Beginning Aug. 5 and lasting through Aug. 14, the state will reduce its sales tax rate from 6.25 percent to 1.25 percent for certain clothing items costing less than $125 and school supplies.
The “tax holiday” was included in Gov. J.B. Pritzker’s “family relief plan,” one prong of several bills making up the Fiscal Year 2023 operating budget. The tax breaks passed with nearly unanimous support in the General Assembly and provided an estimated $1.8 billion in tax relief for Illinoisans.
“These past two-and-a-half years, for everyone, of managing through the pandemic has been hard,” Pritzker said at a news conference on Aug. 4 at Roosevelt Elementary School in Broadview. “And the last nine months of inflation on top of that has strained the budgets of parents and teachers alike. Prices have risen for everything from gas to groceries to school supplies, and everyone is taking a hit. It’s at moments like these that we need thoughtful and creative solutions that provide financial relief for Illinois families.”
The state estimated the sales tax reduction would amount to $50 million in savings for taxpayers.
Included clothing items
The 10-day tax reduction includes clothing items costing less than $125 individually.
Clothing items, as defined by the law, include the standard items such as shorts, pants, skirts, shirts and underwear. The tax reduction will also apply to aprons, hats, caps and earmuffs, coats and jackets, belts and suspenders, rubber pants, lab coats, hosiery, scarves, bathing suits, school uniforms and neckties.
It also applies to footwear – shoes, shoelaces, slippers, insoles, boots, socks and sandals.
But it does not apply to ballet, tap or athletic shoes, roller or ice skates, ski boots, waders or fins.
Shoppers also should not expect the reduced sales tax rate on accessory items such as briefcases, hair bows, handbags, jewelry, sunglasses or wigs. The reduction also does not apply to sports gloves, goggles, hand and elbow guards, life preservers, wetsuits, shoulder pads, shin guards or mouth guards.
Also excluded are protective equipment items such as breathing masks, hearing protectors, face shields, hard hats and helmets, respirators, protective gloves, safety goggles or tool belts.
Included school supplies
Binders, book bags, calculators, cellophane tape, blackboard chalk, notebooks, erasers, folders, index cards, legal pads, lunch boxes, pencils and sharpeners, supply boxes, protractors, rulers, compasses and scissors are all eligible for the reduced tax rate.
So are glue, highlighters, markers, crayons and colored pencils.
Shoppers should not expect other art supplies to be eligible for the reduced rate, however. Clay and glaze, paints and paint brushes, sketch pads and drawing pads will all be taxed at the regular 6.25 percent rate.
Textbooks, reference books, maps and globes are all excluded from the “holiday” as well.
Electronics and computers will also be taxed at the regular rate. That includes computers and related supplies such as flash drives, memory cards, data storage, computer cases, cables, printers and ink.
Shoppers also should not expect any breaks while buying cameras, cellphones or handheld electronics.
The task of adjusting the tax rate for individual items will fall on retailers, who collect sales tax and remit it to the state.
Guidance from the Illinois Department of Revenue on qualifying items can be found here.
Other tax relief
Other tax relief measures approved in the budget include a property tax rebate up to 5 percent of the homeowner’s tax bill up to $300, and a one-time income tax rebate of $50 per individual and $100 per dependent, up to a limit of three children per family. Those would be available to individuals with incomes up to $200,000 and joint filers with incomes up to $400,000.
The package also suspends for one year the 1 percent tax on groceries and puts a six-month pause on the automatic inflationary increase in the state’s motor fuel tax, which was estimated to be 2.2 cents per gallon.
The plan also permanently expands the state earned income tax credit from 18 to 20 percent of the federal credit while also expanding the number of households that can claim the credit.
The measure also set an income tax credit for teachers buying classroom supplies at $250 for the current year and $500 beginning Jan. 1, 2023.