Illinois’ back-to-school sales tax holiday starts August 7. What qualifies

Illinois’ back-to-school sales tax holiday begins Friday, August 7, giving families a 10-day window to pay a reduced state sales tax on qualifying clothing, footwear and school supplies.

The holiday runs through the close of business Sunday, August 16. Under Illinois Department of Revenue guidance, the state portion of sales tax on eligible purchases falls from 6.25% to 1.25%.

That does not make purchases completely tax-free statewide. Local sales taxes remain in effect, so the combined rate at checkout will vary by location.

What qualifies

Qualifying clothing and footwear include shirts, blouses, pants, shorts, coats, jackets, school uniforms, shoes, sneakers, sandals, boots, socks, stockings and shoe insoles.

Each eligible clothing or footwear item must have a retail selling price of less than $125. An item priced at $125 or more does not qualify for the reduced state rate.

Eligible school supplies must be used by students in the course of study. Examples include binders, bookbags, calculators, composition books, crayons, folders, glue, notebooks, paper, pencils, pens, rulers and scissors.

Qualifying school supplies do not have a $125 price threshold. But not every school-related purchase qualifies; the item still must fit the state’s definition of a school supply used in a student’s course of study.

What does not qualify

The state’s guidance excludes many products that families may consider part of back-to-school shopping.

Excluded clothing-related items include accessories, jewelry, handbags, wallets, cosmetics, umbrellas, wigs and nonprescription sunglasses. Sports and recreational equipment and protective equipment also do not qualify. Examples include helmets, goggles, shoulder pads, mouth guards and safety gear.

Some footwear is excluded, including ballet, tap, cleated or spiked athletic shoes, roller and ice skates, ski boots, waders and fins.

Art supplies such as paints, paintbrushes, sketch pads and watercolors are excluded. Textbooks, workbooks, reference books and maps also do not qualify. Computers, computer supplies, printers, printer ink, cameras, flash drives and cellphones are excluded as well.

How the tax appears at checkout

Illinois is reducing only its state portion of the sales tax. The state rate on qualifying items drops by five percentage points, from 6.25% to 1.25%, while local sales taxes remain in effect.

For example, the Department of Revenue says a location with a normal combined rate of 9.75% would use a 4.75% rate during the holiday on qualifying items. A location with a 6.50% rate would use 1.50%. Those examples show why shoppers should not expect one statewide checkout total.

Discounts, bundles and returns

For clothing, retailers determine whether an eligible item is below the $125 limit after an unreimbursed coupon or store markdown but before a reimbursed coupon.

Bundled purchases can receive different treatment. A qualifying item bundled with a nonqualifying item receives the reduced rate only when the value of the qualifying items exceeds the value of the nonqualifying items. A bundled sale that includes qualifying clothing or footwear is subject to the $125 limit.

Keep receipts after shopping. During the 60-day period immediately after the holiday, a retailer generally credits or refunds tax on a returned qualifying item at the reduced rate unless the customer provides a receipt or invoice showing that the usual rate was paid, or the retailer has documentation showing that the usual rate was paid.

Exchanges also can change the tax treatment. A qualifying item bought during the holiday and exchanged afterward for the same or a lower-priced item generally does not require additional tax. If the item is returned after the holiday and the credit is applied to a different purchase, the new item is charged at the normal rate.

When the holiday ends

The reduced rate applies through the close of business Sunday, August 16. After that, normal sales-tax rates resume for qualifying clothing, footwear and school supplies.

Families can reduce confusion at checkout by shopping during August 7–16, checking the price of each clothing or footwear item, confirming that school supplies fit the qualifying list and reviewing the receipt to make sure local taxes were applied.

Sources

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