Illinois — Sales & Use Tax

Illinois imposes a "retailers' occupation" tax, rather than a traditional transaction-based sales tax. The Retailers' Occupation Tax Act (35 ILCS 120) taxes the business of selling tangible personal property at retail, not the simple act of making a sale. Illinois also administers three parallel acts: the Use Tax Act (purchases for use where ROT was not collected), the Service Occupation Tax Act (taxes service providers transferring tangible personal property), and the Service Use Tax Act (complements service occupation taxation on the purchaser side). Informally, these four acts together are referred to as "sales tax" in state guidance and on returns.

Key statutory components:

• Under 35 ILCS 120/2, the ROT is imposed on persons engaged in the business of selling tangible personal property at retail in Illinois. "At retail" is defined at 35 ILCS 120/1 to exclude sales for resale or for subsequent lease.
• As confirmed by Illinois courts (e.g., Svithiod Singing Club v. McKibbin, 381 Ill. 194 (1942)), the tax is on the occupation of retailing, not directly on each sale. This affects supplier documentation, audit procedures, and eligibility for exemptions.
• State and local taxes: In addition to the state ROT, municipalities and counties may impose their own local ROT under statutory authority (see 65 ILCS 5/8-11-1 and 55 ILCS 5/5-1006). The Illinois Department of Revenue administers both state and local ROT liabilities.

Major recent changes:

• Beginning January 1, 2025, Public Act 103-592 amends the ROT Act to treat leases of tangible personal property (excluding motor vehicles, trailers, etc. required to be titled or registered) as "sales at retail" for ROT purposes, shifting such transactions from use tax to ROT unless exempt.
• Public Act 103-983, also effective January 1, 2025, changes sourcing such that destination-based ROT applies to many sales previously subject only to use tax.
• Effective January 1, 2026, Public Act 104-0006: (i) eliminates the 200-transaction economic nexus threshold for remote sellers and marketplace facilitators (leaving only the $100,000 gross receipts test), and (ii) introduces a fallback 15% state ROT rate if the retailer does not provide sufficient sourcing information for destination-based sales.

Sources:

• 35 ILCS 120 Retailers' Occupation Tax Act (as amended through P.A. 103-592, P.A. 103-983, and P.A. 104-0006)
• 86 Ill. Admin. Code Parts 130, 140, 150, 160 (administrative detail)
• Recent Public Acts and IDOR Bulletins, including FY 2025-10 and FY 2026-12, summarize these statutory changes.

Source: 35 ILCS 120 (Retailers' Occupation Tax Act) Source: Public Act 103-592 (amends 35 ILCS 120) Source: Public Act 103-983 (amends 35 ILCS 120) Source: Public Act 104-0006 Source: IDOR FY 2025-10 Bulletin Source: IDOR FY 2026-12 Bulletin Source: 86 Ill. Admin. Code Parts 130, 140, 150, 160

Illinois imposes the Retailers' Occupation Tax at two rates depending on the type of property sold. The general rate is 6.25% of gross receipts from sales of tangible personal property made in the course of business. A reduced rate of 1% applies to prescription and nonprescription medicines, drugs, and medical appliances, including products classified as Class III medical devices by the FDA used for cancer treatment pursuant to prescription, along with accessories and components related to those devices, modifications to motor vehicles for disability accessibility, and insulin, blood sugar testing materials, syringes, and needles used by human diabetics.

Effective January 1, 2026, the state eliminated the 1% tax on grocery sales (food for human consumption to be consumed off premises, excluding alcoholic beverages, cannabis-infused food, soft drinks, candy, and food prepared for immediate consumption), though municipalities and counties may impose a local 1% grocery tax by ordinance.

These rates apply only to state-level tax; local governments impose additional retailers' occupation taxes administered by the Illinois Department of Revenue.

Source: 35 ILCS 120/2-10; 86 Ill. Admin. Code § 130.311; Illinois Tax Matrix (IDOR Publication PIO-101)

Effective January 1, 2026, Illinois eliminated the 200-transaction threshold for economic nexus. Remote retailers without physical presence in Illinois must now register and collect Retailers' Occupation Tax if they meet or exceed $100,000 in cumulative gross receipts from retail sales of tangible personal property to purchasers in Illinois during the preceding 12-month period.

Key 2026 change: Prior to January 1, 2026, remote retailers triggered nexus by surpassing either $100,000 in cumulative gross receipts or 200 separate transactions delivered into Illinois in any 12-month period. Public Act 104-0006 (2024), codified at 35 ILCS 120/2(b-1), repealed the 200-transaction prong, so only the $100,000 gross receipts threshold remains after that date.

Remote retailers must determine whether they meet the threshold at the end of each calendar quarter (March, June, September, December), using a rolling 12-month lookback period. If the threshold is met or exceeded by the end of a quarter, the retailer must begin collecting and remitting all applicable state and local retailers' occupation tax at destination rates on all retail sales to Illinois purchasers at the start of the next quarter.

Gross receipts for this purpose exclude exempt sales, sales for resale, and sales made through marketplace facilitators when the facilitator collects Illinois tax.

Material revision: This section has been updated to reflect Public Act 104-0006 and IDOR's FY 2026-12 Bulletin, which detail the removal of the 200-transaction test for economic nexus effective January 1, 2026. This change is confirmed in IDOR's legal letter ST 26-0019-GIL and the current version of 35 ILCS 120/2(b-1).

Source: 35 ILCS 120/2(b-1) Source: IDOR Bulletin FY 2026-12 Source: IDOR Legal Letter ST 26-0019-GIL

Effective January 1, 2026, Illinois requires marketplace facilitators to register and collect Retailers' Occupation Tax (ROT) if, during the preceding 12-month period, they meet or exceed $100,000 in cumulative gross receipts from retail sales of tangible personal property to Illinois purchasers. As of this date, the prior 200-transaction threshold is formally eliminated—marketplace facilitators are subject to collection and remittance responsibilities solely based on the $100,000 gross receipts test. This rule applies regardless of the number of transactions made.

A marketplace facilitator is defined as a person or business who, under an agreement with an unrelated third-party marketplace seller, both facilitates the retail sale (by listing or advertising tangible personal property for sale) and collects payment from the customer, transmitting it to the marketplace seller. Once subject to collection, the facilitator is liable for all applicable state and local ROT on both its own sales and those made on behalf of marketplace sellers through its marketplace.

Quarterly Determination: Marketplace facilitators must determine whether they meet the $100,000 threshold at the end of each calendar quarter (March, June, September, and December) using a rolling 12-month lookback. If the threshold is met or exceeded by the end of a quarter, the facilitator is required to register and collect ROT for the subsequent quarter and all quarters in which the threshold remains exceeded.

Fallback 15% State ROT Rate: Beginning January 1, 2026, if a marketplace facilitator fails to provide sufficient sourcing information for certain delivered sales (i.e., when the delivery location cannot be determined), the Department will assess a fallback state ROT rate of 15% on those undetermined sales. This penalty rate applies to both remote retailers and marketplace facilitators where destination-based sourcing cannot be accurately applied.

Material changes since prior version: Elimination of the 200-transaction threshold and introduction of the 15% fallback ROT rate on undetermined-location sales, both effective January 1, 2026, under Public Act 104-0006 and IDOR Bulletin FY 2026-12.

Source: 35 ILCS 120/2 Source: 86 Ill. Admin. Code Part 131 Source: IDOR Bulletin FY 2026-12 Source: Public Act 104-0006

Illinois uses both origin and destination sourcing for the Retailers' Occupation Tax (ROT), depending on the type and location of the seller and the transaction, with important changes effective January 1, 2026.

Current sourcing rules (through December 31, 2025):

• Remote retailers (no physical presence in Illinois): Destination sourcing applies. Tax is collected at the rate in effect at the Illinois address where tangible personal property is shipped, delivered, or where the purchaser takes possession.
• In-state retailers with inventory or fulfillment in Illinois: Origin sourcing applies to sales from Illinois inventory; tax is based on the rate at the business location from which the sale is fulfilled.
• Out-of-state locations: When an Illinois-based retailer sells from a location outside Illinois to an Illinois purchaser, destination sourcing applies.

Changes effective January 1, 2026:

• The 200-transaction threshold for economic nexus is eliminated. Remote retailers and marketplace facilitators are only required to collect ROT if they meet or exceed $100,000 in cumulative gross receipts from sales to Illinois purchasers in any rolling 12-month period.
• Penalty rate for insufficient sourcing information: Effective January 1, 2026, if a retailer fails to provide sufficient information to enable accurate destination sourcing on gross receipts, the Illinois Department of Revenue will assess a flat 15% tax rate on those undetermined sales. This applies both prospectively and during audits for prior periods.

Statutory grounding and definitions:

• The sourcing rules and required methods are outlined in 35 ILCS 120/2-12, which also provides definitions for terms such as "remote retailer" and "maintaining a place of business." For detailed descriptions and scenarios, see the IDOR’s official guidance.

Source: 35 ILCS 120/2-12; IDOR Destination-Based Sales Tax Assistance; IDOR Bulletin FY 2026-12

Illinois law prohibits any person from making retail sales of tangible personal property in Illinois without holding a valid Certificate of Registration from the Illinois Department of Revenue (IDOR). This core requirement applies to both Illinois-based retailers and, critically, to remote retailers and marketplace facilitators who meet the state's economic nexus standard.

Material update effective January 1, 2026

Effective January 1, 2026, Illinois law eliminates the prior 200-transaction threshold. Remote retailers and marketplace facilitators must now register and collect tax only if they meet or exceed $100,000 in cumulative gross receipts from sales of tangible personal property to Illinois purchasers in the preceding 12-month period. The number of transactions is no longer relevant for nexus or registration: the only threshold is gross receipts. This change is codified in Public Act 104-0006 and implemented by IDOR Bulletin FY 2026-12.

Registration methods and process

• Businesses (in-state and remote) register using Form REG-1 via three channels:
• Online through MyTax Illinois (mytax.illinois.gov) — recommended, fastest (1-2 days)
• Mail — slower processing (4-6 weeks)
• In-person at an IDOR office

IDOR may require a bond or other security as a registration condition for applicants with certain risk factors (prior tax delinquencies, revoked prior certificates, etc.).

• After approval, IDOR issues an electronic Certificate of Registration through the MyTax Illinois platform. Businesses can access and print the certificate under their account, or request a paper copy by email if they lack online access.

• Illinois-based and remote retailers must register before conducting any business activities triggering Illinois tax obligations (sales, inventory, employee hiring, etc.).

Additional registration mechanics

• Remote retailers, marketplace facilitators, and in-state retailers making destination-based sales must register tax sites for each applicable local jurisdiction through MyTax Illinois. All locations can now be managed on a single filing interface for Forms ST-1/ST-2 after 2026 system updates.
• Retailers below the $100,000 gross receipts threshold may have their registration status changed automatically to “voluntary use tax” collector, with IDOR notifications provided.

Authority for these requirements

• 35 ILCS 120/2a (certificate, registration, bond authority)
• IDOR Publication 113 (Registering Your Business)
• IDOR Bulletin FY 2026-12 (economic nexus change, registration workflow)

Source: 35 ILCS 120/2a; IDOR Business Registration; IDOR Publication 113, Registering Your Business; IDOR Bulletin FY 2026-12

The Illinois Department of Revenue (IDOR) assigns each retailer a filing frequency for Form ST-1 (Sales and Use Tax and E911 Surcharge Return) based on the retailer's average monthly tax liability. The Department reviews accounts annually and notifies retailers if their filing frequency changes.

Filing frequency thresholds (as of January 2026)

The Form ST-1 Instructions (R-1/26) specify filing frequency brackets strictly based on average monthly liability:

• Annual filing: Assigned if average monthly liability is less than $50. The annual return covers the calendar year and is due by January 20 of the following year.
• Quarterly filing: Assigned if average monthly liability is at least $50 but not more than $200. Quarterly returns are due April 20, July 20, October 20, and January 20.
• Monthly filing: Assigned if average monthly liability is greater than $200. Monthly returns are due on the 20th day of the month following the end of the reporting period.

IDOR may notify retailers by mail if a filing frequency change is warranted under these brackets based on their annual review. The Department determines filing assignment based on registration information and actual tax liability history.

Quarter-monthly accelerated payments

Retailers and servicepersons with average monthly tax liability of $20,000 or more must make quarter-monthly accelerated payments. These are due on the 7th, 15th, 22nd, and last day of each month. Retailers subject to this rule must remit a minimum of 22.5% of actual monthly liability or 25% of the liability reported for the same month in the preceding year. These payments are in addition to the regular monthly return and are reconciled against total liability on the ST-1.

Electronic filing requirement

Retailers with annual gross receipts averaging $20,000 or more must file returns electronically, under 86 Ill. Admin. Code Part 760. Hardship waivers may be requested. Retailers required to file electronically who do not comply cannot take the discount for preparation and filing expenses.

Filing required even if no sales

Retailers must file Form ST-1 by the required due date even during periods with no gross receipts.

Source: Form ST-1 Instructions (R-1/26); 86 Ill. Admin. Code Part 760; 35 ILCS 120/3

A remote retailer that exceeds the $100,000 economic nexus threshold for Illinois Retailers’ Occupation Tax (ROT) must begin collecting and remitting ROT on the first day of the calendar quarter immediately following the end of the lookback period in which the threshold was met.

Quarterly determination and lookback Illinois law requires remote retailers to determine if they meet or exceed the $100,000 threshold at the end of each calendar quarter (March 31, June 30, September 30, December 31) using a rolling 12-month lookback. If the retailer's cumulative gross receipts from sales of tangible personal property to Illinois purchasers in the prior 12 months meet or surpass $100,000 as of the last day of a quarter, they are required to begin collecting ROT starting the first day of the next quarter.

Collection and remittance obligation The obligation to collect applies to all sales to Illinois purchasers made on or after the first day of the next calendar quarter and continues for each subsequent quarter for which the remote retailer continues to exceed the threshold. Filing and remittance deadlines are governed by the Department's standard due date rules (generally, the 20th day of the month following the close of the reporting period).

Legal support This timing rule is directly stated in Illinois regulation at 86 Ill. Admin. Code § 131.115(b), which provides: “A remote retailer shall determine on a quarterly basis whether it meets either threshold. If a remote retailer meets a threshold for a lookback period, it is deemed to be engaged in the occupation of selling at retail in Illinois and must comply with all requirements… beginning on the first day of the quarter immediately following the end of the lookback period in which the remote retailer met the threshold.”

Source: 86 Ill. Admin. Code § 131.115(b)

Illinois' Retailers’ Occupation Tax Act provides multiple statutory exemptions for sales of tangible personal property that otherwise would be subject to the state and local retailers’ occupation tax. Exemptions generally fall into three broad categories: sales for resale, sales to specific entities (status-based exemptions), and sales of certain types of property (product-based exemptions).

1. Sales for resale Sales of tangible personal property are not taxable when the property is purchased for resale in the regular course of business, provided the purchaser provides a valid resale certificate. The exemption is contingent on maintaining proper documentation. If the seller does not properly document the transaction as a resale, the Department may impose tax liability. Source: 86 Ill. Adm. Code § 130.120(c)

2. Status-based exemptions Certain purchasers are exempt from retailers’ occupation tax for qualifying transactions, including:

• Government entities (U.S., State of Illinois, units of local government)
• Charitable, educational, and religious organizations (must be organized and operated for qualifying purposes and registered with the Department)
• Certain senior citizen organizations and some hospital organizations

Transactions with these entities qualify for the exemption only when the purchase is made for exclusive use by the organization and not for the benefit of officers, members, or employees. Source: 35 ILCS 120/2-5(11), (15)

3. Product-based exemptions Certain product categories are wholly or partially exempt from retailers’ occupation tax. The most notable statutory exemptions include:

• Farm chemicals and certain agricultural products (e.g., seed, feed)
• Machinery and equipment used primarily in manufacturing or assembly of tangible personal property
• Rolling stock used by railroads
• Newspapers and magazines
• Proceeds from certain sales of medical appliances and prescription medicines (subject to separate rate and certain conditions)
• Sales of food, drugs, and medical appliances for certain qualifying uses

A full list—with specific definitions and qualifications for each exemption—can be found in the Retailers’ Occupation Tax Act, Section 2-5. Source: 35 ILCS 120/2-5

Practical note: Many product-based exemptions are subject to strict qualification criteria regarding use, purchaser/seller certification, and proper documentary evidence. Exemption certificates must be properly obtained, executed, and retained by the seller to be recognized on audit.

Illinois imposes statutory penalties for both late filing and late payment of sales and use tax returns (including Form ST-1), as detailed in Illinois Department of Revenue Publication 103. Below are the main categories and rates effective as of 2026:

Late-Filing Penalties:

• If a return is not filed by the due date, a penalty applies that is the lesser of $250 or 2% of the tax required to be shown due on the return, after accounting for timely payments or credits (see Publication 103, Table 1, “Failure to file”).
• If the return is still not filed within 30 days after the Department sends a nonfiling notice, an additional penalty applies. This second penalty is the greater of $250 or 2% of the tax shown due on the return, up to a maximum of $5,000 (Publication 103, Table 1, “Failure to file within 30 days after notice”).
• Zero-tax or information-only returns (e.g., specific transaction reporting forms) are subject to a $100 flat penalty.

Late-Payment Penalties:

• If tax is not paid by the due date, a 2% penalty applies for payments made 1–30 days late.
• If payment is 31 days or more late, the penalty increases to 10% of the unpaid tax (Publication 103, Table 1, “Failure to pay”).
• Higher penalties apply in connection with audit or protest scenarios: 15% if payment follows initiation of an audit or investigation; 20% if paid more than 30 days after issuance of an amended audit return or after certain protest/refund processes, per Table 1 of Publication 103.

Interest:

• Interest on underpayments and late payments accrues at the annual rate set under the Uniform Penalty and Interest Act. This rate is published annually by the Department (Publication 103, Section "Interest").

Abatement:

• The Department may abate penalties when the failure to file or pay was due to reasonable cause, as described in the “Abatement” section of Publication 103. Examples of reasonable cause include death, serious illness, destruction of records, or reliance on written Department advice.

Effective dates, changes, and further details on calculation and examples are available in Publication 103, which is updated regularly. Practitioners should always check the most current version.

Source: Illinois Department of Revenue, Publication 103, Penalties and Interest for Illinois Taxes

Illinois buyers generally must provide exemption certificates or equivalent documentation to claim sales and use tax exemptions, but the form and requirements are category-specific.

Resale Exemption: Purchasers seeking a resale exemption typically provide Form CRT-61 (Certificate of Resale). However, a substitute certificate is valid if it contains all data elements required by statute (names and addresses of buyer and seller, property description, resale intent statement, purchaser’s signature and date, and purchaser's Illinois registration/account ID or out-of-state registration info). Sellers must verify the purchaser’s registration number using MyTax Illinois and retain the certificate for at least 3.5 years. Electronic signatures (such as scanned or stylus entries) are authorized specifically on Form CRT-61. Source: CRT-61 Instructions (Illinois DOR)

Manufacturing, Production Agriculture, Coal & Aggregate Mining Exemptions: Exempt purchases of qualifying equipment or machinery require Form ST-587, which certifies use in production or mining. Blanket or percentage certificates (covering multiple purchases or a purchase percentage) are permissible but must be renewed at least every three years as stipulated in the ST-587 instructions. Purchasers may also use purchase orders if they contain all required certificate elements. All such documentation must be retained by the seller for a minimum of 3.5 years. Source: ST-587 Instructions (Illinois DOR)

Exempt Organization Purchases (Charity, School, Government): Qualifying organizations use their Illinois "E-number" (format E99XX-XXXX), which serves as documentary proof of exempt status. There is no standard form for this exemption. Sellers must verify exemption status online; records of E-number use should be maintained for audit. Source: Exemption for Organizations (Illinois DOR FAQ)

Electronic Procedures and Recent Practice: Exemption certificates themselves are kept by the seller and not submitted electronically to IDOR, even where other forms (e.g., the ST-556 for titled/registered vehicles) must be e-filed if filing thresholds are met. The e-filing of tax returns referencing exempt transactions is different from transmitting exemption certificates. All certificates and substitutes across exemption types must be retained by the seller for at least 3.5 years from the purchase date. Source: Record Keeping Requirements (Illinois DOR); E-Filing Requirements (Illinois DOR)

Key Notes:

• Substitute documentation is allowed for many exemptions if it fully meets the listed statutory and administrative requirements.
• The three-year renewal applies specifically to blanket and percentage certificates for manufacturing/agriculture/mining, as directed on ST-587, not to all exemptions.
• Electronic and scanned signatures are explicitly permissible on CRT-61 and may be accepted for other certificates only when authorized by IDOR guidance specific to those forms.

Source: CRT-61 Instructions (Illinois DOR) Source: ST-587 Instructions (Illinois DOR) Source: Exemption for Organizations (Illinois DOR FAQ) Source: Record Keeping Requirements (Illinois DOR) Source: E-Filing Requirements (Illinois DOR)

Not yet human confirmed.

Retailers in Illinois do not register directly with municipalities or counties for the local 1 percent grocery occupation tax. Instead, all such local taxes are collected and administered by the Illinois Department of Revenue (IDOR), using uniform sourcing, reporting, and remittance procedures.

Collection and Reporting

• Effective January 1, 2026, the state-wide 1 percent grocery tax was repealed but municipalities and counties (in unincorporated areas) may impose a local 1 percent grocery tax by filing an ordinance with IDOR—typically by April 1 (effective July 1) or by October 1 (effective January 1).
• Retailers must verify whether the jurisdiction imposes the tax and, if so, must collect and remit that 1 percent grocery tax via Form ST-1, or Form ST-2 for multiple-site returns. The MyTax Illinois Tax Rate Finder tool provides up-to-date local grocery tax information.

Uniform Administration by IDOR

• IDOR is the single point of administration for these local taxes; there is no need for separate municipal or county-level registration, remittance, or filing.
• Retailers receive notification through IDOR (via MyTax Illinois or mail) when their location becomes subject to the tax, and can lookup applicable rates—including local grocery tax—using the MyTax Illinois Tax Rate Finder.

Disbursement and Reporting Transparency

• Funds collected for local grocery tax are disbursed by IDOR to local governments as part of regular sales tax allocations. Disbursement reports include separate summary lines for “Municipal Grocery Tax (MGT)” or “County Grocery Tax (CGT)” that are combined with standard Municipal or County Tax reports for confidentiality, as clarified in the LTAD Newsletter.

Summary

• Retailers apply the same destination-based sourcing rules as general sales tax for delivered grocery sales.
• All local 1 percent grocery taxes are collected only via state-administered Form ST-1/ST-2, with no separate local filings required.
• IDOR provides notifications and tools to help retailers determine when and where this tax applies.

Source: Compliance Alert CA-2026-01 (IDOR) Source: Bulletin FY 2026-11 (IDOR) Source: Bulletin FY 2026-03 (IDOR) Source: Sample County Grocery Occupation Tax Ordinance Source: LTAD Newsletter April 2026

Not yet human confirmed.

Illinois law authorizes the Department of Revenue to require a bond or other security as a condition of Retailers’ Occupation Tax (ROT) registration if certain risk factors are present. Most new applicants are not required to furnish a bond, but the Department may require one from registrants if: (1) the applicant (including officers or partners) previously defaulted on Illinois tax obligations within the past five years; (2) an owner was previously responsible for a revoked or canceled ROT certificate; or (3) the Department otherwise determines that a bond is necessary to ensure compliance, especially if prior delinquencies exist.

Security Type and Maximum Amount Acceptable security may include a surety bond, irrevocable letter of credit, personal sureties, or an assigned deposit or other financial instruments approved by the Department. The statute imposes an upper limit on required security—no bond or security can exceed three times the applicant’s average monthly tax liability or $50,000, whichever is less.

Process and Release The Department will notify the applicant of the amount and type of security required after application review. No Certificate of Registration is issued until the security is accepted. The statute provides that security will be released and returned (1) within 30 days of satisfactory compliance for at least three continuous years, or (2) to a “Prior Continuous Compliance” taxpayer (as defined by statute and reg). In the event of default, the Department may convert the security to recover unpaid tax, penalties, or interest.

No specific standard bond form or formal waiver request process appears in statute or regulation—the Department determines requirements case-by-case. Practitioners should use MyTax Illinois or contact the Central Registration Division for current procedures.

Source: 35 ILCS 120/2a; 86 Ill. Admin. Code 130.725

Not yet human confirmed.

Illinois allows a statutory “retailers’ discount” on Retailers’ Occupation Tax (ROT), Use Tax, Service Occupation Tax, and Service Use Tax returns when filed and paid on time. The discount recognizes the administrative costs of tax collection borne by the retailer. As of 2026, the discount remains in effect under revised terms.

Discount rate and cap:

• The discount equals 1.75% of tax due per return period.
• Beginning with returns due on or after January 1, 2025, the total discount is capped at $1,000 per month per taxpayer (across all returns and locations, including ST-1, ST-2, ST-556, and ST-556-LSE).
• Returns for periods prior to January 2025 are not subject to the cap; the discount for those periods is 1.75% of the tax due, or $5/year minimum, whichever is greater.

Eligibility requirements:

• The retailer must timely file and pay each return.
• The discount may not be claimed on late/amended returns or for tax paid after the original due date.
• Electronic filers are eligible, except those granted a hardship waiver from electronic filing. A retailer required to file and pay electronically who does not do so (without a hardship waiver) may not claim the discount. (86 Ill. Adm. Code § 760.205).

Types of tax and local applicability:

• The discount applies to both state and locally administered retailers’ occupation and use taxes remitted via Forms ST-1, ST-2, ST-556, and ST-556-LSE, provided returns are timely.
• The $1,000/month cap applies on an aggregated basis across all qualifying returns filed under the same tax ID.

Recent changes:

• The $1,000/month cap was enacted by P.A. 102-0700 and took effect for returns due on/after January 1, 2025. There has been no subsequent legislation or administrative action discontinuing the retailers’ discount as of June 2026.

Summary:

• The retailers’ discount remains available at 1.75%, capped at $1,000/month (total), for all timely ROT and related returns due in 2026. Prior unlimited discounts do not apply for post–2024 periods. Ineligible taxpayers (e.g., late filers, non-electronic filers w/o waiver) may not take the discount.

Source: 35 ILCS 120/3; ST-1 Instructions (R-1/26); IDOR Retailer Requirements; FY 2025-11 Bulletin