Illinois: Sales Tax Handbook
What purchases are exempt from the Illinois sales tax?
While the Illinois sales tax of 6.25% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Illinois.
Sales Tax Exemptions in Illinois
In Illinois, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.
Some items which are considered to be exempt from sales tax in the state include: machinery, and building materials for real estate development. In addition, newspapers and legal tender (for example: gold, medallions and gold bullion issued by qualifying governments), and jet fuel intended to be utilized for international flights are also tax-exempt items.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Illinois:
Clothing
6.25%Groceries
1%Prepared Food
8%Prescription Drugs
1%OTC Drugs
1%These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Are services, shipping, installation, etc taxable in Illinois?
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Illinois sales tax see the Illinois sales taxability FAQ page.
Other tax-exempt items in Illinois
This table lists a number of additional categories of goods and services that are exempt from Illinois' sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Illinois.
Category | Exemption Status |
---|---|
Leases and Rentals | |
Motor Vehicles | EXEMPT * |
Tangible Media Property | EXEMPT * |
Manufacturing and Machinery | |
Machinery | EXEMPT |
Raw Materials | EXEMPT * |
Medical Goods and Services | |
Medical Services | EXEMPT |
Newspapers and Magazines | |
Newspapers | EXEMPT |
Periodicals | EXEMPT |
Occasional Sales | |
General Occasional Sales | EXEMPT * |
Motor Vehicles | EXEMPT * |
Optional Maintenance Contracts | |
General Optional Maintenance Contracts | EXEMPT * |
Services | |
Janitorial Services | EXEMPT |
Transportation Services | EXEMPT |
Software and Digital Products | |
Custom Software - Delivered on Tangible Media | EXEMPT |
Custom Software - Downloaded | EXEMPT |
Customization of Canned Software | EXEMPT * |
Digital Products | EXEMPT |
Trade-Ins | |
General Trade-Ins | EXEMPT |
* See notes in category taxability page for details
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