Illinois sales tax (ROT): rates, nexus & ST-1 filing

$100,000 in cumulative gross sales into Illinois during the preceding 12 months. Illinois eliminated its 200-transaction threshold effective January 1, 2026, so nexus is now sales-only — joining the majority of states that have dropped the transaction count. Once you cross the threshold, register with the Illinois Department of Revenue as a Retailer's Occupation Tax (ROT) collector and begin collecting on subsequent sales.

Illinois's state ROT rate is 6.25%. Local jurisdictions (counties, municipalities, special districts) add 0.25% to 5.25% on top, taking combined rates as high as 11.5% in some Chicago neighborhoods. The state portion includes 5% to the state general fund and 1.25% distributed to local governments — but the visible rate to the buyer is the combined number. Cook County, the City of Chicago, and the Regional Transportation Authority each add their own slice in the Chicago area.

Illinois uses the Retailer's Occupation Tax (ROT) as its functional sales tax. Legally it's a tax on the privilege of selling tangible personal property, paid by the retailer — not by the customer. Practically, retailers pass it through on the invoice and customers experience it as sales tax. The Use Tax (UT) is the buyer-side parallel for out-of-state purchases. ROT and UT rates match. The naming matters in DOR audit correspondence and on Form ST-1.

Pure SaaS — software accessed over the internet without a download or local install — is NOT taxable in Illinois under PIO-2021-12. Canned software downloaded electronically IS taxable as ROT. Custom software is exempt. Digital products (ebooks, music, video downloads) are not subject to ROT but may be subject to Chicago's Personal Property Lease Transaction Tax (PPLTT) at 9%, which catches a lot of SMBs selling into the Chicago market.

Illinois is one of the few origin-sourcing states for intra-state ROT. If both seller and buyer are in Illinois, the rate is determined by the seller's location (where the order is accepted or fulfilled), not the buyer's ship-to. Inter-state sales into Illinois from out-of-state sellers follow destination sourcing — buyer's location rate applies. This origin rule is unusual and means in-state sellers can have a stable rate per location regardless of where they ship.

Illinois requires marketplace facilitators with $100,000+ in IL sales to collect and remit on behalf of third-party sellers (the 200-transaction test was eliminated effective January 1, 2026). Amazon, Etsy, eBay, Walmart, and Shopify Markets in Illinois are facilitators. Note the 'Leveling the Playing Field for Illinois Retail Act' (effective Jan 2021) — it changed how marketplace and remote sellers source tax: marketplace and remote sellers use destination sourcing, while in-state direct sellers use origin sourcing. The mismatch trips up audits.

The DOR assigns frequency by liability: monthly if average monthly tax exceeds $200 (most active sellers), quarterly for $50–$200, annually for under $50. Returns on Form ST-1 are due by the 20th of the month following the period. A quarter-monthly accelerated payment schedule (4 payments per month) applies if monthly tax exceeds $20,000 — keep a close eye on threshold-crossing as DOR can reassess frequency mid-year.

(1) Treating Illinois as a destination state and shipping the buyer's rate when you're an in-state seller — origin sourcing means YOUR location's rate. (2) Missing Chicago's PPLTT on digital downloads, leases of equipment, and cloud services sold into Chicago (9% on top of state ROT). (3) Forgetting that out-of-state ROT collectors source to destination — the in-state vs out-of-state distinction matters. (4) Not filing the ST-2 schedule when you have multiple locations. (5) Skipping the annual ST-2-AR locality reconciliation, which DOR cross-matches against your ST-1 series.