Effective January 1, 2025, a provision of Illinois HB4951 goes into effect which caps the sales tax vendor discount to $1,000 per month. The original idea behind offering this discount was as a form of compensation to businesses meant to offset expenses related to collecting and remitting sales tax. The argument in favor of capping the discount is that automation has reduced a great deal of the manual work associated with sales tax filings, so retailers are entitled to less compensation for collecting and timely remitting.
Since the rate for Vendor’s use tax is 1.75% of tax collected, this change will primarily impact businesses who are collecting over $57,000 in tax monthly. Taxpayers who have large volumes of sales or who consistently sell large amounts into Illinois need to be aware of this change and ensure they take only the allowable discount. (Illinois H.B. 4951, Signed by JB Pritzker 6/7/2024)