What You Need To Know About Important Illinois Tax Updates

As we begin 2021 and approach the legislative season, it’s clear there will be numerous changes that will impact tax compliance. This is spurred on by both the pandemic’s economic fallout and changes necessitated by our increasingly digital economy.

In this article, we examine several updates regarding tax compliance in Illinois and what they mean for any retailer doing business in the state.

Marketplace Facilitation in Illinois

After the 2018 Wayfair decision, Illinois enacted marketplace facilitation legislation, following in the footsteps of many other states. However, unlike other states, this legislation is creating friction with other pieces of tax law specific to Illinois.

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Illinois State Sales Tax Deduction

When the final results are in, car dealerships in Illinois likely noticed a spike in revenue during December 2019 by customers looking to avoid increased Illinois sales tax. This increase is a result of a new Illinois sales tax law that is set to go into effect January 1, 2020. The tax law that was signed by Gov. J.B. Pritzker on June 28th caps the sales tax deduction on the trade-in value of vehicles. Previously, Illinois had no cap on the sales tax deduction allowable on vehicles that are traded in as a part of the purchase of a new vehicle. State officials estimate that the change in Illinois tax law will generate roughly $60 million in additional revenue on an annual basis. Proceeds will go to funding roads and vertical infrastructure projects under the Rebuild Illinois Capital Plan.

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