The Illinois tax changes 2026 touch grocery shoppers, retailers that sell into the state, pass-through entity owners and any employer with staff in Aurora, Naperville or anywhere else in Kane, DuPage, Will and Kendall counties. This post collects what changed, who it affects and what to do before year-end.
What are the Illinois tax changes 2026 for sales tax?
| Change | Detail | Effective |
|---|---|---|
| State grocery tax | 1 percent state tax on groceries eliminated | January 1, 2026 |
| Local grocery tax | Cities and counties may impose 1 percent by ordinance | Ordinances filed by April 1 start July 1; filed by October 1 start the next January 1 |
| Items still taxed at the general rate | Alcohol, soft drinks, candy, prepared food | Unchanged |
| Drugs and medical appliances | Stay at the state 1 percent rate | Unchanged |
| Revised return | Form ST-1 version R-01/26 for periods from January 2026 | January 1, 2026 |
| Remote seller threshold | $100,000 in Illinois receipts; the 200-transaction test is gone | January 1, 2026 |
| Unknown destination | 15 percent rate if a sale's location cannot be determined | January 1, 2026 |
Check the Tax Rate Finder in MyTax Illinois for your address, because the local grocery rate depends on the municipality or county. Our sales and use tax guide shows how to register and file.
Should remote sellers use the amnesty?
The 2026 Remote Retailer Tax Amnesty runs August 1 through October 31, 2026 and covers sales from January 1, 2021 through June 30, 2026. Qualifying sellers register with IDOR, pay the simplified rates of 9 percent on general merchandise and 1.75 percent on items normally taxed at 1 percent, and IDOR waives related penalties and interest if they pay in full or complete a repayment plan. Retailers that meet the threshold must file Form ST-1 starting with the July 2026 return. Without participation, IDOR may audit and may assess the 15 percent rate on sales it cannot place.
What changed for income tax and pass-through entities?
- Rates and exemptions: the individual rate remains 4.95 percent, and the personal exemption is $2,925 for 2026 ($2,850 for 2025), unavailable above $250,000 of adjusted gross income ($500,000 joint).
- PTE tax: the expiration date was removed, so the election is permanent. The PTE tax rate is 4.95 percent, and the replacement tax is 1.5 percent.
- New partnership election: for tax years ending on or after December 31, 2026, a partnership can pick between two bases for the PTE tax, shown on Form IL-1065.
- Estimated payments: partnerships electing PTE tax that expect more than $500 of liability must pay estimates, and the first payment due on or after June 16, 2026 includes catch-up amounts.
- Qualified small business stock: gains excluded federally are added back for tax years ending on or after December 31, 2026.
- Bonus depreciation: Illinois decouples from federal 100 percent bonus depreciation for tax years beginning on or after January 1, 2026.
The extended 2025 IL-1040 due date was October 15, 2026. IDOR also warns that USPS postmarks now show the date of first automated processing, so file and pay electronically. See Illinois income tax for individuals and businesses.
What changed for employers?
- My Illinois Savings: formerly Illinois Secure Choice, it applies to employers with at least 5 employees in every quarter of the previous year, at least 2 years in business and no qualified retirement plan. Employees are enrolled by default at 5 percent of gross pay in a Roth IRA, with annual 1 percent escalation to 10 percent and a 30-day opt-out. Contributions must reach the program within 7 days of deduction. Employers that sponsor a plan certify an exemption.
- Paid leave: the Paid Leave for All Workers Act, in force since January 1, 2024, gives employees 1 hour for every 40 worked, up to 40 hours a year, for any reason. It lists no small employer exemption, and Chicago and Cook County have their own ordinances.
- Wages and unemployment insurance: the state minimum wage is $15 per hour, and the 2026 UI taxable wage base is $14,250.
- Withholding: the quarterly IL-941 for July through September is due November 2, 2026.
See Illinois payroll withholding, UI and new hire and employer registrations with IDOR and IDES.
What should you do now?
- Retailers: decide before October 31 whether the amnesty fits your Illinois sales history.
- Pass-through owners: review your PTE election and estimates with your preparer.
- Employers: register with My Illinois Savings or certify an exemption, and check your PLAWA policy.
- Everyone: e-file and pay through MyTax Illinois.
- Calendar: use the Illinois compliance calendar.
How we can help
We serve Aurora and Kane County businesses with sales tax registration, payroll and Illinois filings, and coordinate with Canadian and Indian advisers where owners live abroad. See sales tax and GST compliance. More local help is in our Aurora and Illinois guides.
Frequently asked questions
Is the grocery tax gone everywhere in Illinois?
No. The state 1 percent tax ended, but a city or county may impose a 1 percent local tax. The rate you pay depends on your location.
Who qualifies for the remote retailer amnesty?
Remote retailers with unpaid eligible sales tax who are registered with IDOR, hold a MyTax Illinois logon and meet the receipts thresholds. For quarters before 2026 the test was $100,000 of receipts or 200 transactions; from 2026 it is $100,000.
Is the PTE tax still optional?
Yes. The tax remains an election, and its expiration date was removed.
Does my small business need My Illinois Savings?
Only if you meet the headcount, years-in-business and no-plan tests. A business that already sponsors a qualified plan certifies an exemption instead.
Official sources
- IDOR: Illinois Grocery Tax Changes Effective January 1, 2026 (FY 2026-03)
- IDOR: 2026 Illinois Remote Retailer Tax Amnesty Program (FY 2026-28)
- IDOR: 2026 income tax changes (FY 2027-01)
- IDOR: What's New for Illinois Income Taxes (FY 2026-15)
- My Illinois Savings: Employer program details
- Illinois Department of Labor: Paid Leave for All Workers Act FAQ
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.