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IllinoisHB2755104th General Assembly (2025–2026)HouseWALLET
REVENUE-VARIOUS
Sponsored By: Curtis J. Tarver, II (Democratic)
Became Law
state government administrationassignmentsexecutive
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Bill Overview
Analyzed Economic Effects
167 provisions identified: 71 benefits, 53 costs, 43 mixed.
25% credit for endowment gifts
For tax years ending on or after December 31, 2025 and before January 1, 2030, you can get a 25% Illinois income‑tax credit for approved endowment gifts to qualified community foundations. Credits are capped at $100,000 per person ($200,000 for joint filers) each year. Each foundation has a $3,000,000 annual cap, and total credits are capped at $5,000,000 per year. A quarter of yearly credits is reserved for gifts of $25,000 or less. The Department must issue an authorization certificate for the credit to be awarded.
Less tax on groceries and meals
Starting January 1, 2026, food sold to eat off the premises is exempt from the tax. Alcohol, cannabis‑infused food, soft drinks, candy, and food prepared for immediate consumption still get taxed. Also starting January 1, 2026, prepared meals from licensed hospitals, nursing homes, assisted living, certain disability and mental‑health facilities, licensed child care locations, and Life Care Facilities are tax‑exempt. Beginning July 1, 2024, home‑delivered meals for Medicare or Medicaid recipients are tax‑exempt when a contracted intermediary (like an MCO or Medicare Advantage plan) pays the bill.
No sales tax at unclaimed‑property sales
If you buy tangible items sold by or for the State Treasurer under the Unclaimed Property Act, you do not pay Illinois sales tax on those purchases. The exemption applies only to those Treasurer sales.
No sales tax on breast pumps
Beginning July 1, 2022, you do not pay sales tax on breast pumps, breast pump collection and storage supplies, and qualifying breast pump kits. The law lists which items qualify.
No sales tax on menstrual products
From January 1, 2017 through December 31, 2026, you do not pay Illinois sales tax on menstrual pads, tampons, and menstrual cups. This lowers out‑of‑pocket costs for these products while the exemption is in effect.
No sales tax on off‑premises food
Starting January 1, 2026, food you buy to eat off the seller’s premises is exempt from Illinois sales tax. The exemption does not cover alcohol, cannabis‑infused foods, soft drinks, candy, or food prepared for immediate consumption. Most take‑home groceries qualify.
Sales‑tax break for active‑duty military
Beginning January 1, 2024, an active‑duty service member who shows valid military ID and pays with a method where the federal government is the payor does not pay Illinois sales tax on tangible purchases. The buyer must complete a state form at checkout, and the store keeps it for six years.
Short Illinois stays for aircraft are tax‑free
No Illinois tax applies if an aircraft is bought and leaves Illinois within 15 days and is not based or registered in Illinois, with a signed buyer certificate. The exemption also covers prepurchase evaluations and post‑sale customization when the aircraft departs within 15 days and is not based or registered in Illinois, with the required certificate. If the aircraft is later used in a taxable way in Illinois, the buyer must file and pay tax on fair market value within 30 days.
Tax amnesty window Oct–Nov 2025
From October 1 to November 15, 2025, you can pay past‑due state taxes and get penalties and interest removed for eligible periods. You must pay all tax due and meet all amnesty rules. Amnesty is not available if you are in a criminal investigation or in pending court cases for nonpayment, delinquency, or fraud.
Apprenticeship training tax credit
For tax years starting January 1, 2020 through December 31, 2025, you can claim a credit equal to 100% of qualified education costs, up to $3,500 per apprentice each year. You can add $1,500 more per apprentice if the apprentice or your main office is in an underserved area. The program is capped at $5 million in credits each year and requires Department certification. Credits are nontransferable.
Farm gear and chemicals tax‑free
Starting January 1, 2025, farm chemicals and most farm machinery and equipment used mainly for production agriculture are exempt from this sales tax. Electrical power generation equipment used mainly for farming qualifies beginning January 1, 2024. You must certify the item is used primarily for farming.
Pass‑through EDG credits cut taxes
A pass‑through business, or its owners, can treat some or all of an EDG credit as an Illinois income tax payment. You cannot treat more than the Illinois income tax you owe for that year.
State tax break for cannabis
For tax years beginning on or after January 1, 2023, licensed cannabis businesses in Illinois can subtract from Illinois taxable income the deductions disallowed under federal IRC Section 280E, as long as those amounts are not otherwise added back. This lowers Illinois income tax for licensed cannabis operators.
Targeted sales and fuel tax breaks
Items you buy to rent under rental‑purchase agreements are tax‑exempt if you give the seller a certificate and proof you are registered. Lease receipts from qualifying computer software licenses and from property already under a pre‑2023 local lease‑receipts tax are treated as exempt. If you own and operate tugs or spotters on both private and airport property, you can claim a refund or credit of tax paid on undyed diesel used, up to $100,000 per calendar year, and you may file no more than once per quarter.
Tax credit for in-store cigarette rolling
If you run a cigarette rolling machine at your shop, you can claim a credit for tobacco taxed under the Tobacco Products Tax Act that customers use in that machine. The tobacco must meet the law’s product rules. This reduces your tax due under Section 1‑10.
Tax credit for sustainable jet fuel
From July 1, 2023 through December 31, 2032, you may accept a purchaser’s Sustainable Aviation Fuel (SAF) credit certification to pay Service Use, Use, or occupation tax on a qualifying aviation‑fuel sale. The credit you apply cannot exceed 6.25% of the taxable receipts for that sale and cannot pay penalties or interest. Keep the producer’s certification that the fuel meets the SAF standard and records showing gallons sold.
Dedicated deposits for civic and transit projects
Once a public‑private agreement is signed and the civic build is complete, the state makes set yearly deposits to the Civic and Transit Infrastructure Fund. Listed amounts run from $200 million in FY2024 up to $445.1 million in FY2043. Money comes from state sales and use tax receipts.
More road and downstate transit funding
Each month the state sends a growing share of motor‑fuel and gasohol taxes to the Road Fund: 16% (FY22), 32% (FY23), 48% (FY24), 64% (FY25), and 80% starting July 1, 2025. The state also makes monthly payments to the Downstate Public Transportation Fund as required by law. These transfers support roads and transit service.
Ongoing funding for McCormick Place expansion
Each month the state deposits one‑eighth of the Chairman’s requested annual amount into the McCormick Place Expansion Project Fund until the yearly total is met. The law lists yearly totals through 2036, up to $450 million. Deposits continue while bonds are outstanding and stop after fiscal year 2060.
Big transfers for roads, transit, McCormick Place
The State directs large, scheduled transfers to major projects. Road Fund deposits from motor‑fuel taxes phase up to 80% beginning July 1, 2025. The Civic and Transit Infrastructure Fund receives set yearly amounts, from $200 million in FY2024 up to $361.9 million by FY2036, and then the same amount while bonds are outstanding, but not after December 31, 2060. McCormick Place gets monthly deposits under a yearly schedule, ending no later than FY2060. The Build Illinois Fund receives percentage‑based payments with backstop rules. Also, purchases for building or furnishing a municipal convention hall are tax‑free when a qualifying public‑facilities corporation buys them and title goes to the city at completion or when bonds are paid.
Business income subtractions and elections
If you claim the Section 218(a) credit, you can subtract that dollar amount from Illinois taxable income. For tax years ending on or after December 31, 2017, you can subtract the federal Section 199 deduction amount from Illinois income. If you received an Illinois Gives credit and also took a federal deduction for that endowment gift, you can subtract the federal amount from Illinois income. For property with federal bonus depreciation, you compute a subtraction based on the non‑bonus depreciation using year‑specific formulas, limited so total deductions for a property do not exceed the federal bonus depreciation. For tax years ending on or after December 31, 2011, if you added back certain insurance premiums and later got a reimbursement, you can elect to subtract the reimbursed amount equal to the deductible loss you would have had if uninsured; then the insurer must include that amount as its income.
Cannabis 280E tax break for estates
For tax years starting January 1, 2023, Illinois lets trusts and estates tied to licensed cannabis businesses subtract deductions that federal law disallowed under IRC §280E. This subtraction applies only to amounts not otherwise added back. It lowers Illinois taxable income for those trusts and estates.
Credit for innovative manufacturing projects
For tax years starting January 1, 2026, a taxpayer with an approved agreement under the Advancing Innovative Manufacturing for Illinois Tax Credit Act gets the credit listed in the agreement. The credit is available in the year the project is placed in service. Unused credit can be carried forward up to 10 years. Credits are subject to recapture for noncompliance.
Data centers buy equipment tax-free
A data center with a certificate from the Department of Commerce and Economic Opportunity can buy qualifying equipment and building materials tax‑free. The exemption began July 1, 2022. Retailers must keep a copy of the buyer’s certificate to document the exemption.
High Impact Business tax breaks and jobs credit
High Impact Businesses can get tax credits and utility exemptions once required investments are in service and required jobs are created or kept. For facility‑based designations, benefits start when the facility is operating. Certified construction projects get a credit equal to 50% of incremental income tax withheld from construction workers, or 75% in underserved areas. Total Blue Collar Jobs Act credits are capped at $20 million per state fiscal year. Businesses in federal foreign trade zones can also qualify for extra credits and exemptions.
Manufacturing investment credit starts 2026
For tax years starting on or after January 1, 2026, you can get an income tax credit based on capital improvement investments. The credit is 3% for $10,000,000 to under $50,000,000, 5% for $50,000,000 to under $100,000,000, and 7% for $100,000,000 or more. The credit cannot exceed 7% of total investments. The Department may award credits on or after January 1, 2027. Unused credits carry forward up to 10 years and cannot reduce tax below zero.
Sellers can deduct customer returns
If you refund a customer for returned goods, you can deduct that refund on your next return. You must have reported and paid tax on the original sale. This lowers your taxable receipts and reduces the tax you owe.
State tax relief for cannabis companies
For tax years starting January 1, 2023, licensed cannabis corporations can subtract from Illinois income the deductions that federal tax law (Section 280E) disallows, to the extent not otherwise added back. This lowers Illinois taxable income for eligible cannabis businesses.
Tax and utility breaks for tech campuses
Certified tenants in a designated quantum computing campus get exemptions from state or local use tax on building materials. They can also get exemptions from certain gas, electricity, telecom, and municipal telecom charges, and a state income tax credit. Tenants must have a Department certificate; the Department of Revenue administers the exemptions.
Fixed vehicle use tax by price and age
For vehicles acquired on or after January 1, 2022, the use tax is a fixed dollar amount. Family transfers and similar cases pay $15. Motorcycles pay $25. Most cars pay by sale price and age, with listed amounts (for example, $465 for newer low‑price cars and up to $10,100 in some tiers).
More lawsuit awards taxed by Illinois
If a fertility‑fraud settlement is included in your federal income, Illinois counts it too. Awards from the Court of Claims for time unjustly served are included in Illinois income. For tax years starting January 1, 2025, eligible residents who had nonprofit medical debt relief must add the federal taxable amount to Illinois income.
More student loan amounts taxed
For tax years starting on or after January 1, 2021 and before January 1, 2026, Illinois taxes any student loan discharge that is in your federal AGI and not excluded by federal law. For tax years beginning January 1, 2026, if you are a qualified worker who got student loan repayment help from a qualified community foundation, you must add that amount to your Illinois taxable income.
Nonresident pro athletes taxed on Illinois days
Illinois taxes a nonresident pro athlete on the share of pay tied to duty days in Illinois. Illinois pay equals total pay times duty days in Illinois divided by total duty days. Travel days without games, practices, or meetings may not count as duty days.
Cap on diesel refunds for tugs
If you own and operate tug or spotter equipment on both private and airport property, you can claim undyed diesel refunds. Your total refunds are capped at $100,000 per calendar year. You may file only one claim per quarter.
Cap on sales tax vendor discounts
Starting with returns due January 1, 2025, your monthly vendors’ discount is capped. You can claim at most $1,000 across non‑transaction returns and $1,000 across transaction returns each month, counted across state and listed local taxes. Aviation fuel’s 1.25% portion is excluded, and discounts apply only if you file correctly; the Department can disallow them after a final registration revocation. Beginning January 1, 2026, if a certified service provider files for you, the provider gets a 1.75% discount (capped at $1,000 per month) and you cannot take the vendors’ discount on that return.
Add‑backs raise Illinois business taxes
Illinois requires several add‑backs when you compute base income. You must add back federal bonus depreciation. You must add back certain interest, intangible costs, and insurance premiums paid to foreign or excluded related parties, with limited exceptions and evidentiary rules. Licensed cannabis businesses must add back deductions disallowed by federal law (IRC 280E). Some income from intangible deals with related foreign or excluded parties must also be added, up to a cap.
Online and marketplace sellers must collect Illinois tax
Starting January 1, 2025, a retailer with a place of business in Illinois must collect Illinois state and local retail taxes on sales to Illinois customers, even if shipped from outside Illinois. Starting January 1, 2026, remote retailers must collect and remit if sales to Illinois buyers are $100,000 or more in the past 12 months. They check this threshold each quarter and must file for at least one year once they cross it. Marketplace facilitators meet the same $100,000 rule and, when treated as the retailer, must report marketplace sales separately. Facilitators can take price adjustments and the retailers’ discount, and are generally the ones audited for those marketplace sales.
How Illinois taxes nonresident pro athletes
Illinois‑source income equals total team pay times Illinois duty days divided by total duty days. Travel days without games, practices, or meetings are not Illinois duty days but count in total duty days. This formula can raise or lower what a nonresident pro athlete owes to Illinois.
Tax changes for 529 and ABLE savings
Illinois changes how money from 529 and ABLE accounts affects state taxes. Rules differ by tax year and whether a plan is in or out of state. Some nonqualified withdrawals increase Illinois income. From 2018 through 2027 tax years, you can subtract up to $10,000 of ABLE contributions each year. Employer matches count as if you made them.
2026 amnesty and certified tax providers
The Department runs a Remote Retailer Amnesty from August 1 to October 31, 2026. Eligible remote sellers can report Illinois sales from January 1, 2021 through June 30, 2026 and pay a simplified rate (9% on items normally at 6.25% and 1.75% on items normally at 1%), or the tax they actually collected if higher. Interest and penalties are waived for eligible transactions if they register and e‑file; fraud cases and those already paid are excluded. The Department also certifies tax service providers and systems. Certified providers must meet standards, accept liability rules, and file separate returns for each remote seller client.
EDG credit: use on payroll; new limits
If you receive an EDG credit and meet the law’s criteria, you can elect to use the credit against Illinois withholding. The election is irrevocable and applies to withholding due in the first quarter after the credit is awarded. The law limits how many years you can claim the incremental credit (generally 10 or 15 years, depending on the project type). It also updates EDG thresholds, including a $2,500,000 investment floor for firms with over 100 employees and new high‑investment tiers tied to jobs.
Film credit caps and nonresident limits
For productions starting on or after July 1, 2022, only the first $500,000 of wages per employee count toward the credit. Nonresident wages count only for listed key jobs, and only 2 nonresident actors qualify if Illinois spend is $25,000,000 or less (4 if more). Above‑the‑line spending over 40% of Illinois spend generally does not count, and related‑party amounts face tighter limits. These rules expand some eligibility but cap high wages and restrict related‑party and above‑the‑line spending.
How state tax dollars are split
The state redirects tax money among major funds. Road Fund transfers rise by date: 16% (July 1, 2021), 32% (July 1, 2022), 48% (July 1, 2023), 64% (July 1, 2024), and 80% (July 1, 2025). Starting July 1, 2025, 43% of the extra liquor tax goes to the Capital Projects Fund and 57% to the General Revenue Fund. Also from July 1, 2025, the first $5 million each year from the tobacco products tax goes to the Tobacco Settlement Recovery Fund; the rest splits 50/50 to the Long‑Term Care Provider and Healthcare Provider Relief Funds. A $40 million per‑year vehicle use tax transfer supports the Build Illinois Fund. The law also sets 75%/25% splits of certain remainder moneys between General Revenue and the Common School Fund, and it directs amnesty collections half to schools and half to General Revenue, with 2% for tax administration. The Income Tax Refund Fund stays for refunds, with one‑time rebate payments allowed only in fiscal years 2022 and 2023.
Project credits: recapture, no stacking, sunset
If you cease operations at the project site with intent to leave Illinois during the agreement, the State recaptures the full credit and bars you from some programs for 36 months. You cannot hold overlapping agreements for the same address or pair a REV Illinois agreement with an active EDG agreement at that address. A project that loses REV status may still receive credits under EDG if it meets EDG rules. No new credit agreements under the Advancing Innovative Manufacturing program may start after December 31, 2030.
Higher pay floor in incentive jobs
Jobs created under these agreements must pay more than local averages. For agreements before April 19, 2022, pay must be at least 120% of the county average wage. For agreements on or after April 19, 2022, pay must be at least 120% of the average wage for a similar job in the county, as set by the Department. This raises the minimum total compensation for these positions.
Groceries mostly tax-free starting 2026
Beginning January 1, 2026, food for people to eat off‑premises is tax‑exempt. Alcohol, adult‑use cannabis, soft drinks, candy, and certain prepared‑for‑immediate‑consumption foods are still taxed. Food prepared and served by licensed hospitals, nursing homes, child care, and similar care facilities is exempt. The law also creates a trust fund to hold any county or municipal grocery tax collections and refunds, and to pay municipalities.
Franchise tax amnesty in late 2025
From October 1 to November 15, 2025, you can pay past‑due franchise taxes and license fees for periods ending after June 30, 2019 and on or before June 30, 2025 without penalties and interest. If you pay in full and meet the terms, the State will not pursue civil or criminal cases for those covered periods. Businesses already in related investigations or litigation cannot use this amnesty.
Subtract some insurance reimbursements
For tax years ending on or after December 31, 2011, if you had to add back insurance premiums, you may elect to subtract certain reimbursements from Illinois income. You can subtract the part of the reimbursement that matches the expense or loss that would have been deductible if you were uninsured. If you elect this, the insurer must add that amount to its own income.
Aviation fuel taxes fund airports and refunds
For aviation fuel sold on or after December 1, 2019, the state pays 20% of net 6.25% tax revenue into the State Aviation Program Fund each month. It also deposits estimated refund amounts into a separate aviation fuel refund fund. These payments continue while federal revenue‑use rules remain binding.
Local governments can build clean energy systems
Illinois local governments can build, own, and operate clean energy and climate‑resilience projects. They can buy land, manage the systems, and charge users for service. This expands local options to improve energy and resilience infrastructure.
Monthly crime lab and tank cleanup funding
The state deposits $500,000 each month into the State Crime Laboratory Fund. It also pays each month into the Underground Storage Tank Fund the certified average monthly deficit, capped at $18 million per fiscal year. These payments support public safety and environmental cleanup.
7.3% to the Education Assistance Fund
On and after July 1, 1991, Illinois deposits 7.3% of specified post‑refund income‑tax collections into the Education Assistance Fund. The percentage applies after deposits to the Income Tax Refund Fund. This provides ongoing support for education.
Annual checks on local tax boundaries
Each year, the state sends local taxing areas their boundaries by February 1. Jurisdictions must report changes by April 1 for July 1 enforcement, or by October 1 for January 1 enforcement. This helps keep local sales taxes applied to the right places.
How Illinois funds income‑tax refunds
Each fiscal year, set percentages of income‑tax collections are deposited into the Income Tax Refund Fund for individuals and for corporations/pass‑throughs. The law makes an irrevocable and continuing appropriation so refunds and certain one‑time rebates can be paid. After year‑end, any surplus in the Refund Fund moves to the General Revenue Fund, with specified exclusions. Three one‑time transfers of $35 million from the Tobacco Settlement Recovery Fund boosted refund money in January 2001, 2002, and 2003. The State also balances year‑end differences between the Refund Fund and the Personal Property Tax Replacement Fund.
Local governments’ share of state taxes
Illinois sends monthly shares of state tax collections to local governments. Cities with 1,000,000+ people receive 20% of the State and Local Sales Tax Reform Fund (after a compliance transfer), subject to appropriation. The State transfers set percentages of income‑tax net revenue each month to the Local Government Distributive Fund, with the current schedule at 6.47% for individuals and pass‑throughs and 6.85% for corporations beginning August 1, 2023. Also, 16% of certain 6.25% tax on titled or registered out‑of‑state purchases goes to the Local Government Tax Fund.
Sales‑tax splits to special purpose funds
Each month, Illinois divides sales‑tax receipts among several funds. Parts of net revenue go to the State and Local Sales Tax Reform Fund and the County and Mass Transit District Fund. For aviation fuel sold on or after December 1, 2019, 20% of net revenue from the 6.25% rate goes to the State Aviation Program Fund (with refund handling) while federal rules apply. All monthly net revenue from the 1.25% rate on sales‑tax‑holiday items goes to the State and Local Sales Tax Reform Fund. An estimated 80% of the net revenue increase from candy, grooming/hygiene products, and soft drinks (taxed at 6.25% since 2009) goes to the Capital Projects Fund. For qualifying sorbents, 80% goes to the Clean Air Act Permit Fund, capped at $2 million per fiscal year across related laws.
Shorter lookback for math-error tax notices
The Department cannot send math‑error notices covering sales more than three years before the next January 1 or July 1. These notices are not formal tax liabilities and do not trigger protest rights. Other notices generally follow a three‑year limit too, with exceptions for fraud, amended returns, or agreed extensions.
Backstop transfers for Build Illinois bonds
If monthly transfers into the Build Illinois Fund fall short, the Department immediately pays the difference from other tax receipts, up to yearly limits. Payments stop when the Governor’s budget office certifies that bond trust accounts hold enough money.
State Climate Bank and clean energy loans
The Illinois Finance Authority acts as the State Climate Bank. It can use state and federal money, gifts, and private capital to finance clean energy and water projects, including in environmental justice and other eligible communities. Governments can also issue bonds for clean‑energy and resilience projects. Direct loans are capped at $600,000 and may cover up to 50% of a project portion; at least 8 board members must approve each loan.
Lower property taxes for affordable apartments
Apartment buildings with 7+ units get a lower assessed value if they keep units affordable. A 10‑year pledge of 15%–34% affordable units earns a 25% reduction; 35% or more earns 35%. In low‑affordability areas, a 30‑year, 20% pledge uses a staged reduction from 100% of the base‑year difference in years 1–3, then 80%, 60%, 40%, and 20% through year 30. Owners must apply and submit documents like the deed, permits, rent lists, and income proofs; some cases must show a project labor agreement first. If a 30‑year benefit ends before Dec 31, 2025, owners can reapply by Dec 31, 2026 with recent qualifying costs, and they must give tenants written notice in the year before ending if not renewing.
Dedicated funding for tax compliance staff
Each month, the State deposits one‑twelfth of 5% of the prior year’s Audit Bureau cash receipts into the Tax Compliance and Administration Fund. One rule applies to audit receipts from sales and use tax programs; another applies to audit receipts from specified individual and corporate income tax subsections, net of refund deposits. Money in the fund, subject to appropriation, is used to hire auditors and compliance staff.
Income tax shares for schools and services
Starting February 1, 2015, part of individual income tax revenue goes to the Fund for the Advancement of Education and the Commitment to Human Services Fund. The share is 1/30 through January 31, 2025, and 1/26 starting February 1, 2025. Deposits stop if the Section 201 tax rate is reduced under Section 201.5. The law also set historical deposits (1991–1994) from individual income tax into a local government distributive fund at listed percentages.
Quantum campus designation and benefits
Illinois creates a “quantum computing campus” designation. A campus must be contiguous and between 100 and 640 acres, include tenants planning to engage businesses owned by minorities, women, and people with disabilities, and certify carbon neutrality or a green building standard within 60 months of service. Benefits begin within 3 months of certification and can last up to 20 years, with one renewal for another 20 years.
Sales tax dollars sent to projects
Each month, the State sends certain sales and use tax receipts to key funds. It pays the Underground Storage Tank Fund an amount equal to the prior year’s certified average monthly deficit, capped at $18 million per year. It deposits $500,000 monthly to the State Crime Laboratory Fund. It deposits one‑eighth of the Chairman’s certified amount each month to the McCormick Place Expansion Project Fund, up to yearly caps, while bonds are outstanding (not after FY 2060). It also makes monthly payments into the Downstate Public Transportation Fund, and scheduled annual deposits to the Civic and Transit Infrastructure Fund for FY 2024–2043 once a public‑private agreement is executed and the civic build is complete. From July 1, 1993 to September 30, 2013, the law also required a set monthly share to the Illinois Tax Increment Fund.
Tax breaks for airlines and carriers
From July 1, 2023 through December 31, 2032, retailers may accept a sustainable aviation fuel (SAF) credit from airline buyers to satisfy Use Tax and up to 6.25% of receipts against Retailers’ Occupation Tax. They must keep the producer’s certification and records of SAF gallons sold. Illinois use tax does not apply to rolling stock used by interstate carriers for hire in interstate commerce, or to telecom equipment permanently installed in aircraft operated by an FCC‑licensed common carrier. If too much tax was paid, the Department issues credits or refunds with interest, and aviation fuel refunds are paid only from the Aviation Fuel Sales Tax Refund Fund or an appropriation.
Declare and pay tax on untaxed cigarettes
If you get cigarettes for use in Illinois without paying the distributor tax, you must file a return within 30 days and pay electronically. The Department may issue a stamp if the cigarettes still exist. Secondary distributors cannot buy unstamped original packages or buy from unlicensed sellers. A distributor who violates these rules pays $1,000 for the first violation and $3,000 for later ones, plus any tax, penalty, and interest the Department assesses.
Higher taxes on tobacco and nicotine
On and after July 1, 2025, tobacco products are taxed at 45% of the wholesale price. Starting the same day, the law also treats many nicotine products—like pouches, lozenges, and gum—as tobacco products for tax and regulation. FDA‑approved quit‑smoking products sold only for that purpose are not included.
New taxes on service leases and marketplaces
Starting January 1, 2025, the state treats the right to use property from a service lease as taxable use. Leases by servicemen no longer count as demonstration or interim use. Starting January 1, 2026, qualifying marketplace service sales are taxed at 6.25% on half the bill. If half the bill is below the marketplace’s cost for the property, the cost is used instead.
Nonresidents taxed for 30+ Illinois workdays
For tax years ending on or after December 31, 2020, Illinois taxes pay for nonresidents who work in Illinois for more than 30 working days and the in‑state work is nonincidental. Illinois pay equals total pay times Illinois working days divided by total working days.
RTA retail, service, and fuel taxes
The RTA Board may add a motor fuel tax in the region up to 5% of the retail price, and a matching use tax on fuel use. If the Board imposes the retailers’ tax, Cook County rates are 1.25% for certain items (like prepared food and 1%‑rate items) and 1.0% for others; in DuPage, Kane, Lake, McHenry, and Will the rate is 0.75%. A matching service occupation tax can also apply at those county rates. Aviation fuel in the five suburban counties is 0.25% unless certified for airport‑related purposes. Adoption needs concurrence of 12 Directors.
Stricter deadlines and checks for EV rebates
You must apply for the Illinois EV rebate within 90 days of purchase. For rebates issued on or after July 1, 2025, the Agency can ask for more documents, including tax returns, to prove eligibility. If you do not respond on time, you may have to repay some or all of the rebate.
High-tax filers must pay by EFT
If your average monthly tax liability is high, you must pay by electronic funds transfer. The thresholds are $150,000 (from Oct 1, 1993), $100,000 (from Oct 1, 1994), and $50,000 (from Oct 1, 1995). If your annual tax liability is $200,000 or more, EFT starts Oct 1, 2000. Each year before August 1, the Department tells who must use EFT, and you must use it for at least one year starting October 1.
Higher quarter‑monthly payments in 2023–24
For quarter‑monthly payments due July 1, 2023 through June 30, 2024, the 25% prior‑year amount is figured as if certain 2023 rate cuts never happened. This increased some required quarter‑monthly payments during that window.
Leases taxed like retail sales
Beginning January 1, 2025, many leases are taxed like sales. Lessors pay tax only on the lease money they actually receive each filing period. Registered motor vehicles, watercraft, aircraft, and semitrailers are excluded. The law also counts leases in “sale,” “use,” and “selling price” definitions, and it taxes leases tied to a sale of service. If you hire a subcontractor and cannot prove cost, the law assumes the property cost equals 50% of the subcontractor’s charge.
Leasing businesses taxed like sellers
Beginning January 1, 2025, a lease of tangible personal property counts as a sale for tax. If you lease out equipment or other tangible items, you are treated as a retailer and must collect and remit tax. You must also file monthly returns for leasing receipts, due by the 20th of each month. Service providers that lease property are covered under the Service Occupation Tax as well.
New marketplace and remote seller rules
Beginning January 1, 2026, a marketplace facilitator with $100,000 or more in Illinois sales in the past 12 months must collect and pay Illinois tax. Remote out‑of‑state retailers have the same $100,000 test. The threshold is checked each quarter, and once met, you must collect for one year before reassessment. Also starting January 1, 2026, sellers cannot use the cost‑price election for marketplace sales when the marketplace meets the legal threshold.
Stricter sales tax payments and penalties
If your average monthly tax is $20,000 or more (on or after Oct 1, 2000), you must pay quarter‑monthly on the 7th, 15th, 22nd, and last day. If you miss or underpay any required quarter‑monthly payment, you owe penalties and interest on the shortfall. If you fail to file a required retail return, the Department will estimate tax due and add a 30% penalty. If you do not provide required sourcing records for Illinois sales, the Department can assess 15% of the gross receipts for those sales.
Tougher rules for job tax credits
REV Illinois agreements must list project details, duration, yearly credit amounts, minimum investments, and job counts. You must file annual reports (due April 15) and report in writing within 30 days if you cannot meet commitments. The Department posts agreement terms online within 10 days. Employers seeking the apprenticeship credit must apply online, report apprentice data and expenses, and cannot sell the credit; the Department reports on the program each July 1. For construction credits, you must file yearly reports and provide a certified AUP on construction expenses or accept the Department’s wage estimate. The Department can revoke a High Impact Business designation, recover wrongfully exempted taxes with interest, and bar the business from State‑funded programs for 10 years; it must revoke designations for noncompliance.
Vendor discount capped at $1,000/month
For returns due on or after January 1, 2025, the vendor’s discount you can keep is capped at $1,000 per month. The $1,000 cap applies across the listed state tax Acts and local taxes on the same return. If you file transaction‑by‑transaction, all transaction returns in a month share the same $1,000 cap.
Metro East tax vote and titled‑item fee
Counties in the Metro East District can put a vote on raising District tax rates from 0.25% to 0.75%. A petition of 2,500 electors can ask a court to require a referendum. If voters approve, the State starts collecting the higher rate. If the Board excludes titled or registered property from a rate hike, it may charge a fee up to $20 or the excluded tax amount per sale, whichever is less. No fee applies when a motor vehicle is sold to a nonresident who does not title it in Illinois.
Higher taxes on sports betting operators
Beginning July 1, 2024, master licensees pay tiered privilege taxes on adjusted gross receipts: 20% up to $30 million, 25% on $30–50 million, 30% on $50–100 million, 35% on $100–200 million, and 40% above $200 million. These tiers apply separately to internet/mobile receipts and to in‑person receipts. Starting July 1, 2025, internet/mobile wagers also face a per‑wager tax: $0.25 per wager for the first 20 million Tier 1 and Tier 2 wagers each year, then $0.50 per wager above 20 million. There is also a 2% tax on adjusted gross receipts from wagers placed within any home rule county with over 3,000,000 people. Operators must submit annual audits and quarterly compliance reports by Illinois‑registered CPAs, chosen by the Board and paid by the licensee.
Marketplaces collecting service taxes in 2026
Beginning January 1, 2026, a marketplace facilitator with $100,000 or more in Illinois service sales over the last 12 months is engaged in business in Illinois. You must check this threshold every quarter. If you meet it, you must register, collect, and file service‑tax returns.
Stricter window for tax refunds
Refund claims are barred for amounts paid more than three years before the next January 1 or July 1. If the audit deadline would end less than six months after you file a refund claim, the State gets six more months to issue a tax notice. You and the Department can still agree to extensions.
Phone tax up to fund 9-8-8
Beginning July 1, 2025, the tax on intrastate and interstate retail phone charges rises from 7% to 8.65%. You may claim a credit for interstate calls taxed by another state, up to the Illinois tax. The extra 1.65 percentage points fund the statewide 9-8-8 crisis line. The state creates a 9-8-8 Trust Fund and the human services agency runs the statewide crisis system.
How Illinois taxes multi-state workers
For tax years ending on or after December 31, 2020, your pay is Illinois‑source if you work in Illinois more than 30 working days and that in‑state work is not incidental. Your Illinois pay is your total pay times (Illinois working days ÷ total working days). Disaster‑related service days may be excluded.
Fuel tax rules, licenses, and penalties update
On January 1, 2026, valid supplier and receiver fuel licenses convert to distributor licenses, and those holders must follow distributor rules. Illinois may join IFTA to harmonize commercial motor‑fuel tax reporting. The law creates criminal penalties for knowingly operating without required fuel licenses or knowingly failing to file or pay. Some listed Articles take effect on July 1, 2025 and January 1, 2026.
Aircraft engine parts tax break window
From January 1, 2024 through December 31, 2029, parts and supplies used to modify, repair, or maintain aircraft engines and power plants are tax‑exempt, even if you are not an FAA‑certified repair station. Earlier, from 2010 through 2023, the aircraft materials exemption only applied to FAA‑approved repair stations with a Class IV Rating operating under Part 145, and excluded commercial passenger carriers.
New credit for critical manufacturers
Illinois creates the Advancing Innovative Manufacturing for Illinois Tax Credit for manufacturers of critically needed goods operating or locating in the state. Your agreement must keep operations at the project site for at least 15 years. If the Department finds you are not in compliance, credits are disallowed after the notice date and any required recapture increases your tax in the recapture year.
New rules for certified tax providers
Before you use a certified service provider (CSP), you must sign a tax‑remittance agreement. The CSP must file a copy with the Department at least 30 days before it starts and then file returns and pay all taxes in the agreement, including local taxes. The Department also runs an address database to match buyers to the right local tax. If that State data is wrong and you relied on it, you are not liable for the local tax error.
New tax rules for online marketplaces
Beginning January 1, 2026, a marketplace that has $100,000 or more in Illinois service sales over the prior 12 months must collect and pay State and local service occupation taxes. The facilitator must tell each seller it is taking on the seller’s tax duties and must collect and remit the tax on marketplace sales. Sellers must give the marketplace the data it needs (including cost price when it is over 50% of the bill). Sellers are protected if they gave correct data and the marketplace failed to collect; marketplaces can be protected if they reasonably relied on wrong seller or State data. Affiliates acting as both facilitator and seller are jointly liable. Note: for 2020 only, a seller’s marketplace sales were exempt if the facilitator collected and paid the use tax; keep records to claim any credit not already issued.
New tax rules for online services
Beginning January 1, 2026, if you keep a business location in Illinois and sell services from outside the State to Illinois customers, you owe Illinois service occupation taxes. If you sell through a marketplace, you must keep records and give the marketplace cost price when it is over 50% of the invoice; you are held harmless if you gave correct data and the marketplace failed to collect. You can elect each fiscal year to pay tax on cost price instead of gross billing if your annual cost price is under 35% of receipts (75% for prescription drugs or graphic arts). For marketplace sales, tax is 6.25% of the larger of half the customer billing or the cost price. These rules add compliance steps but also offer liability protections and a cost‑price election.
Retailer discounts capped; CSP gets 1.75%
Starting January 1, 2025, the vendor discount is capped at $1,000 per month across covered returns. Retailers cannot take a discount on the 1.25% portion of aviation‑fuel tax tied to federal rules. If your registration is finally revoked, the Department can deny your vendor discount. When a certified service provider files and pays for you, the provider keeps a 1.75% discount, and you cannot claim it yourself.
Rolling‑stock tests and fuel exemption
Fuel bought outside Illinois and brought in the tanks of locomotives used in interstate freight or passenger service is not taxed in Illinois. For motor vehicles and trailers bought on or after July 1, 2017, the rolling‑stock exemption requires a purchaser certification of use by an interstate carrier with an active USDOT number and a GVWR over 16,000 pounds for motor vehicles. For aircraft and watercraft bought on or after January 1, 2014, the item must carry people or goods for hire in interstate commerce for more than 50% of trips or miles in a 12‑month period. If an item later fails the rules, tax applies to the selling price with reasonable depreciation for the qualified period.
How phone tax money is split
Beginning August 1, 2025, telecommunication excise receipts are split by set shares. About 57.7% goes to the General Revenue Fund after required monthly payments. 11.6% goes to the Common School Fund, 11.6% to the School Infrastructure Fund, and 19.1% to the statewide 9‑8‑8 Trust Fund. Each month, $1,000,000 also goes to the Common School Fund and 1/12 of 5% of the prior year’s Audit Bureau cash receipts goes to the Tax Compliance and Administration Fund.
More funding for tax compliance staff
Each month, Illinois deposits one‑twelfth of 5% of 80% of the prior fiscal year’s Audit Bureau cash receipts into the Tax Compliance and Administration Fund. Money in this fund is for hiring more auditors and compliance staff, subject to appropriation. Stronger compliance can improve fairness and collections, but some taxpayers may face more audits.
State shifts fuel and sales-tax money
The state raises the Road Fund share of net motor‑fuel and gasohol tax to 80% starting July 1, 2025 (after rising from 16% in 2021). After other required transfers, 75% of remaining receipts go to General Revenue and 25% to the Common School Fund; beginning July 1, 2025 the 25% is deposited directly into the school fund. Each month, the state also moves money to the Tax Compliance and Administration Fund equal to 1/12 of 5% of 20% of last year’s Audit Bureau cash receipts. An older transfer rule sending 1.7% of 80% of net revenue to the Motor Fuel Tax Fund ended April 1, 2000.
How banks count Illinois income for taxes
For years ending before December 31, 2008, an international banking facility subtracts a floor amount (income times a statute‑set fraction) from its income. For years ending on or after December 31, 2008, a financial firm apportions business income to Illinois by a receipts fraction: Illinois receipts over total receipts. For years ending before December 31, 2024, investment and trading receipts are included in that receipts factor, using specific excess‑interest and excess‑income measures.
Longer multifamily tax breaks, with conditions
A reduced property valuation can run up to 10 years and be renewed for up to two more 10‑year periods if rules are met. Buyers of a reduced‑valuation property must keep complying (except new‑construction/rehab rules) for as many years as passed between placed‑in‑service and the seller’s first reduction year. Owners can apply within two years after the property is placed in service; the initial 10‑ or 30‑year eligibility is shortened by the years waited. That timing rule applies to properties placed in service on or after January 1, 2015.
EV and factory incentives with job targets
The REV Illinois Program offers incentives to approved manufacturers and suppliers. EV makers must invest at least $1.5 billion, place the project in service within 60 months, and create 500+ new full‑time jobs. Other listed projects must invest $300 million, finish in 60 months, and create 150+ new jobs. There are alternative thresholds for older agreements ($20 million/48 months/50 jobs), for conversions or expansions ($2.5 million/48 months with jobs equal to the lesser of 50 or 10% of baseline, or $100 million/60 months), and a temporary 6/7/2023–5/31/2024 window requiring $500 million and 800 retained jobs. Within 24 months after a project is placed in service, the applicant must certify the facility is carbon neutral or holds an approved green building certification.
New rules for apportioning business income
Illinois uses the sales factor alone for most apportionment for years ending on or after December 31, 2000. Property for apportionment uses original cost (or 8 times net annual rent for rentals). Receipts from intangibles count in Illinois to the extent used here, and telecom receipts are sourced by the customer’s service address. For years ending on or after December 31, 2025, unitary groups must include and allocate sales from non‑taxpayer members. Financial organizations use receipts‑based apportionment with detailed sourcing rules.
New rules on investment income apportionment
Starting with tax years ending on or after December 31, 2024, investment and trading receipts count in the Illinois receipts factor. Firms must assign each asset or activity to the fixed place of business with the most substantive contacts; the Department can rebut bad assignments. If no place stands out, income is assigned to the business’s commercial domicile. Federally regulated exchanges can elect a special formula that ties Illinois income to their Illinois share of business income.
Updated business income sourcing rules
Illinois updates how certain receipts count in your sales factor. Exchanges can elect a special method using Illinois floor receipts plus a share of matching/clearing receipts (63.77% for tax years ending in 2013 transition; 27.54% after). Receipts from intangibles are sourced where the item is used; telecom and broadcasting follow Illinois service address/audience rules for tax years ending on or after Dec 31, 2008. Insurance income uses Illinois premiums over total premiums; reinsurance can include accepted reinsurance with a binding election. If standard apportionment is unfair, you or the Department can use an alternative method. If a sale later shows income as non‑business, you must add back related expenses from that year and the prior two years and apportion them to Illinois.
Stronger age checks for tobacco and vapes
Sellers must verify a buyer is at least 21 before selling tobacco, e‑cigarettes, or other nicotine products. For in‑person sales, anyone who looks under 30 must show a government photo ID. For online or mail sales, sellers must use an independent third‑party age‑verification service that checks public records.
Stronger youth vaping and e-cig rules
The law tightens rules to keep e‑cigarettes from people under 21. Shipping e‑cigarettes to anyone under 21 is banned. Free samples of tobacco, nicotine, or e‑cigarette products are banned, except smokeless tobacco samples inside adult‑only facilities. It also updates definitions for vaping products and who is covered by youth‑sales laws.
Cook County delays 2023 tax sale, pauses interest
In Cook County, the filing to start the 2023 annual tax sale is due by March 10, 2026. No interest accrues on delinquent 2023 taxes from September 2, 2025 through April 1, 2026. This gives owners more time and lowers carrying costs for that period.
Metro East funds can support affordable housing
A qualifying city in the Metro East Mass Transit District may spend certain funds to run programs for low‑income and very low‑income households’ affordable housing needs. This applies only to cities over 50,000 people by the 1980 census in that district and only if they receive the referenced funds.
Property tax bills must list exemptions
For bills mailed on or after January 1, 2026, your property tax bill must show available exemptions in bold and list the assessment office contact. In counties with estimated or accelerated billing, this appears on the final installment.
Tax deadlines paused for detainees
If you are a detained national or the spouse of one, the law postpones State and local tax deadlines. It also waives interest and penalties during the postponement. This applies to any State or local tax, including Illinois income and property taxes. The Department of Revenue and local governments may adopt rules and policies to carry this out.
Tax relief for detained U.S. nationals
If a U.S. national is unlawfully or wrongfully detained abroad or held hostage, their tax bills are postponed until 90 days after release. No interest or penalties accrue during the postponement. The person’s property cannot be sold for taxes during that time. The spouse also gets these protections.
High Impact Business designations for projects
The state can designate a company as a High Impact Business for 20 years, with up to a 20‑year renewal. Applicants must plan large investments, create many jobs, or run qualifying facilities. Some location limits apply, and the Department must decide within 90 days.
Higher tank-size cutoff for fuel distributors
The storage‑capacity threshold that makes a site a motor‑fuel distributor or receiver rises from 20,000 to 30,000 gallons. Fewer small facilities now meet the distributor definition. Some businesses may avoid related licensing and reporting duties.
Lower license fee for tobacco retailers
The annual retailer license fee for tobacco products is $75 per location, down from $150. Retailers pay $75 times the number of locations each year by electronic payment.
Suppliers can choose to pay retailers’ taxes
Manufacturers, importers, and wholesalers may take on the duty to account for and pay the tax on their products’ retail sales in Illinois. They can do this only if the affected retailers do not file a written objection with the Department.
Co-ops can match federal loss rules
A cooperative can elect to use its federal treatment of patronage and nonpatronage losses for Illinois taxes. The choice applies to returns due on or after the election date. Past returns may be amended if allowed. You can revoke the choice only with the Director’s approval.
Past exemption for centralized purchasing
From January 1, 2002 through June 30, 2016, a business using centralized purchasing could buy goods from an Illinois retailer, store them here briefly, and move them out of state for use without owing Illinois use tax. A permit and records were required to prove out‑of‑state use. This exemption ended June 30, 2016.
Refunds for mixed dyed and clear diesel
If you paid tax on undyed diesel that was unintentionally mixed with dyed diesel, you can claim a refund when the undyed part is 500 gallons or more. You must document the date, place, gallons, and what happened to the mix. The mix must be used or sold only for non‑highway purposes.
Small retailers can file less often
If your average monthly tax is $50 or less, you may file yearly. If it is $200 or less, you may file quarterly. Reduced schedules follow the same rules and set due dates as monthly returns.
Lower fines for environmental violations
Top civil fines fall in several programs. General maximums drop to $50,000 per violation and $10,000 per day for continuing violations. NPDES water fines are capped at $10,000 per day. UIC fines drop to $2,500 per day, and for Class II wells $10,000 once and $1,000 per day. CAAPP air fines fall to $10,000 per day. For community water systems, the max is $5 per premises per day. Late toxic‑release forms are $100 per day, up to $6,000, starting on day 31 after a warning and stopping on January 1 of the next year. Section 52.5 penalties drop to $1,000 for a first violation and $2,500 for later ones.
Money to run EV rebate program
Starting in fiscal year 2024, up to $600,000 a year from the Electric Vehicle Rebate Fund can pay for state administration of the EV rebate program. The Secretary of State may receive up to $225,000 for its costs. This keeps the program operating.
Zones must include veterans and people with disabilities
Cities with a certified River Edge Redevelopment Zone must file a plan within 60 days to encourage participation by minority persons, women, persons with disabilities, and veterans. The Department can help create and implement the plan.
Faster payouts to cities from state fund
The Illinois Comptroller must transfer Local Government Distributive Fund amounts within 60 days after the Treasurer certifies them. This improves the timing of money cities and counties receive.
Aviation fuel refunds and fund deposits
For aviation fuel sold on or after December 1, 2019, the state deposits each month what it estimates is needed to pay refunds equal to 80% of the aviation fuel tax, while federal revenue‑use rules apply. In the past, from July 1, 1993 to September 30, 2013, a small share of retail tax receipts went to the Illinois Tax Increment Fund. The aviation deposits help ensure refunds are paid under federal rules.
Relief from some business add‑backs
For tax years ending on or after December 31, 2025, you can avoid adding back certain intangible expenses if you show the payee was unrelated, the deal was arm’s‑length, or the payee was taxed abroad. You can also rebut add‑backs with strong evidence or agree with the Director on an alternative apportionment. If Section 163(j) limits interest, the required reduction is assigned first to non‑foreign payees, then to foreign payees. Illinois still ties taxable income to federal amounts, and very old net operating losses remain limited by law.
Cities and counties may add 1% grocery tax
Beginning January 1, 2026, your city may add a 1% tax on grocery sales inside the city. Your county may add a 1% tax on grocery sales in areas outside any municipality. If adopted, a matching 1% tax applies to groceries transferred with services.
Cities can add up to 3¢ gas tax
A city in a county with over 3,000,000 people can add a local motor fuel tax up to $0.03 per gallon. The tax does not apply to aviation fuel. The state keeps 1.5% for administration and sends the rest to the city. Cities must pass an ordinance and meet filing deadlines for a July 1 or January 1 start.
Metro East sales and lease taxes
The Metro East Mass Transit District can add a 0.25% tax to retail sales made in the District. If that retailers’ tax is adopted, a matching 0.25% tax also applies to the goods part of certain services and to items used in the District that must be titled or registered to a District address. Beginning January 1, 2025, covered leases that start or renew on or after that date can also be taxed. When the Department collects certain District fees, it keeps 4% in the first 12 months and 2% after to cover its costs.
More winnings count as Illinois income
If you win money at Illinois‑licensed horse tracks, riverboats, casinos, or organization gaming facilities, those winnings are Illinois‑source income for tax years ending on or after December 31, 2019. Sports betting winnings under the Sports Wagering Act are Illinois‑source for tax years ending on or after December 31, 2021. Unemployment benefits paid by the Illinois Department of Employment Security are Illinois‑source income. This can raise Illinois tax for nonresidents.
RTA can tax paid parking
The RTA Board may add a parking tax at off‑street lots and garages in the region that charge fees and have more than two spaces. This raises the cost of paid parking where adopted. The Authority can set classes, exemptions, and penalties, and may collect the tax itself.
Tobacco makers must fund escrow or pay
Tobacco manufacturers selling in Illinois must join the Master Settlement Agreement or deposit per‑unit amounts into escrow by April 15 each year. Courts can add daily penalties up to 100% for non‑knowing violations or 300% for knowing violations. A second knowing violation can ban Illinois sales for up to two years.
Tougher tobacco penalties and retailer suspensions
The law raises penalties for illegal tobacco sales. Each violation can cost the greater of 5 times the retail value or $5,000, and illegal products can be seized. The Department can suspend or revoke distributor and retailer licenses. Retailers with a compliant age‑check training program face shorter suspensions; without training, suspensions climb to 30 days for repeated under‑21 violations in 24 months. People under 16 cannot sell tobacco or e‑cigarettes, except an owner’s child in a family business.
Who must sign business tax returns
Corporation returns must be signed by an officer or accredited agent. LLC returns must be signed by a manager, a member, or an accredited agent. This sets clear signing rules for business returns.
Add‑back for related‑party insurance costs
For tax years ending on or after December 31, 2008, you must add back insurance premium expenses paid to a related person excluded from your unitary group. You can reduce the add‑back by dividends from that payee that are already in the group’s income.
Alcohol sellers: monthly electronic reports
Retail liquor sellers (who are not distributors or manufacturers) must file a monthly purchase statement. The Department may require electronic or phone filing. Distributors, importing distributors, and manufacturers must e-file a monthly statement by the 10th showing gross receipts and listing purchasers and tax numbers, and must give each retailer a report by the 10th.
Annual info return and final-return rule
The Department can require certain retailers to file an annual information return with at least 60 days’ notice. The return must show gross receipts from the last federal return and other business details. If you discontinue a business that required returns, you must file a final return within one month.
Cigarette machine operators must e‑file
If you operate cigarette machines, you must file monthly electronic returns and pay by the 15th for the prior month. Returns must list production, meter and sales data, brands, manufacturer and distributor info, and tube details. The Department can allow exceptions by rule.
Cigarette machine returns to Attorney General
Cigarette machine operators must send a copy of their monthly return and supporting schedules to the Illinois Attorney General by the 15th for the prior month.
E-file rules for aviation fuel and cannabis
Sellers that collect tax on aviation fuel must file a separate aviation fuel tax return and pay online. Aviation fuel means jet fuel and aviation gasoline. Cannabis tax filers must file all cannabis tax returns and pay online. The Department sets the form and method for electronic filing and payment.
Extra reports at events and 0%-rate food
At events with a risk to State revenue, the Department may require daily sales reports and daily tax payments from sellers and concessionaires. The Department must notify affected sellers first. Returns must also show gross receipts for items taxed at a 0% rate under Public Act 102‑700 and the tax that would have been due without the 0% rate.
Faster, detailed reports for vehicle sales
For sales of vehicles, trailers, watercraft, or aircraft that need State registration, you must file a detailed transaction report within 20 days after delivery. The report must list buyer and seller details, price, trade‑in, balance due, tax due or proof it is not due, date and place, and item ID. Lessors who sell titled or registered items to retailers for resale may report those transfers on the uniform invoice return by the 20th of the next month, and must file it electronically.
Monthly e‑filing for tobacco distributors
Distributors must e‑file monthly returns by the 15th for the prior month. Illinois cigarette manufacturers must e‑file by the 5th and include delivery invoices. Secondary distributors must e‑file monthly quantity reports by the 15th. Stamping distributors must report little cigars, and all distributors must report wholesale price and moist snuff ounces. The Department can allow a waiver from e‑filing if you lack internet access. Extra payments can be credited to future tax bills.
More e‑filing, EFT, and info returns
Retailers averaging $20,000 or more in annual gross receipts must file Use Tax returns online starting January 1, 2023, unless they get a hardship waiver. Larger taxpayers must pay by electronic funds transfer when they meet set liability thresholds; the Department notifies them before August 1 each year. If the Department sends a notice, a taxpayer must file an annual information return within at least 60 days with sales, inventory, payroll, and related data; a top officer must sign, and penalties can apply.
Retailers and servicemen must e-file
Retailers with average annual receipts of $20,000 or more must file returns online. This rule starts January 1, 2018. Starting January 1, 2023, e-filing also covers vehicle, watercraft, aircraft, and trailer registration returns. Servicemen with $20,000 or more in receipts must also e-file starting January 1, 2018. You can ask the Department for a waiver if you lack internet or have a hardship.
Separate e-returns for trailer leases
Starting January 1, 2025, lessors of trailers (not semitrailers) that must be registered must file a separate electronic lease return. File and pay online by the 20th day after the reporting period. Report all lease receipts for that period on one Department form.
Separate returns for each registration
If you hold more than one registration, you must file a separate return for each registration. Retailers of titled items like vehicles, boats, aircraft, and trailers usually must file a separate return for each item sold. Limited exceptions apply for resale transfers and some rolling‑stock transfers.
Stricter LLC rule for nonresident vehicle break
If an LLC buys a vehicle and any member lives in Illinois, the law presumes the nonresident purchaser exemption does not apply. You can rebut this with proof, such as insurance showing an out‑of‑state primary use or proof of permanent storage or garaging outside Illinois.
Environmental fines rise with inflation
Beginning July 1, 2026, certain environmental penalty caps increase every July 1 by the annual CPI‑U percent change. The increase uses the 12‑month CPI‑U change ending in March and builds on prior adjustments. This raises the maximum fines over time.
Fixed fines for some environmental citations
Administrative citations carry set fines. It is $1,500 for a first violation, and $3,000 for a second or later adjudicated violation under the listed sections. Paid penalties go to the Environmental Protection Trust Fund, and if a local government issued the citation, half goes back to that local government.
No more new River Edge zones
After the additional pilot River Edge Redevelopment Zones listed in the law are certified, the Department cannot certify any more zones. It may amend or rescind certifications for zones that already exist.
Quantum campus exemptions add labor rules; end 2030
No new exemption certificates for quantum computing campuses are issued after July 1, 2030, but certificates already in effect then remain valid. Tenants seeking construction‑related exemptions must require contractors and subs to meet responsible‑bidder rules and to sign a project labor agreement. Tenants must submit proof of those requirements to the Department.
Sports betting tax timing rules
Sports wagering licensees must use accrual accounting to measure tax. Taxes tied to adjusted gross sports wagering receipts are due by the last day of the month after the month the receipts were earned. This changes when revenue is recognized and when payments are due, not the tax rates.
Online lottery sales allowed until July 2025
You can buy lottery tickets online if you are 18 or older. Every online purchase must start and finish inside Illinois. The Department sets rules, may allow subscriptions, and can use a private manager with approval. This online‑sales section ends on July 1, 2025.
Rehab spending thresholds rise; forms posted online
For qualifying rehab, the per‑square‑foot minimums start at $8.00, $12.50, and $60.00 for 2021 work. Beginning in 2022, each amount increases yearly by the CPI‑U and rounds to the nearest penny; amounts for work before Jan 1, 2026 do not change. By Feb 15 each year starting 2026, the state posts the CPI‑U change, and big counties must post their updated rehab thresholds by Mar 15. If a county has no local forms, it must accept and post the Department of Revenue’s application forms online or make them available at the assessment office.
Rounding rules and faster title filings
Small tax amounts under $1 are rounded: under $0.50 becomes $0.00; $0.50 to $0.99 becomes $1.00. All amounts on returns must be rounded to the nearest dollar. To speed titles or registration, the titling agency can send your tax report and payment to the Department. If a retailer delays, you can certify the delay and pay the Department directly to get a receipt. Your payment is credited to the retailer, but the retailer does not get the vendor discount.
Tax rules for nonresidents and cars
If you live outside Illinois and bring in property you bought elsewhere for your temporary personal use, Illinois use tax does not apply. If you buy a motor vehicle in Illinois and title it in another state, you are exempt if you get a drive‑away permit or have transferable plates—unless your home state does not allow a reciprocal exemption. If reciprocity is not allowed, Illinois charges tax at your home state’s rate, up to Illinois’s rate. You must sign a sworn statement and the retailer keeps a copy.
Short-term rental taxes and platform fees
Short‑term rentals (under 30 days) are treated as hotels for many lodging rules. The law defines hosting platforms and short‑term rentals. Hosting‑platform fees from short‑term rentals are not part of taxable “rent” for hotel tax. For the narrow case of re‑renters of hotel rooms, short‑term rentals are not treated as hotels.
Hiring plans and diversity reports for credits
Applicants for these incentives must file a hiring plan that shows how they will recruit and hire full‑time workers. Plans can include partnerships with colleges and use of approved apprenticeship programs. If the applicant seeks a credit that year, it must file a workforce diversity report by April 15. Applicants may also apply for apprenticeship education expense credits.
Quantum campus applications, MOUs, and reporting
To form a quantum computing campus, applicants must apply and enter an MOU that lists investment, new jobs, timelines, repayment rules, and how long exemptions last. Entities joining an existing campus must seek an amendment and required support. Starting July 1, 2025, the state issues a yearly report naming tenants, locations, estimated credits, jobs pledged, and whether sites are in special zones.
Recycling rules for REV Illinois projects
Businesses applying for REV Illinois must have a recycling contract or in‑house recycling ability. Each year, they must report that relationship and what share of EV batteries are recycled. These requirements last for the full agreement and are enforced through it.
Refunds for returns and offset rules
If a manufacturer accepts a new vehicle return and refunds the buyer under the New Vehicle Buyer Protection Act, the retailer gets a refund or credit for the tax paid on that sale. The Department can apply any credit or refund you are due to other tax, penalty, or interest you owe, and can delay a refund until related cases are resolved. It can also bill back an erroneous refund within 3 years, or 5 years if fraud caused the refund.
Rolling stock test and fixed election
For vehicles bought through June 30, 2017 (and limousines any time), a vehicle counts as rolling stock if it carried people or goods for hire in interstate commerce for over half of trips or miles in 12 months. You must choose trips or mileage at purchase; mileage applies if you do not choose. Your choice stays in effect while you own the item.
Stricter rolling‑stock rules; no rideshare limos
To claim the rolling‑stock exemption, more than 50% of trips or miles in a 12‑month period must be interstate. You must elect trips or mileage at purchase and document it; mileage is the default if you do not choose. Aircraft can use flight hours and watercraft can use nautical miles or trip hours. Beginning July 1, 2025, limousines used for rideshare services cannot use this exemption.
Tobacco makers: permits and monthly reports
Out‑of‑state cigarette manufacturers may get permits to pay Illinois tax if they post security and use sealed original packages, and they must file electronic returns. If they send unstamped packs into Illinois for promotions, they must imprint required language, pay the tax by the 5th for the prior month, and file monthly electronic shipment reports. Starting July 1, 2025, distributors’ monthly tobacco returns must also list the wholesale price for all tobacco products, including moist snuff.
State can use tobacco escrow for Medicaid
A tobacco manufacturer can assign its escrow funds to the State with the Attorney General’s approval. The State may use those assigned funds to reimburse Medicaid and to offset judgments. The Attorney General can also start the assignment process for funds left unclaimed for more than one year.
Motor fuel tax law cleanup and transfers
The law removes several sections from the Motor Fuel Tax Law. It also ends a long‑standing transfer from the General Revenue Fund to the Motor Fuel Tax Fund that was equal to 1.7% of 80% of net revenue from two months earlier, effective April 1, 2000.
State blocks some local tax penalties
Home rule cities and counties cannot impose taxes, interest, or penalties that conflict with this state law’s postponement and exemption rules. The State limits local taxing power in this area.
Monthly split of sports betting surpluses
Starting September 25, 2024, extra money left each month in the Sports Wagering Fund is split: 58% to the General Revenue Fund and 42% to the Capital Projects Fund. Transfers happen on the 25th of each month based on the Board’s certified surplus.
Standards for Illinois Gives foundations
To qualify for Illinois Gives credits, community foundations must meet national standards on a set timeline. Applications before July 1, 2025 must substantially meet the standards. From July 1, 2025 to June 30, 2026, a foundation must have the accreditation seal or have applied for it. On and after July 1, 2026, the seal is required. Foundations must also make grants for Illinois beneficiaries and keep permanent endowment funds.
Sponsors & Cosponsors
Sponsor
Curtis J. Tarver, II
Democratic • House
Cosponsors
Celina Villanueva
Democratic • Senate
Mattie Hunter
Democratic • Senate
Mike Porfirio
Democratic • Senate
Mike Simmons
Democratic • Senate
Napoleon Harris, III
Democratic • Senate
Rachel Ventura
Democratic • Senate
Roll Call Votes
House vote • 5/31/2025
Senate Floor Amendment No. 3 House Concurs
Yes: 71 • No: 43
House vote • 5/31/2025
Senate Committee Amendment No. 1 House Concurs
Yes: 71 • No: 43
House vote • 5/31/2025
Senate Floor Amendment No. 2 House Concurs
Yes: 71 • No: 43
House vote • 5/31/2025
Senate Floor Amendment No. 3 Motion to Concur Recommends Be Adopted Rules Committee;
Yes: 5 • No: 0
Senate vote • 5/31/2025
Third Reading - Passed;
Yes: 31 • No: 25
House vote • 5/31/2025
Senate Committee Amendment No. 1 Motion to Concur Recommends Be Adopted Rules Committee;
Yes: 5 • No: 0
House vote • 5/31/2025
Senate Floor Amendment No. 2 Motion to Concur Recommends Be Adopted Rules Committee;
Yes: 5 • No: 0
House vote • 5/31/2025
Motion Prevailed to Suspend Rule
Yes: 74 • No: 39
Senate vote • 5/15/2025
Do Pass as Amended Executive;
Yes: 9 • No: 4
House vote • 4/8/2025
Third Reading - Short Debate - Passed
Yes: 113 • No: 0
House vote • 3/12/2025
Do Pass / Short Debate State Government Administration Committee;
Yes: 8 • No: 0
Actions Timeline
Public Act . . . . . . . . . 104-0006
6/16/2025HouseEffective Date January 1, 2026; Some Provisions
6/16/2025HouseEffective Date July 1, 2025; Some Provisions
6/16/2025HouseEffective Date June 16, 2025; Some Provisions
6/16/2025HouseGovernor Approved
6/16/2025HouseSent to the Governor
6/12/2025HouseAdded as Alternate Co-Sponsor Sen. Rachel Ventura
6/5/2025SenatePassed Both Houses
6/4/2025HouseMotion to Reconsider Vote - Withdrawn Rep. Will Guzzardi
6/4/2025HouseAdded as Alternate Co-Sponsor Sen. Napoleon Harris, III
6/1/2025SenateAdded as Alternate Co-Sponsor Sen. Mattie Hunter
6/1/2025SenateMotion Filed to Reconsider Vote Rep. Will Guzzardi
5/31/2025HouseHouse Concurs
5/31/2025HouseSenate Floor Amendment No. 3 House Concurs 071-043-000
5/31/2025HouseSenate Floor Amendment No. 2 House Concurs 071-043-000
5/31/2025HouseSenate Committee Amendment No. 1 House Concurs 071-043-000
5/31/2025HouseMotion Prevailed to Suspend Rule 074-039-000
5/31/2025HouseMotion Filed to Suspend House Rule(s) for Immediate Consideration Rep. Bob Morgan; 15d
5/31/2025HouseSenate Floor Amendment No. 3 Motion to Concur Recommends Be Adopted Rules Committee; 005-000-000
5/31/2025HouseSenate Floor Amendment No. 2 Motion to Concur Recommends Be Adopted Rules Committee; 005-000-000
5/31/2025HouseSenate Committee Amendment No. 1 Motion to Concur Recommends Be Adopted Rules Committee; 005-000-000
5/31/2025HouseSenate Floor Amendment No. 3 Motion to Concur Referred to Rules Committee
5/31/2025HouseSenate Floor Amendment No. 2 Motion to Concur Referred to Rules Committee
5/31/2025HouseSenate Committee Amendment No. 1 Motion to Concur Referred to Rules Committee
5/31/2025HouseSenate Floor Amendment No. 3 Motion Filed Concur Rep. Curtis J. Tarver, II
5/31/2025House
Bill Text
Engrossed
Enrolled
Introduced
Senate Amendment 1
Senate Amendment 2
Senate Amendment 3