Illinois Sales Tax on Leases and Rentals Illinois: Sales Tax Handbook


Are Leases and Rentals subject to sales tax?

While Illinois' sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of leases and rentals in Illinois, including motor vehicles and tangible media property. To learn more, see a full list of taxable and tax-exempt items in Illinois.

Motor Vehicles
In the state of Illinois, any rentals for a maximum of one year will be subject to an automobile renting occupation and use tax.

Tangible Media Property
In the state of Illinois, lessors are required to pay a use tax upon acquisition. The purported lease to nominal lessee can be subject to the retailers' occupation tax.

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