Illinois Sales Tax: Rates, Rules & Compliance Guide

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Illinois sales tax has a base state rate of 6.25%, but once local taxes are added on, combined rates can climb as high as 11.5%. If you sell physical goods, that's the tax rate you need to take into account.

But if you sell software or digital products, there's a twist. Illinois does not tax SaaS at the state level. Chicago, however, has a Personal Property Lease Transaction Tax (PPLTT) that taxes software at 15%. That tax has its own registration, its own filing process, and its own due dates. 

This guide covers the full picture: what's taxable, when you have nexus, how to register, how to calculate, and how to file and remit sales tax in Illinois.

What Illinois Taxes: Taxable Categories

Illinois sales tax applies to retail sales, leases, and rentals of tangible personal property (TPP). If you're selling physical goods to buyers in Illinois, you're almost certainly required to collect sales tax.

SaaS, electronically delivered software, and digital services are not taxable under Illinois state sales tax, though they are taxable in Chicago. (See below). Canned/prewritten software is generally taxable if ownership is transferred. Pure services with no TPP component are generally not taxable in Illinois. 

What Remains Taxable for Most Businesses

For businesses selling physical products into Illinois, it’s important to note that the following are taxable at the state plus local jurisdiction rate:

• General merchandise
• Leases and rentals of tangible personal property
• Prepared or restaurant food

Groceries are tax exempt in Illinois as of January 1, 2026. Prescription drugs and certain medical appliances are also exempt.

Monitoring: When Illinois Sales Tax Applies to You

Economic Nexus

Economic nexus is triggered when your sales into Illinois hit $100,000 in the previous 12-month period. This amount includes all taxable and non-taxable retail sales, but, for individual sellers, marketplace sales are excluded from the threshold. 

Note: As of January 1, 2026, Illinois removed its 200-transaction threshold. Revenue is now the only measure.

Once you cross this threshold, you're required to register and begin collecting sales tax in Illinois.

Physical Nexus

Any physical presence in Illinois creates an obligation to collect sales tax. This includes offices, employees, warehouses, or inventory stored in the state. There's no revenue threshold required.

Remote sellers and out-of-state sellers who meet the economic nexus threshold are treated the same as Illinois businesses once they register.

Registration: How to Register for Illinois Sales Tax

Businesses register for an Illinois sales tax permit through MyTax Illinois. To register:

1. Create a MyTax Illinois account.
2. Select "Register a New Business."
3. Complete Form REG-1, the Sales and Use Tax license application.
4. Submit 

For business registration, you’ll need your businesse’s identifying information, such as EIN and the names and contact info of stakeholders. 

There’s no fee to register for an Illinois sales tax permit, but businesses in some specialized industries require additional licenses before being allowed to register. You’ll typically receive your permit in 1-2 weeks from registration.

Note that if you also sell SaaS or digital goods into Chicago, you’ll be required to register separately for Chicago’s PPLTT tax.

Calculation: Illinois Sales Tax Rates

The sales tax rate for the state of Illinois is 6.25%. After that, local taxes layer on top.

Counties, cities, and special taxing districts can all add their own rates, with combined rates reaching as high as 11.5% in some areas. The MyTax Illinois Tax Rate Finder (Illinois sales tax calculator) lets you look up the exact combined rate by address.

Major City Combined Rates

Combined tax rates in major Illinois municipalities include:

Charging Illinois Sales Tax

For remote sellers, Illinois is a destination-based sales tax state. This means you’ll charge sales tax based on your buyer’s location. Illinois-based sellers, however, should charge sales tax based on the rate at their in-state location. 

Chicago PPLTT — The SaaS-Specific Tax

Chicago's Personal Property Lease Transaction Tax (PPLTT) applies to SaaS and digital goods used within city limits. The current rate is 15% (increased from 11% effective January 1, 2026).

This tax exists because Chicago treats software subscriptions as a lease of personal property or what the city calls a "non-possessory computer lease." That classification means CRM tools, project management platforms, accounting software, and other cloud services are all subject to the PPLTT when the customer is in Chicago.

The state-level SaaS exemption doesn't apply here. The PPLTT is a city tax, and it applies regardless of how Illinois classifies your product at the state level.

If you sell SaaS or digital goods and have customers in Chicago, you need to:

• Register separately with the Chicago Business Direct (CBD) portal 
• Calculate the PPLTT at 15% on applicable Chicago transactions
• File PPLTT returns by the 15th of the month following the period end (not the 20th, like state returns)
• Remit separately through the CBD portal

Filing: How and When to File Illinois Sales Tax Returns

File Illinois sales tax returns online through MyTax Illinois using Form ST-1.

Returns are due on the 20th of the month following the reporting period. If the 20th falls on a weekend or holiday, the deadline moves to the next business day. For example, if you are a monthly filer, sales tax for the month of January would be due February 20th.

A business’s filing frequency depends on your average monthly tax liability. IDOR assigns your frequency at registration and can reassign it as your business grows.

Frequencies are generally:

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Note that some very high-volume businesses may be required to file more often than monthly. 

It’s important to understand that the PPLTT filing is separate. Chicago PPLTT returns are due on the 15th of the month following the period end and are filed through the Chicago Business Direct portal, not MyTax Illinois. The PPLTT is a totally separate tax from Illinois sales tax. 

Late filing results in penalties and interest charges. For late filing, the penalty is the lesser of $250 or 2% of the tax owed. If you still haven't filed within 30 days of receiving a nonfiling notice from IDOR, an additional penalty of the greater of $250 or 2% of the tax shown due, up to a maximum of $5,000 may be levied.

Interest accrues on top of any penalties, starting the day after your payment was due. The rate is tied to the federal underpayment rate and is reviewed by IDOR every January and July.

The IDOR can also audit Illinois businesses and remote retailers that fail to meet their obligations. 

Remittance: How to Pay Illinois Sales Tax

You’ll generally remit the sales tax owed along with your sales tax filing through MyTax Illinois. Illinois charges you via ACH debit with your bank account on file. Paying Chicago’s PPLTT is the same, except it’s paid through the Chicago Business Direct portal. Both these methods require a US bank account on file. 

If you're a foreign business without a US bank account, you won't be able to remit directly through either portal. Sphere's embedded remittance platform handles this — letting you meet both state and Chicago obligations without needing a local bank account.

How Sphere Helps With Illinois Sales Tax Compliance

Illinois sales tax looks manageable on paper. But the PPLTT adds a whole separate compliance layer for any business selling digital products or SaaS into Chicago. This means two portals, two filing schedules, and two remittance processes.

Sphere automates the full Illinois compliance workflow, including: 

• Monitoring - Tracks your Illinois revenue against the $100,000 economic nexus threshold in real time
• Registration - Manages both the MyTax Illinois (REG-1) and Chicago CBD registration processes
• Calculation - Applies the correct combined rate by customer location, including the 15% Chicago PPLTT for SaaS and digital products. 
• Filing - Prepares and submits state returns via MyTax Illinois and PPLTT returns via CBD on schedule
• Remittance - Handles ACH payments for both obligations, including for non-US businesses via Sphere's embedded platform
• Exemption certificate management - Collects, validates, and stores sales tax exemption certificates so you're audit-ready.

  Ready to automate your Illinois sales tax compliance? 

Schedule a demo with Sphere today.

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Sphere's AI engine, TRAM, also continuously monitors tax law changes so you don't have to. When rates change (like Chicago's PPLTT increase in 2026), your compliance stays current without any manual intervention.

Chicago’s PPLTT makes Illinois sales tax tricky, but Sphere automates your workflow so you can get back to running your business.