Illinois Tax Policy Changes

Published On: June 29th, 2022Categories: Accounting, Small Business, Taxes

Illinois announced a couple of new state tax policies starting this summer to give temporary relief to consumers. For business owners, this means altering the tax charged for certain products. And for shoppers, this means paying less tax during certain periods on specific products. So let’s dive into the changes.

Grocery Tax Suspension

Starting July 1, 2022, Illinois will be suspending the sales tax on groceries normally taxed at the 1% low rate. This suspension will continue for a year until June 30, 2023. According to the bulletin from the State of Illinois, groceries taxed at the low rate include food for human consumption that is to be consumed off the premises where it is sold. This does not include alcoholic beverages, food containing or infused with adult-use cannabis, soft drinks, candy, or food prepared for immediate consumption. All medicine and drugs are also excluded from this tax suspension.

Illinois tax policy changes.

Printed Notification Requirements
The state is asking that retailers include the following statement on any cash register tape, receipt, invoice, or sales ticket: “From July 1, 2022, through June 30, 2023, the State of Illinois sales tax on groceries is 0%.”

If you cannot include the above statement, the state has provided a sign that can be printed and placed in a spot that is clearly visible to consumers. Here is a link to the printable sign

New Form to Report Sales
The state has created a new schedule for retailers to use when reporting sales of groceries during the grocery tax suspension. This new schedule is Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule. This schedule should be filed with your sales tax return.

Regional Tax Still Imposed
The Regional Transportation Authority and Metro-East Mass Transit District will continue to impose the .75% local tax on grocery food. This is not suspended under the grocery tax suspension. In our area, this includes Cook, DuPage, Kane, Lake, McHenry, and Will counties.

Complete details can be found in this informational bulletin from the Illinois Department of Revenue.

Sales Tax Holiday

Illinois tax policy changes.

The State of Illinois has also announced a ten-day sales tax holiday in August. From August 5, 2022, through August 14, 2022, the state portion of the sales tax on school-related items will be reduced by 5 percent. This means that the tax on qualifying items will be 1.25%, down from the usual 6.25% state tax.

What is included?
Qualifying items include clothing and footwear with a retail price under $125 and certain school supplies. The school supplies are not subject to the $125 maximum. Here is a complete list of the qualifying and non-qualifying items.

What does this mean for the retailer?
Retailers must adjust the sales tax from August 5, 2022, to August 14, 2022, by 5 percent. For example, if the current sales tax rate is 6.25%, retailers will need to reduce the state portion by 5%, leaving the tax being charged at 1.25%. Note that local sales taxes still apply and are not reduced during the sales tax holiday. For complete rules on handling returns, exchanges, backorders, etc., please see the informational bulletin from the Department of Revenue.

New Forms to Report Sales
Similar to the Grocery Tax Suspension, the state has created a new schedule for retailers to use when reporting tax during the sales tax holiday. This new schedule is Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule and should be filed with your sales tax return.

These policy changes are aimed at giving consumers some relief during the current economy. If you are a business owner and have additional questions about navigating these changes, our team is here to help!

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About the Author: Rachael Lesperance

Consider Rachael Lesperance the “Swiss Army knife” of Eccezion. Her versatility has proven invaluable since she joined the firm in 2011, always at the ready to jump in whenever and wherever needed. “I particularly enjoy working with local small businesses, whether it be assisting with their financial statements or finding ways to minimize their tax burden. Investing in the community that way is important to me.”