Consumer taxes are typically higher for consumer goods or services that are either unhealthy or not considered essential, such as cigarettes and liquor. Gasoline taxes generally fund highway construction and maintenance, while sales tax revenue usually goes into the state's general fund. Illinois consumer tax laws place a relatively high tax rate on cigarettes, while also raising money for the state through riverboat casino gambling.
The basic provisions of Illinois consumer tax laws are listed below:
| Sales Tax | 6.25% - 35 ILCS 120/2-10 |
| Cigarette Tax | 99 mills per cigarette ($1.98 per pack of 20) - 35 ILCS 130/2 |
| Gasoline Tax per Gallon | 34.1¢ - 35 ILCS 505/2 |
| Use Tax | 6.25% - 35 ILCS 105/3-10 |
| Liquor Tax | Beer 23.1¢/gal.; Wine $1.39/gal.; Spirits $8.55/gal. - 235 ILCS 5/8-1 |
| Gambling Tax | Riverboat gambling tax $3 per person admitted; wagering tax 15 to 50% adjusted gross receipts 230 ILCS 10/12, 230 ILCS 10/13 |
Here the term "mills" means one one-thousandth of a dollar, so 10 mills = 10 one-thousandths of a dollar, or .01.
Note: State laws are constantly changing -- contact an Illinois tax attorney or conduct your own legal research to verify the state law(s) you are researching.
Purpose of Consumer Sales Tax
Unlike income taxes, consumer taxes are directed at how a person spends their money rather than how much money they make. Consumer taxes in Illinois are a flat percent, not a graduated scale like income tax. This means that everyone pays the same percent, regardless of how much they spend. However, there are different tax percentages depending on the sale or item taxed. In addition to revenue raising, Illinois imposes taxes on certain items to discourage their purchase, and to pay for costs associated with that item.
Types of Consumer Taxes
There are two general forms of consumer taxes in Illinois. The type most people are familiar with is sales tax. Sales tax applies to most consumer sales in the state. However, there are some exceptions. The other form of consumer tax is excise tax. This is a tax on a specific item. The tax can be a flat rate per item, or it can be a percentage of the price, like a sales tax. Excise taxes are used to either discourage purchasing or using an item, or to help pay for expenses that are associated with it.
Sales Tax in Illinois
Illinois charges a 6.25% sales tax for sales within the state. There are many exceptions to sales tax in Illinois, some of the most common exceptions are movie tickets, food purchased at grocery stores, food sold in a student cafeteria, newspapers, some Internet sales, and sales by nonprofit organizations. Counties and cities may have their own sales tax on top of the Illinois state sales tax.
Cigarette Tax
The state of Illinois charges $1.98 in tax for ever pack of cigarettes. This tax is meant to discourage smoking, and pay for any costs the state may incur from cigarette smoking.
Gasoline Tax
Illinois charges a 39.1 cent tax for every gallon of gasoline. This is in addition to any federal or local gasoline taxes. The revenue from gasoline taxes generally pays for road repair and maintenance.
Liquor Tax
For beer, Illinois charges 23.1 cents per gallon. Wine has a $1.39 per gallon tax. Hard alcohol is charged $8.55 per gallon in tax.
Gambling Tax
Illinois charges a tax on riverboat gambling at the rate of $3 per person admitted.
Use Tax
If you want to avoid paying taxes on an expensive item, like a car, you may try to purchase the car in a state that does not charge sales tax. However, Illinois will charge a use tax at the same rate as a sales tax, once you register the car in the state.
If you would like to know more about consumer taxes, there are many attorneys throughout Illinois with tax law experience who may be able to help. In addition to informing you about the law, they may be able to advise you about methods to avoid paying unnecessary taxes, while still staying within the bounds of the law.
Research the Law
Illinois Consumer Tax Laws: Related Resources
Confused About Illinois Consumer Tax Laws? Talk to an Attorney
Consumer taxes, such as sales and gasoline tax, are automatically added at the point of purchase and generally don't require any action on behalf of consumers. But you may have questions about use tax or, if you're a business owner, you may need legal help on collecting and paying these taxes. Contact a local tax lawyer to learn more about the tax laws in Illinois.
