Understanding Illinois Use Tax and How it Works

What is Illinois use tax?
6.25 percent Illinois use tax rates are 6.25 percent of the purchase price of general merchandise and 1 percent of the purchase price of qualifying food, drugs, and medical appliances.
Read more on www.irs.gov

The use of tangible personal property that was acquired outside of Illinois but is liable to Illinois sales tax if purchased within the state is taxed under Illinois use tax. In a sense, it is an addition to the Illinois sales tax. Personal property that was not subject to sales tax at the time of purchase but is used, stored, or eaten within the state of Illinois is liable to the use tax. The current sales tax rate is 6.25%, and both taxes have the same percentage.

When a citizen of Illinois purchases an automobile from an Indiana dealer who does not charge Illinois sales tax, this is an instance of Illinois use tax. The Illinois citizen would be compelled to pay use tax on the purchase price of the vehicle, which would be the same as the Illinois sales tax rate, if the vehicle is transported back to Illinois and utilized in the state for more than 90 days.

Use tax can be applied to smaller transactions like those made online or outside of the state, despite the fact that it is frequently linked with larger purchases like those of automobiles, boats, and other expensive things. The buyer of an item from an online retailer who does not have a physical presence in Illinois and does not charge Illinois sales tax must pay use tax on the item’s purchase price if they are residents of Illinois.

Many tax payers ponder whether they should save their food receipts for their records. The answer is negative, as expenses for food cannot be deducted from taxes. Illinois does not impose a sales tax on groceries, unlike some other states. As a result, you cannot claim a deduction on your Illinois state income tax return using your supermarket receipts.

Similar to this, grocery receipts are not deductible expenses, so you cannot deduct them from your taxes. You might be eligible to claim such costs as a business expense on your tax return if you own a business and buy groceries for work-related reasons.

In conclusion, Illinois use tax is a fee on personal property that was not subject to sales tax at the time of purchase but is used, stored, or consumed within the state of Illinois. To prevent fines and interest, it’s crucial to comprehend use tax and when it applies to your purchases. Although receipts for groceries cannot be deducted from taxes, it is still crucial to maintain track of receipts for other tax-deductible items and for record-keeping.

FAQ
Then, what item is taxed the most?

The title of the article “Understanding Illinois Use Tax and How it Works” alone cannot tell you what is taxed the most in Illinois. The article may offer details about Illinois’ use tax structure, but it may not be specifically focused on the things that attract the highest rates of taxation.