Illinois Sales Tax on Software and Digital Products Illinois: Sales Tax Handbook

Illinois:

Are Software and Digital Products 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 software and digital products in Illinois, including canned software - delivered on tangible media, canned software - downloaded, custom software - delivered on tangible media, custom software - downloaded, customization of canned software and digital products. To learn more, see a full list of taxable and tax-exempt items in Illinois.


Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in Illinois.

Canned Software - Downloaded
TAXABLE
Sales of canned software - downloaded are subject to sales tax in Illinois.

Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in Illinois.

Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in Illinois.

Customization of Canned Software
EXEMPT
In the state of Illinois, any modified software which is held for general or repeated sale or lease is considered to be taxable.

Digital Products
EXEMPT
Sales of digital products are exempt from the sales tax in Illinois.



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Source: http://www.salestaxhandbook.com/illinois/sales-tax-taxability/software-and-digital-products