Common Sales Tax Exemptions

A person who sells tangible personal property must determine, at the time when he sells the property to a purchaser, whether the purchaser is buying the property "for use or consumption" or whether the purchaser has an exemption for the purchased tangible personal property. This determination is required in order that the seller may properly file the returns and compute his tax liability. Mere statements by sellers that property was exempt will not be accepted by the Illinois Department of Revenue (IDOR) without corroborative evidence. Customers who make tax-exempt purchases must provide retailers with proper documentation. Retailers who cannot properly document a tax-exempt sale will be liable for paying sales tax, and if applicable, any surcharge on the transaction.

The contents on this page are informational only and do not take the place of statutes, rules, and court decisions. For many topics covered on this page, we have provided a reference to the applicable section or part of the Illinois Compiled Statues and the Illinois Administrative Code for further clarification or more detail.

The exemptions discussed below do not represent a comprehensive list of Illinois Sales Tax exemptions. For a detailed list see 35 ILCS 120/1 and 35 ILCS 120/2-5.


FAQ Index

    Frequently Asked Questions

    Sale for resale

    Legal References

    The sale for resale exemption applies to sales made to businesses that purchase items tax free to resell. The tangible personal property may be used by the purchaser only if it is incorporated into tangible personal property that subsequently will be subject to tax. The tax and, if applicable, surcharge are collected and paid when the items are sold at retail.

    To document the exemption, a retailer must keep in its records a certificate of resale containing:

    • the seller's name and address,
    • the purchaser's name and address, 
    • an identification or description of the items purchased for resale, 
    • a statement from the purchaser that the items are being purchased for resale, 
    • the purchaser's signature and the date of signing, and
    • one of the following:
      • the purchaser's active account ID or resale number issued by IDOR, or 
      • a statement that the purchaser is an out-of-state purchaser who will always sell (and deliver) to his or her customers outside Illinois.

    Purchasers may either document their tax-exempt purchases by completing Form CRT-61, Certificate of Resale, or by making their own certificate. A copy of the signed certification must be provided to the retailer. Certificates of Resale should be updated at least every three years.

    Report sales for resale on Form ST-1, Sales and Use Tax and E911 Surcharge Return, Schedule A. 

    Interstate commerce

    Legal References

    The interstate commerce exemption applies to sales made from Illinois businesses that are delivered outside Illinois and are not returned to Illinois for use.

    To document the exemption, a retailer must keep in its records one of the following:

    • a waybill or bill of lading in the name of the seller and showing the delivery address outside Illinois if the item is shipped by common carrier,
    • a receipt from the U.S. Postal Service showing the name of the addressee, the delivery address outside Illinois, and the date the item was mailed if the item is sent by mail, or 
    • a trip sheet containing the name, address, and signature of the out-of-state purchaser and the signature of the person making the delivery if the retailer will use its own transportation equipment.

    This exemption does not apply to sales to out-of-state purchasers when the purchaser takes physical possession of the item in Illinois, except in the case of items that must be titled or registered with an agency of state government for which either the seller issued a drive-away permit or the purchaser transferred current out-of-state license plates, provided the state where the item will be titled or registered offers Illinois resident purchasers a reciprocal exemption. Note that nonresident purchaser exemptions are not allowed on watercraft sales.

    Report exempt sales of interstate commerce on Form ST-1, Schedule A.

    Rolling stock

    Legal References

    Items (including repair and replacement parts) purchased by interstate carriers for hire to haul persons or commodities in interstate commerce qualify for the rolling stock exemption. Lessors may qualify for the exemption if items (including repair and replacement parts) purchased will be leased for one year or more.

    A motor vehicle, limousine, or trailer must carry persons or property for hire in interstate commerce each consecutive 12-month period for more than 50 percent of the motor vehicle's total trips or miles. Aircraft and watercraft purchased on or after January 1, 2014 (and repair and replacement parts) must be used by an interstate carrier for hire to carry persons or commodities in interstate commerce for more than 50 percent of its total trips for that period or for greater than 50 percent of its total miles for that period. Rail carrier items (and repair and replacement parts) must be used by an interstate carrier for hire to carry persons or commodities in interstate commerce on a regular and frequent basis.

    Generally, it is not the type of item that determines whether or not it qualifies for use as rolling stock, but how the item is used by an interstate carrier for hire. Only those items specifically used as rolling stock will qualify for this exemption. For example, items do not qualify for use as rolling stock when they are used only

    • to transport company officers, employees, customers or others not for hire (even if the persons cross state lines); or
    • to transport property that a business owns or is selling and delivering to customers (even if the items cross state lines); or
    • as support vehicles (other than those specifically used for "escort" service) when the vehicles do not haul persons or
    • commodities for hire in interstate commerce.

    Trips or mileage of a motor vehicle, trailer, limousine, aircraft, watercraft, or rail carrier item in or on which persons or property are carried for hire just between points in Illinois may be used to qualify for the exemption if the journey of the passenger or shipment of the property either originates or terminates outside Illinois. For aircraft, flight hours may be used in lieu of recording miles, and for watercraft, nautical miles or trip hours may be used in lieu of recording miles.

    To document the exemption, a retailer must keep in its records

    • the seller's name and address, 
    • the purchaser's name and address,
    • the documentation indicating that the purchaser is an interstate carrier for hire,
    • an identification or description of the items purchased,
    • a statement that the purchaser is purchasing the items for use as rolling stock in interstate commerce for hire, and
    • the purchaser's signature and the date of signing.

    Purchasers of motor vehicles, trailers, aircraft, watercraft, limousines, and rail carrier items (and repair and replacement parts) may document their tax-exempt purchases by completing Form RUT-7, Rolling Stock Affidavit, and providing a copy to their retailers. Purchasers also must identify which method will be used to document the exemption — trips or mileage. This choice must be documented on Form RUT-7 or the signed certification. Once made, this election will remain in effect for the duration of the purchaser's ownership of that item. If no choice is indicated, the purchaser will be deemed to have chosen the mileage method. 

    Report and identify sales of rolling stock on Form ST-1, Schedule A.

    Manufacturing machinery and equipment

    Legal References

    The manufacturing machinery and equipment exemption applies to purchases of machinery and equipment, including production related tangible personal property and graphic arts machinery and equipment, used primarily (more than 50 percent of the time) in manufacturing or assembling items for wholesale or retail sale or lease. The exemption includes machinery and equipment used in general maintenance and repair of exempt machinery or for in-house manufacture of exempt machinery. 

    To document the exemption, a retailer must keep in its records:

    • the purchaser's active account ID or resale number issued by IDOR and
    • an exemption certificate containing
      • the seller's name and address, 
      •  the purchaser's name and address, an identification or description of the items purchased,
      •  a statement from the purchaser that the items are being used primarily in manufacturing or assembling items for wholesale or retail sale or lease, and
      • the purchaser's signature and the date of signing.
    Purchasers may document their tax-exempt purchases either by completing Form ST-587, Machinery and Equipment Exemption Certificate, or by making their own certificate. A copy of the signed certification must be provided to the retailer. 

    Report sales of exempt manufacturing machinery and equipment on Form ST-1, Schedule A. 

    Farm machinery and equipment

    Legal References

    The farm machinery and equipment exemption applies to purchases of farm machinery and equipment used or leased for use primarily (more than 50 percent of the time) in production agriculture or for use in state or federal agricultural programs. The exemption also applies to repair and replacement parts for qualifying machinery and equipment. Excluded from this exemption are motor vehicles required to be registered under the Illinois Motor Vehicle Code. ATVs do not generally qualify because the exemption does not extend to general farm transportation or recreation. However, if the ATV is used more than 50 percent of the time in production agriculture (raising of livestock, crops, seed stock, animal husbandry, floriculture, aquaculture, horticulture, and viticulture to produce products that will be sold), it would qualify for the farm machinery and equipment exemption. Qualifying use of ATVs includes collecting soil samples, mapping fields, applying farm chemicals, transporting seeds to fields, and hauling livestock or livestock necessities, such as medication, feed, and water. Qualifying use of ATVs does not include scouting crops, checking fences, tile mapping, herding livestock, checking livestock, hauling debris, traveling to inaccessible areas, or transporting tools, persons, or equipment to repair fences and mow fence rows or ditches.

    To document the exemption, a retailer must keep in its records an exemption certificate containing

    • the seller's name and address,
    • the purchaser's name and address,
    • an identification or description of the items purchased,
    • a statement from the purchaser that the items are being used primarily in production agriculture or in a state or federal agricultural program, and
    • the purchaser's signature and the date of signing.

    Purchasers may document their tax-exempt purchases either by completing Form ST-587 or by making their own certificate. A copy of the signed certification must be provided to the retailer. 

    Report sales of exempt farm machinery and equipment on Form ST-1, Schedule A.

    Enterprise zone - building materials

    Legal References

    The enterprise zone exemption applies to the sale of building materials that will be incorporated into real estate located within an enterprise zone. There is no requirement that the building materials be purchased from a retailer located within the enterprise zone.

    To document the exemption, a retailer must keep in its records a certification from the purchaser that contains the following:

    • a statement that the building materials are being purchased for incorporation into real estate located in an Illinois enterprise zone,
    • the location or address of the real estate into which the building materials will be incorporated,
    • the name of the enterprise zone in which that real estate is located,
    • a description of the building materials being purchased, 
    • the purchaser's exemption certificate number issued by IDOR, and
    • the purchaser's signature and date of purchase.

    Purchasers may document their tax-exempt purchases either by completing Form EZ-1, Certificate of Exempt Purchase for Building Materials, or by making their own certificate. A copy of the signed certification must be provided to the retailer.  

    Report exempt sales of building materials for use in an enterprise zone on Form ST-1, Schedule A.

    Enterprise zone - items other than building materials

    Legal References

    The enterprise zone exemption also applies to the sale of tangible personal property other than building materials, to a business certified by the Department of Commerce and Economic Opportunity (DCEO).  

    Items that may qualify include

    • tangible personal property  used or consumed in the operation of pollution control facilities,
    • tangible personal property used or consumed within an enterprise zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease, including repair and replacement parts,
    • machinery and equipment used in the operation of a high impact service facility within the enterprise zone,
    • jet fuel used in the operation of high impact service facilities,
    • machinery and equipment used in the operation of an aircraft maintenance facility located within an enterprise zone,
    • tangible personal property  used or consumed within an enterprise zone by any aircraft maintenance facility directly in the process of maintaining, rebuilding, or repairing aircraft, including repair and replacement parts, and 
    • jet fuel and petroleum products used or consumed by any aircraft support center directly in the process of maintaining and rebuilding or repairing aircraft. 

    To document the exemption, a retailer must keep in its records the following: 

    • a copy of the current certificate of eligibility issued by DCEO and
    • a written statement signed by the certified business that the items are being purchased for use or consumption at a location within an enterprise zone. 

    Once a retailer has a current signed copy of the certificate of eligibility and statement of exemption on file, the certified business may claim the exemption on subsequent purchases. The business will need to indicate on the purchase order that the item or items are exempt by referencing the certificate of eligibility and statement of exemption. The exemption can only be claimed if the certificate of eligibility is current and made during the effective period of the certificate of eligibility specified by DCEO.

    Report exempt sales of items other than building materials for use in an enterprise zone on Form ST-1, Schedule A.

    High impact/ Reimagining electric vehicle business - building materials

    Legal References

    High impact business - 

    Reimagining electric vehicle business - 

    The high impact/ reimagining electric vehicle business exemption applies to the sale of building materials that will be incorporated into a high impact/ reimagining electric vehicle business (HIB/REV) location if the business has received this designation from DCEO.

    To document the exemption, a retailer must keep in its records a certification from the purchaser that contains the following:

    • a statement that the building materials are being purchased for incorporation into a designated HIB/REV location, 
    • the location or address of the designated HIB/REV into which the building materials will be incorporated, 
    • the name of the designated HIB/REV, a description of the building materials being purchased,
    • the purchaser's exemption certificate number issued by IDOR, and 
    • the purchaser's signature and date of purchase. 

    Purchasers may document their tax-exempt purchases either by completing Form EZ-1, Certificate of Exempt Purchase for Building Materials, or by making their own certificate. A copy of the signed certification must be provided to the retailer.  

    Report exempt sales of building materials for use in a high impact/ reimagining electric vehicle business on Form ST-1, Schedule A.

    High impact business - items other than building materials

    Legal References

    The high impact business exemption also applies to sale of tangible personal property other than building materials to a business certified by DCEO. 

    Items that may qualify include those used in the process of manufacturing or assembly of tangible personal property  for wholesale or retail sale or lease.

    To document the exemption, a retailer must keep in its records the following: 

    • a copy of the current certificate of eligibility issued by DCEO and
    • a written statement signed by the certified business that the items are being purchased for use or consumption at a location within an enterprise zone. 

    Once a retailer has a current signed copy of the certificate of eligibility and statement of exemption on file, the certified business may claim the exemption on subsequent purchases. The business will need to indicate on the purchase order that the item or items are exempt by referencing the certificate of eligibility and statement of exemption. The exemption can only be claimed if the certificate of eligibility is current and made during the effective period of the certificate of eligibility specified by DCEO.

    Report exempt sales of items other than building materials for use in a high impact business on Form ST-1, Schedule A.

    River edge redevelopment zone

    Legal References

    The river edge redevelopment zone exemption applies to qualifying sales of building materials that will be incorporated into real estate within a river edge redevelopment zone by remodeling, rehabilitating, or new construction. 

    A "qualifying sale" is a sale of building materials that will be incorporated into real estate as part of an industrial or commercial project and a Certificate of Eligibility for Sales Tax Exemption has been issued by the municipality where the project is located. 

    To document the exemption, a retailer must keep in its records a certification from the purchaser that contains the following: 

    • a statement that the building materials are being purchased for incorporation into real estate located in a river edge redevelopment zone, 
    • the location or address of the real estate into which the building materials will be incorporated,
    • the name of the river edge redevelopment zone in which that real estate is located,
    • a description of building materials being purchased,
    • the purchaser's exemption certificate number issued by IDOR, and
    • the purchaser's signature and date of purchase.

    Qualifying sales must be to the organization itself, not its members or representatives.

    Purchasers may document their tax-exempt purchases either by completing Form EZ-1, Certificate of Exempt Purchase for Building Materials, or by making their own certificate. A copy of the signed certification must be provided to the retailer.  

    Report exempt sales of items for use in a river edge redevelopment zone on Form ST-1, Schedule A.

    Exempt (non-profit) organizations (excluding governmental bodies)

    Legal References

    Only non-profit organizations that have applied for and received an exemption identification number ("E" number) from IDOR qualify as tax-exempt purchasers of tangible personal property and prepaid wireless services. Examples of organizations that may qualify for tax-exempt status include churches, charities, schools, county fair organizations, and certain senior citizen organizations. Once such organizations have been granted their "E" numbers, they may purchase items tax free to further their organizational purposes.

    To document the exemption, a retailer must request from the purchaser either

    • a copy of the purchaser's exemption certificate issued by IDOR or
    • the purchaser's "E" number. (In this case, before completing the transaction, retailers should verify this number by using MyTax Illinois or by calling IDOR at 217 782-8881).

    Qualifying sales must be to the organization itself, not its members or representatives.

    Report sales to exempt organizations on Form ST-1, Schedule A.

    Sales by non-profits

    Legal References

    There are some very limited exemptions from the Retailers' Occupation Tax for sales by exclusively charitable, religious, and educational organizations and institutions. However, the exemption is not available unless the selling organization or institution has an active "E" number. These exemptions include

    • sales to members,
    • noncompetitive sales, and
    • occasional dinners, socials, or similar activities.

    These limited exemptions do not need to be reported; however, non-profit organizations which incur Retailers' Occupation Tax liability as retail sellers of tangible personal property are required to register and file Form ST-1. Suppliers of such purchasers incur Retailers' Occupation Tax liability when they sell tangible personal property to any such purchaser at retail (i.e., for use or consumption by the purchaser or to be given away by the purchaser, and not for resale in any form as tangible personal property). Sellers claiming the sale to an exempt organization exemption are cautioned against laxity in claiming the benefit of this exemption without verifying the status of the purchaser. The seller will have the burden of proof in establishing his right to any such claimed exemption. 

    Occasional Sales

    Legal References

    The isolated or occasional sale of tangible personal property at retail by a person who does not hold himself out as being engaged (or who does not habitually engage) in selling such tangible personal property at retail is not subject to tax. Occasional dinners, socials, or similar activities of a person organized and operated exclusively for charitable, religious, or educational purposes, whether or not such activities are open to the public. "Occasional" generally means two or less during a rolling calendar year. 

    No sales tax return is due on these sales. However, if a person or business engages in more than occasional sales, then the person or business is in the business of making sales and must register to collect and remit tax on the items sold. 

    School fundraiser

    Legal References

    Retailers' Occupation Tax does not apply to the sale of tangible personal property, including food, purchased through fundraising events for the benefit of a public or private elementary or secondary school, or a group of those schools, or one or more school districts if the events are sponsored by an entity recognized by the school district that consists primarily of volunteers and includes parents and teachers of the school children. This exemption does not apply to fundraising events

    • for the benefit of private home instruction or 
    • for which the fundraising entity purchases the personal property sold at the events from another individual or entity that sold the property for the purpose of resale by the fundraising entity and that profits from the sale to the fundraising entity.

    A fundraising group may engage in tax-free selling only when it sells items that it has prepared or that are donated to it. When purchasing tangible personal property to be used to make items for sale, the fundraising group must use an "E" number to make such purchases tax free. 

    The fundraising group does not have a reporting requirement. The supplier must document the sale on Form ST-1, Schedule A.

    Governmental bodies

    Legal References

    Except as otherwise provided in 86 Ill. Adm. Code 130.2080(b) and 130.2080(c), sales of tangible personal property made to a governmental body (federal, state, local, or foreign) are exempt from the Retailers' Occupation Tax only if the governmental body has an active E-number issued by IDOR and the governmental body provides this active E-number to the retailer, who records that number instead of collecting the tax. In addition, only sales of tangible personal property invoiced directly to and paid by governmental bodies that possess active E-numbers are exempt. If an individual government employee provides a credit card to the retailer containing the name of the employee along with the name of the governmental body, tax will be due, even if the employee provides an active E-number. However, until December 31, 2014, retailers may accept U.S. government bank cards in sales to the U.S. government and its agencies without requiring an Illinois active exemption identification number. Retailers making sales to persons with a U.S. State Department, Office of Foreign Missions card or a Taipei Economic and Cultural Representative Office card should consult 86 Ill. Adm. Code Part 130, Illustration A, which depicts examples of the type of tax exemption cards currently being used and the type of exemption to which the person in possession of that particular card is entitled.

    Report and identify sales to exempt governmental bodies on Form ST-1, Schedule A.

    Data center construction or operation

    Legal References

    Qualified tangible personal property used in the construction or operation of a data center that has been granted a certificate of exemption by the Department of Commerce and Economic Opportunity (DCEO), whether that tangible personal property is purchased by the owner, operator, or tenant of the data center or by a contractor or subcontractor of the owner, operator, or tenant. DCEO shall issue certificates of exemption from the Retailers' Occupation Tax Act, the Use Tax Act, the Service Use Tax Act, and the Service Occupation Tax Act, all locally imposed retailers' occupation taxes administered and collected by IDOR, and the Chicago non-titled Use Tax.

    Report and identify sales for data center construction and operation on Form ST-1, Schedule A.

    Community water supply 

    Legal References

    A community water supply purchaser (or a contractor) may claim a sales and use tax exemption on the following types of sale:

    • sales of tangible personal property purchased and used in the construction or maintenance of structures and physical plant owned by a community water supply, when the tangible personal property is physically incorporated into the structures and physical plant; or
    • sales of tangible personal property purchased and owned by a community water supply, when the tangible personal property is not physically incorporated into the structures and physical plant owned by a community water supply but is used in the construction and maintenance of a community water supply.

    See 86 Ill. Adm. Code 130.1934(c), for a detailed list of tangible personal property that does and does not qualify for this exemption.

    A community water supply purchaser (or a contractor) claiming a sales and use tax exemption must provide to the seller either Form ST-589, Certificate of Eligibility for Sales and Use Tax Exemption — Community Water Supply, or an equivalent as proof that no tax is due on the sale. An equivalent certificate must contain the following: 

    • the name of the not-for-profit corporation operating the community water supply; 
    • the location or address of the community water supply;
    • a statement that the community water supply identified in the certificate meets all the requirements of Section 2-5(39) of the Retailers' Occupation Tax Act;
    • a statement that the not-for-profit corporation is in good standing and has not been dissolved (a foreign not-for-profit corporation also shall state that it has obtained a certificate of authority to conduct affairs in Illinois and that the certificate has not been withdrawn);
    • a description of the tangible personal property being purchased;
    • a statement that the tangible personal property is either:
      •  being purchased and used in the construction or maintenance of structures and physical plant owned by a community water supply and physically incorporated into the structures and physical plant; or
      • being purchased for use in the construction or maintenance of a community water supply by a community water supply; and
      • the signature of the chief executive officer of the not-for-profit corporation operating the community water supply or the chief executive officer's duly authorized designee.

    If the purchaser is a contractor, the equivalent certificate also must contain a signed statement that the tangible personal property will be physically incorporated into the structures and physical plant owned by a community water supply in fulfillment of a construction contract with a not-for-profit corporation that operates the community water supply and is eligible for this exemption.

    Note: Purchases of tangible personal property by a lessor to be leased to a community water supply for use in the construction or maintenance of structures and physical plant owned by the community water supply do not qualify for the exemption.

    Report and identify sales for community water supply on Form ST-1, Schedule A.

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