What is use tax?

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Use tax is a tax imposed on the privilege of using, in Illinois, any item of tangible personal property that is purchased anywhere at retail. Generally, the tax is designed to distribute the tax burden fairly among Illinois consumers and to ensure fair competition between Illinois and out-of-State businesses. Use tax is due when you purchase merchandise that you will use in Illinois from a person or business that did not collect Illinois sales tax (e.g., sales from catalogs, magazines, infomercials, or the Internet). This tax applies to individuals, businesses, and organizations.  Use tax liability may result in the following instances:

• An Illinois consumer purchases tangible personal property at retail from an unregistered, out-of-State retailer for use in Illinois and that retailer does not collect the tax; or
  
• An Illinois business withdraws tangible personal property from its sales inventories for its own use. In this instance, at the time the item was purchased, the business would not have paid tax to the vendor because it purchased the items for resale purposes.
  

Individuals should report use tax on Form ST-44, Illinois Use Tax Return. An individual also may use Form IL-1040, Individual Income Tax Return, to report use tax along with the taxpayer's income tax liability, provided the individual's annual use tax liability is $600 or less. A business may file Form ST-44 to report its use tax, unless the business is registered to file and pay sales and use tax using Form ST-1, Sales and Use Tax and E911 Surcharge Return.

Note: Effective January 1, 2025, retailers previously obligated to collect and remit Illinois Use Tax (UT) on retail sales sourced outside of Illinois and made to Illinois customers are now subject to destination-based retailers’ occupation tax (ROT). “Destination-based ROT” means the total State and local ROT rate calculated for a sale using the rate in effect at the Illinois location to which the item sold (tangible personal property) is shipped or delivered, or at which possession is taken by the purchaser. For more information, see Public Act 103-983 and 86 Ill. Adm. Code 270.115. 

For information on reporting use tax, including information on reporting use tax on purchases of items of tangible personal property that must be titled or registered with an agency of Illinois government (e.g., motor vehicles, motorcycles and all-terrain vehicles, watercraft, aircraft, trailers, and manufactured (mobile) homes), see our Sales and Use Taxes information page.  See also Question 128, "What is the relationship between retailers' occupation and use tax in Illinois?".