A Little Help With Inflation in Illinois

Dear Clients & Friends,

Rising inflation is a burden on us all, but the good news is that the state of Illinois is helping ease the burden by suspending the 1 percent sales and use tax imposed on groceries for one year, as of July 1, 2022, and instituting a ten-day sales tax holiday in August.

So what do these changes mean for you as a small business owner?

It’s important for you to understand the requirements of both changes. The Grocery Tax Suspension applies to “low rate groceries”, which means food that is intended to be eaten away from where it is sold. As such, this suspension does not apply to food that can be consumed immediately (such as candy and soda, etc.), nor does it apply to alcohol or any consumable infused with cannabis. Also, there is no suspension for items that qualify as a medicine or a drug.

To report these sales to the state of Illinois, the Department of Revenue has created Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule, that should be filed with your Form ST-1. Additionally, the state requests that the following statement be added to receipts and/or invoices: “From July 1, 2022, through June 30, 2023, the State of Illinois sales tax on groceries is 0%.”. If it’s not feasible for you to include the statement, alternative notice requirements are available.  You can learn more about what is required of you as a retailer, here; and items that qualify for the grocery tax suspension, here.

As for the IL Sales Tax Holiday, this reduces the state’s portion of the sales tax by 5 percent during the 10-day period of August 5, 2022 through August 14, 2022. This means that the effective state sales tax for qualifying items during this time will be reduced to 1.25 percent, compared to the current state sales tax of 6.25 percent. Qualifying items include:

  • Clothing with a retail selling price less than $125 per item
    • Does not include: accessories, sports or recreational equipment, and protective equipment 
  • Footwear with a retail selling price less than $125 per item
    • Does not include: sports-related footwear
  • School supplies (must be used by students in the course of study)
    • Does not include: art supplies, instructional material, computer and computer supplies, and electronics

A complete list of qualifying and non-qualifying items can be found here.

As a retailer, you should change your sales tax on these qualifying items effective at the start of business on August 5th and ending at the close of business on August 14th. Similar to the grocery tax suspension, you will use Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule to report these adjustments.

As always, we are here to help you navigate these changes and answer any questions you may have to ensure you benefit from and are in compliance with the various State Sales Tax laws.

Stay Safe and Healthy,  

The CJBS Team