Illinois State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Illinois, with full citations and the original source on every page.
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Is a program enrollment fee for an overnight immersive role-play experience subject to Illinois's Hotel Operators' Occupation Tax?
Yes. A facility that assigns participants overnight sleeping accommodations as part of a structured program -- even a private immersive role-play experience with no public lodging or reservations -- i…
Does a livestock shade system qualify for Illinois's farm machinery and equipment sales tax exemption?
No. Illinois's farm machinery and equipment exemption doesn't cover livestock shade systems, permanent or portable, because they're built from ordinary building materials and function like real estate…
Does an out-of-state dry-cleaning/repair company that only picks up and delivers items in Illinois -- with no office or warehouse there -- have to register and collect Illinois tax?
It depends on your numbers, not just your physical footprint: an out-of-state serviceperson with no Illinois office or warehouse can still have to register and collect Illinois tax once it hits $100,0…
Did Illinois eliminate the 200-transaction economic nexus threshold for remote retailers, and how does the $100,000 threshold work?
Yes. Beginning January 1, 2026, Illinois dropped the 200-separate-transactions test for remote retailers; only the $100,000 cumulative gross receipts threshold, measured on a rolling 12-month lookback…
Does an infusion-therapy provider owe Illinois sales tax on the prescription drugs it administers to patients, and at what rate?
An infusion-therapy provider is a "serviceperson" subject to Illinois's Service Occupation Tax on the prescription drugs it transfers to patients as part of treatment -- not exempt -- but qualifying p…
If a waste disposal company requires customers to use its own dumpsters as part of the service, is providing the dumpster a taxable lease or part of a nontaxable service?
It's part of the service, not a taxable retail lease. Since the dumpster has little to no value to the customer without the waste-removal service and can't be rented separately, its "true object" is t…
Are late fees for overdue lease or rental payments subject to Illinois sales tax?
Yes. A late charge or penalty added because a customer paid past the due date becomes part of the seller's or lessor's taxable gross receipts in Illinois -- and since Illinois began taxing most tangib…
Are sales of products to Amtrak exempt from Illinois sales tax, and what records does a retailer need to keep to prove it?
Yes -- sales of tangible personal property to Amtrak are exempt from Illinois state and local Retailers' Occupation Tax and Use Tax under federal law, even though Amtrak can't get a standard exemption…
Do I have to charge Illinois sales tax when I sell Deal-of-the-Day vouchers for golf tee times or pro-shop merchandise?
No -- selling a Deal-of-the-Day voucher itself is never subject to Illinois sales tax, because the voucher is intangible property. Whether tax applies when the voucher is REDEEMED depends on what it's…
Should Illinois's cannabis purchaser excise tax and local cannabis taxes be added on top of the retail price, and do they get taxed again themselves?
Yes, cannabis purchaser excise tax and local (municipal/county) cannabis taxes are separately stated additional charges on top of the retail price -- and none of those tax add-ons become part of the s…
Does the required dyed diesel fuel tax notice have to appear on the front of an invoice, or can it be on the back if the front references it?
A generic front-of-invoice reference to "warnings on the reverse side" is not enough -- the Department concluded that referencing EPA/IRS warnings on the back, without mentioning the Illinois Departme…
If I charge a fee to autograph a poster a customer already owns, is that fee subject to Illinois sales tax?
Signing a poster the CUSTOMER already owns and brings to you is a pure service with no transfer of tangible personal property, so it's not subject to Illinois sales tax by itself. But if you sell the …
How does Illinois's new 2025 lease tax interact with Chicago's Personal Property Lease Transaction Tax on a leased motor vehicle?
Motor vehicle leases aren't covered by Illinois's new 2025 lease-tax law at all -- vehicles keep their pre-2025 tax treatment (dealers owe Retailers' Occupation Tax, lessors owe Use Tax, lessees owe n…
Is software sold with a click-through license taxable in Illinois, and does it matter whether the software is downloaded or purely cloud-based?
It depends on delivery and license terms: software delivered purely through the cloud with nothing downloaded is generally not taxable (it's a nontaxable service), but software that includes any local…
Who owes Illinois tax on the parts used in a free "goodwill" vehicle repair that a manufacturer directs its dealer to perform?
It depends on who initiates the free repair. If a dealer does a goodwill repair entirely on its own, the dealer owes Use Tax on its own cost for the parts. But if a manufacturer directs the repair and…
Are residential elevators, stairlifts, and patient lifts taxed at Illinois's reduced 1% medical appliance rate, or the standard 6.25% rate?
No -- residential elevators, vertical platform lifts, stairlifts, and overhead patient lifts are taxed at Illinois's standard 6.25% state sales tax rate (plus applicable local taxes), not the reduced …
Are a MedSpa's hormone therapy, Botox, and wellness services subject to Illinois sales tax, and how do bundled memberships get taxed?
The Department declined to answer each of the MedSpa's 12 specific service-by-service questions individually, and instead reiterated the general framework: a pure service with no tangible personal pro…
Does Illinois's drive-away permit exemption cover utility and car-hauler trailers sold to Indiana residents, or only RVs and cargo trailers?
Only recreational vehicles and "cargo trailers" that meet a specific regulatory definition (built to be towed, designed for carrying property, and rated at least 2,200 pounds gross vehicle weight) qua…
Are fees charged for parking violations (like parking near a fire hydrant) subject to Illinois's Parking Excise Tax?
No -- a separately stated charge for a parking-rule violation (like parking near a fire hydrant or too close to a crosswalk) is not related to or incidental to the actual privilege of using the parkin…
Is a lessee being double-taxed if their equipment lease already had sales tax paid at signing, before Illinois started taxing lease payments themselves in 2025?
It feels like double taxation but isn't legally recognized as such: the tax paid when a lessor originally bought equipment to lease (pre-2025 Use Tax on the lessor's cost) and the NEW tax now added to…
Can a construction-equipment rental company with one Illinois office source all its rental receipts to that office for local sales tax purposes, regardless of where the equipment is delivered or picked up?
No -- a single-location origin-based approach isn't automatically approved. For a lease with recurring periodic payments where the equipment is delivered to the customer, Illinois sources each payment…
Does a mobile home park owner/dealer owe Illinois sales tax when it resells a used, previously-titled manufactured home out of its park inventory?
Yes. Once a mobile home park owner becomes a licensed dealer and holds a manufactured home in its park inventory, its sale of that home to a purchaser -- whether it's the home's first sale or a later …
Is a bundled IVF specimen-storage offering -- combining a leased robotic system, a nominally-sold storage tank, and subscription database software -- taxable in Illinois?
The Department didn't issue a specific yes/no on this taxpayer's bundled tank/robot/software offering. Instead, it explained the general framework: a software-as-a-service provider is a 'serviceperson…
Can a marketplace facilitator subtract its own currency-exchange, payment-processing, and platform fees from taxable gross receipts, since those fees are charged to marketplace sellers rather than buyers?
No. A marketplace facilitator that has met the $100,000 remittance threshold is treated as the retailer for every sale made over its marketplace, and its taxable gross receipts include all considerati…
Does corrugated plastic field tile used to drain farmland qualify for Illinois's farm machinery and equipment sales tax exemption?
No. Illinois's farm machinery and equipment exemption specifically excludes corrugated plastic pipe and other water-management/drainage products from the definition of exempt 'equipment,' so field til…
Will dietary supplements that don't make medicinal claims still be taxed at a reduced rate after Illinois eliminates its 1% state grocery tax on January 1, 2026?
Dietary supplements without a medicinal label claim keep being classified as 'food' (groceries), but the way they're taxed changes on January 1, 2026: the State's 1% grocery tax is eliminated, and ins…
Is an auction software platform that connects sellers with payment processors, but never touches funds itself, a 'marketplace facilitator' under Illinois sales tax law?
The Department didn't confirm or reject this platform's own position that it isn't a marketplace facilitator. It instead explained that Illinois's definition is intentionally broad -- covering INDIREC…
Does an AI chatbot company owe Illinois sales, use, or service occupation tax on its subscription plans and a free, open-source API software development kit?
Cloud-based AI chatbot access that's never downloaded -- used only through a website or app -- is a service, not subject to Retailers' Occupation Tax or Use Tax. But if the company gives subscribers a…
Is a payment-localization company that briefly holds 'flash title' to goods -- or never holds title at all -- a marketplace facilitator responsible for Illinois sales tax on its merchant clients' sales?
A person must carry out BOTH activities in the marketplace facilitator definition -- listing or advertising the seller's goods for sale, AND collecting/transmitting payment -- to qualify as a marketpl…
Does an out-of-state buyer get a trade-in credit on an Illinois vehicle purchase, and at what rate is the sale taxed if the buyer's home state doesn't offer Illinois a reciprocal exemption?
Illinois allows a dealer to reduce a motor vehicle's taxable selling price with a like-kind trade-in on a retail sale, but that trade-in credit is NOT available on a private-party (non-dealer) vehicle…
Is a signed 'past-use license' agreement -- resolving a dispute over unlicensed access to canned software -- a taxable retail sale, or can it be reclassified as a non-taxable settlement?
The Department's answer supports the software vendor's position: sales of canned computer software are taxable retail sales in Illinois regardless of how the software is delivered (including remote/di…
Does a lessor that already paid use tax on equipment cost under a pre-2025 operating lease now also owe the new lease tax on payments received after January 1, 2025?
Yes. Even though the lessor already paid Use Tax on the equipment's cost under the pre-2025 rules, receipts collected on or after January 1, 2025 from an existing operating lease are now separately su…
Does an AI chatbot company owe Illinois sales, use, or service occupation tax on its subscription plans and a free, open-source API software development kit?
This letter was later SUPERSEDED by ST 25-0057-GIL, which reissued essentially the same analysis for the same taxpayer with only a minor wording correction (no substantive change): cloud-based AI chat…
Is a dietary supplement powder sold in stick packs or sachets, mixed with water, taxed as food at Illinois's reduced rate?
Yes, based on the product labels reviewed, these dietary supplement powders qualify as 'food' taxed at the reduced 1% rate rather than the standard 6.25% rate -- they don't make medicinal claims (so t…
How much is Illinois's Sustainable Aviation Fuel Purchase Credit worth, and are there any caps or carry-forward limits on using it?
Yes, there are caps, but only on soybean oil-derived fuel. From July 1, 2023 through December 31, 2032, an air common carrier earns a $1.50-per-gallon Sustainable Aviation Fuel Purchase Credit (SAFPC)…
Do a medical device company's bone growth stimulation devices qualify for Illinois's 1% reduced sales tax rate as 'medical appliances,' or are they taxed at the general 6.25% rate?
No -- the Department ruled that the taxpayer's bone growth stimulation devices (marketed as combined magnetic field and low-intensity pulsed ultrasound devices) do not qualify as 'medical appliances' …
Are food, medicines, drugs, and medical appliances exempt from Illinois sales tax, or are they taxed at a special rate?
Qualifying food, prescription and non-prescription medicines, drugs, and medical appliances for human use are NOT exempt from Illinois sales tax -- they are taxed at a reduced state rate of 1% (plus a…
Does Illinois sales/use tax apply to a SaaS company's paid subscription fees and its free downloadable mobile app?
No sales tax applies to the SaaS subscription fees themselves, because Illinois does not tax software accessed only remotely through the cloud and never downloaded. The free mobile app is a separate q…
Does a grocer have to charge the higher 6.25% sales tax rate on cold salads, or the preferential 1% low food rate?
It depends on how the salad is made. Under 86 Ill. Adm. Code 130.310, a pre-made cold salad stored in a sealed container qualifies as food not prepared for immediate consumption and is taxed at Illino…
Is a solar-panel construction contractor exempt from Illinois Use Tax on materials when its contract is with a third-party owner instead of directly with the tax-exempt school district that will host the panels?
No. Because the contract is with a third-party PPA company that will own the solar panels, not with the tax-exempt school district itself, the construction contractor cannot buy the materials tax-free…
Does an Illinois auto body shop owe sales/use tax on shop supplies like sandpaper and masking tape, or can it charge customers tax-free for them as a resale?
Auto repairmen and body shops owe Illinois Use Tax on consumable supplies (sandpaper, masking tape, paint thinner, etc.) that are used up in the shop and never physically leave with the customer's car…
When are shipping, storage, and other fulfillment-contract line items subject to Illinois sales tax on a sale of tangible personal property?
It depends on whether an "inseparable link" exists between the sale of the goods and the service charge. If the charge (including delivery) isn't separately identified, or is separately identified but…
Are a travel-marketing company's magazines, direct-mail flyers, and membership fees subject to Illinois sales and use tax?
The Department declined to rule on the specific facts and instead gave general guidance: periodicals published at least twice a year in newsprint-and-ink form (like the company's bimonthly travel maga…
Does Illinois sales tax apply to a membership fee that gives customers access to exclusive dining events and third-party restaurant perks, but no tangible goods?
No. Illinois treats membership fees as intangibles, so they are not subject to Retailers' Occupation Tax or Use Tax when the membership itself transfers no tangible personal property. But if a members…
Is a single-seller e-commerce platform (like a photographer's order and payment site) a 'marketplace facilitator' that must collect Illinois sales tax on behalf of its business customers?
Generally no. If customers reach a seller's page only through a code, link, or unique URL specific to that one seller, and the platform does not let them search or browse for other sellers' products, …
If a subcontractor for a tax-exempt organization (like a school or church) rents equipment such as a lift, does the subcontractor have to pay Illinois sales tax on the rental?
Generally yes. Illinois now taxes lease receipts directly (effective January 1, 2025), and a rental to a subcontractor is taxable unless the subcontractor itself qualifies -- for example, as a constru…
Does a company that only shows ads linking to a retailer's own checkout page, without ever collecting or transmitting the customer's payment, count as a 'marketplace facilitator' that must collect Illinois sales tax?
The Department confirmed that an advertising platform is not a 'marketplace facilitator' under Illinois law as long as it never directly or indirectly collects payment from the customer and transmits …
Are a religious school's mandatory laptop rentals to students, billed as part of tuition, exempt from Illinois sales tax as a 'noncompetitive' sale like school yearbooks?
The Department did not give a yes-or-no answer. It explained that, effective January 1, 2025, leases of tangible personal property are themselves taxable sales in Illinois, and then walked through the…
If a company pays a federal tariff on imported materials and passes that cost on to a customer, does Illinois sales or use tax apply to the tariff amount?
It depends on who is legally responsible for the tariff. If the seller is the importer of record and passes the tariff cost on to the customer as part of the price, the tariff is part of the gross rec…
Now that Illinois taxes leases as sales starting January 1, 2025, can a Chicago-based equipment-rental company charge tax based on its own Chicago location instead of tracking the tax rate for every city its customers take delivery in?
No — the Department did not grant the origin-based shortcut the lessor asked for. Effective January 1, 2025, lessors owe State and local retailers' occupation tax on lease receipts, and for leases wit…
Under Illinois's new 2025 lease-receipts tax, does a lessor of leased machinery owe sales tax on the cost of repair or replacement parts it buys to fix or refurbish the equipment it leases out?
No. A lessor's purchase of repair or replacement parts that get attached to equipment used solely for leasing (and whose lease receipts are already taxed under the new 2025 lease-receipts tax) is exem…
Can a car buyer get a sales-tax trade-in credit when a manufacturer's Lemon Law settlement money is applied toward a replacement vehicle?
No. Illinois law does not allow a sales-tax trade-in credit for the portion of a new vehicle's price that is covered by a manufacturer's New Vehicle Buyer Protection Act ("Lemon Law") settlement. In t…
Does a small out-of-state online retailer that sells below Illinois's $100,000/200-transaction threshold still have to register and collect Illinois sales tax, and can Illinois simplify its local-tax remittance rules for remote sellers?
Illinois Retailers' Occupation Tax applies to remote retailers once they hit $100,000 in Illinois sales or 200 separate transactions with Illinois purchasers under 86 Ill. Adm. Code 131, and there is …
What Illinois state sales tax rate applies to sales of food, and how are soft drinks and candy treated?
As of this March 2025 letter, Illinois taxed food for human consumption to be eaten off the premises at a reduced state rate of 1%, rather than the standard 6.25% Retailers' Occupation Tax rate. That …
Under Illinois's 2025 lease-tax overhaul, does a party-entertainment company that rents out equipment along with an on-site supervisor owe retailers' occupation tax on the whole package, and how is that tax sourced?
Generally yes. Effective January 1, 2025, Illinois taxes leases of tangible personal property as retail sales (Article 75 of Public Act 103-592), and the Department explained that renting out equipmen…
Do pneumatic compression devices sold to Illinois patients for treating lymphedema and chronic venous insufficiency qualify for Illinois's reduced 1% sales tax rate on medical appliances?
The Department did not decide the question definitively, because a GIL can't resolve a specific taxability question. But it reaffirmed that a medical appliance is an item that directly substitutes for…
Under Illinois's 2025 leasing tax, does a park district owe sales tax on golf cart packages, room-rental add-ons, GPS geocache rentals, mini golf, facility rentals, and locker rentals?
It depends on the "true object" of each transaction. Golf carts bundled into golf packages, GPS units rented for geocache tours, and equipment add-ons to room rentals are generally taxable as leases o…
Does Illinois tax hyperbaric oxygen chambers, and other medical devices, at the reduced 1% medical-appliance rate or the general 6.25% rate?
It depends on the specific device and how it's used: Illinois taxes an item at the reduced 1% state rate only if it is a 'medical appliance' that directly substitutes for a malfunctioning body part (l…
Do wheelchair ramps, stair lifts, and grab bars qualify for Illinois's reduced 1% sales tax rate for medical appliances?
No. The Illinois Department of Revenue concluded that wheelchair ramps, stair lifts, and grab bars are taxed at the regular 6.25% state sales tax rate (plus local taxes), not the reduced 1% rate for m…
Since Illinois started taxing leases of tangible personal property on January 1, 2025, does a business that rents out scaffolding owe retailers' occupation tax on those rental charges, and can it accept a manufacturing exemption certificate (Form ST-587) for scaffolding rentals?
Generally yes, the lessor owes state and local retailers' occupation tax on scaffolding rental receipts starting January 1, 2025, and no, an ST-587 manufacturing machinery and equipment exemption cert…
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These are official tax letter rulings and advisory opinions issued by Illinois's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.