Chicago has one of the highest sales tax rates in the country. The sales and use tax rate in Chicago is 10.25% – made up of state, county and city taxes. For consumers and businesses located in Chicago, it is crucial to understand how sales tax works in the city. In this comprehensive guide, there is a Chicago sales tax calculator and all about it’s administration.
Chicago Sales Tax Calculator
The Chicago sales tax calculator is an online tool that automatically calculates sales tax for purchases made in the Chicago area. Users simply select their location in Chicago or the surrounding counties, enter the pre-tax purchase amount, and the calculator will determine the applicable sales tax rate based on the location. It then adds the sales tax amount to calculate the total cost.
Chicago Sales Tax Calculator
Chicago Sales Tax Calculator
Chicago sales tax calculator saves time and makes it easy to estimate totals when shopping in Chicago and suburban Cook, DuPage, Kane, Lake, and Will counties.
Overview of Chicago Sales Tax
Chicago follows Illinois’ base sales tax system which applies taxes based on where a purchase is made rather than where the buyer resides. Here are some key points:
- Chicago’s total sales tax rate is 10.25%
- 6.25% Illinois state sales tax rate
- 1.75% Cook County taxes
- 1.25% Chicago home rule taxes
- 1% Regional Transportation Authority (RTA) taxes
- 0.25% Cook County & City of Chicago home rule occupation taxes
- Sales tax levied on retail transactions of goods and some services
Some exceptions to sales tax include groceries, medications, and qualifying medical procedures.
Sales Tax Rates in Different Parts of Chicago
While Chicago’s overall sales tax rate is 10.25%, some parts have slightly higher total rates due to additional district taxes:
- Central Business District: 10.25%
- Near South Side: 10.25%
- Lincoln Park, Lakeview: 10.25%
- Hyde Park, South Shore: 10.25%
- Far North and Northwest Side: 10.50% (additional 0.25% tax)
- Far Southwest Side: 10.75% (additional 0.50% tax)
Use the zip code level lookup on the Illinois Policy website to find the exact sales tax rate applied in different Chicago neighborhoods.
What Purchases are Subject to Sales Tax in Chicago?
Chicago sales tax applies to retail transactions involving:
Goods
- Electronics like phones, computers, appliances
- Books, music CDs, DVD movies
- Clothing and accessories
- Furniture, home furnishings
- Toys, video games
Services
- Streaming services like Netflix, Spotify, Kindle Unlimited, etc.
- Accommodation rentals including hotels, motels, etc.
- Restaurant meals and purchased food
- Parking lots and garages
- Taxi and ridesharing like Uber, Lyft
Refer to the Illinois Sales Tax Guide for a detailed list of taxable goods and services.
Who Needs to Collect Chicago Sales Tax?
The following sellers are required to register and collect applicable Chicago sales taxes:
- Businesses with physical stores/outlets in Chicago
- Restaurants, hotels and other service providers operating in the city
- Online stores that have inventory in Chicago or ship products to the city’s addresses
- Marketplace providers like Amazon, Etsy, eBay
- Businesses with over $100,000 taxable sales into Chicago
- Remote sellers exceeding $100,000 in sales or 200 transactions to Illinois annually
Out-of-state retailers also need to collect Chicago sales tax on orders shipped to customers located in the city. Refer here for sales tax registration in Illinois.
How Should Sales Tax be Collected in Chicago?
Here are the steps businesses should follow to collect Chicago sales tax properly:
- Verify Chicago tax rates based on store location and delivery address
- Check if goods being sold are subject to sales tax
- Calculate tax on total invoice value by applying the 10.25% tax rate
- Add calculated sales tax to final bill for customer payment
- Separately account for all sales tax collected from customers
- File and submit sales tax returns on a monthly, quarterly or annual basis
Sellers can use sales tax software to accurately calculate collects and file Chicago sales taxes. Proper documentation of all tax collection, payments and filings should be maintained.
Common Chicago Sales Tax Exemptions
Some transactions exempt from Chicago sales taxes include:
- Food purchased at grocery stores
- Prescription medicines and over-the-counter drugs
- Purchases by tax-exempt organizations
- Goods bought for resale or manufacturing purposes
- Farm machinery and equipment
- Motor fuel sales
- Non-titled sales of vehicles like boats, planes, etc.
See Chapter 3 of the Illinois Sales Tax guide for detailed sales tax exemptions.
Sales Tax Compliance Tips for Chicago Businesses
Some tips to stay compliant and avoid issues:
- Ensure business registration with Illinois for tax collection
- Regularly update software with latest Chicago tax rates
- Save all sales and purchase invoices for tax records
- File tax returns even for reporting zero taxes in a period
- Make sales tax payments on time to avoid penalties
- Be transparent about taxes charged on invoices and receipts
Conclusion
Chicago has high sales taxes but proper compliance can help avoid hefty fines. Understanding taxability rules, using accurate rates, integrating sales tax software, timely filing and payment of taxes, and keeping diligent records are key to Chicago sales tax compliance for businesses. This ensures optimization of after-tax profits.
Frequently Asked Questions
Q1: What is the use tax in Chicago?
Use tax applies on goods purchased tax-free outside Chicago but used in the city. The use tax rate mirrors the sales tax.
Q2: Does Chicago tax groceries and medicines?
No, most groceries and prescription drugs are exempt from sales tax in Chicago.
Q3: When are Chicago sales taxes due?
Sales tax collected must be filed and paid monthly, quarterly or annually based on business volumes.
Q4: What are the penalties for incorrect Chicago sales tax?
Late payments attract 2% interest monthly. Incorrect tax calculation can lead to fines of 10-50% of taxes due.
Q5: Can sales tax be waived for non-profit organizations in Chicago?
Yes, tax exempt organizations can purchase goods and services without paying sales tax in Chicago.
