is a self-assessed tax with a very low public awareness rate, and as a result states have a very hard time enforcing use tax compliance. Only about 1.6% of taxpayers pay use tax each year, remitting an average of $69 in use taxes on total purchases averaging $929. [1]
Government studies have shown that a large percentage of use tax payments are made as the result of an audit or under the threat of an audit. If unpaid use tax is discovered by a Illinois tax audit, significant underpayment fees and interest may apply.
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