The Illinois Use Tax rate is 6.25 percent of the selling price of purchases of general merchandise, including automobiles and other items that must be titled or registered. The use tax rate is 1 percent on purchases of qualifying food, drugs, and medical appliances.
What is an example of a use tax?
For example, purchases of clothing, appliances, toys, books, furniture, or CDs would be subject to use tax. Purchases not subject to use tax include food for human consumption such as peanut butter and chocolate.
Do I owe Illinois use taxes?
Use Tax is a sales tax that you, as the purchaser, owe on items that you buy for use in Illinois. If the seller does not collect at least 6.25 percent sales tax, you must pay the difference to the Illinois Department of Revenue.
What is subject to sales and use tax in Illinois?
“Sales tax” is the combination of all state, local, mass transit, home rule occupation and use, non-home rule occupation and use, park district, county public safety and facilities, county school facility tax, and business district taxes.
What is included in use tax?
Use Tax is defined as a tax on the storage, use, or consumption of a taxable item or service on which no sales tax has been paid. Use tax is a complementary or compensating tax to the sales tax and does not apply if the sales tax was charged.
Do you file for use tax?
You will remit it to the state in which you use the goods. You can report and remit your business’s use tax liability on your tax return form. Or, you can file your state’s use tax form. For example, if you buy something online that your state does not charge sales tax on, you do not need to pay use tax.
What’s the difference between sales and use tax?
A sales tax is what the state calls tax collected by a merchant in-state. Use tax is what the state calls a tax collected and remitted by what they deem a “remote seller” (i.e. someone who has sales tax in the state but isn’t based there.)
How is Illinois use tax calculated?
The rate is 6.25% of the purchase price or fair market value, whichever is greater. If you acquire the aircraft by purchase from a person or business that is not in the business of selling aircraft at retail, you must pay tax on the aircraft’s purchase price.
How do you calculate use tax?
On the use tax worksheet, taxpayers:
- Add the amount of all purchases made without payment of California sales or use tax.
- Look up the use tax rate for the location where the items purchased were consumed, given away, stored, or used.
- Multiply the amount by the use tax rate.
What items are taxable in Illinois?
Traditional Goods or Services Goods that are subject to sales tax in Illinois include physical property, like furniture, home appliances, and motor vehicles. Illinois charges a reduced rate on both prescription and non-prescription medicine as well as groceries.
How does use tax work?
Simply put: sales tax is collected by the merchant on taxable items they sell; consumers’ use tax is paid by the buyer on taxable items they purchase. The rate for use tax is generally the same as sales tax and is based on the rate for the tax jurisdiction where the item was received or consumed.
What is the 2.25 tax in Illinois?
Illinois Sales Tax Groceries, drugs and medicine are all subject to a statewide tax rate of 1% of purchase price, in addition to local taxes of up to 1.25%, for a total tax of up to 2.25%. There are some food items that don’t count as a qualifying food.
Do distributors pay sales tax?
Type of Sale For example, a soap manufacturer may sell bars to a distributor, who sells them to a retailer, who sells them to customers. The customers pay sales tax, but the distributor and the retail store do not.
Who actually pays use tax?
You owe use tax on any item purchased for use in a trade or business and you are not registered, or required to be registered with the CDTFA to report sales or use tax. You owe use tax on purchases of individual items with a purchase price of $1,000 or more each.
What is a local use tax?
Local use tax applies to purchases not charged at the local sales tax rate. The local use tax is similar to a sales tax. The rates are identical, but the use tax is applied to taxable purchases that were not taxed at the local sales tax rate (for instance, items purchased out-of-state).
Which states have a use tax?
The primary home rule states that allow local authorities to enact and administer their own general sales and use taxes are Alabama, Alaska, Arizona, Colorado and Louisiana. In most cases in these states, the locality not only separately administers the local tax, but can have different taxability rules than the state.