There are a few very impactful changes happening in Illinois (including Chicago) and Maine – primarily affecting rentals and leased property. If you are a lessor in one of these states – major changes to how you will handle sales and use tax will need to be incorporated into your lease agreements and invoices for all invoices dated after January 1, 2025. Tax will now be collected on the lease stream and purchases of property to be rented or leased will qualify for the resale exemption. Read more about Maine and Illinois in our recent tips. In Chicago, rentals and leases will be exempt from the state sales tax and remain subject to the Chicago Personal Property Lease tax – but at a new rate of 11%. Lessees need to be aware of the increased tax costs on these contracts since it applies for all invoices after January 1st regardless of the date of the rental/lease agreement.
Also in Illinois, all out of state sellers are now subject to collecting the destination Retailer’s Occupation Tax (sales tax) including state and local taxes for all goods originating from outside Illinois. For goods originating from within Illinois, origin sales tax at the seller’s location will continue. More information is in our recent tip.
In Louisiana the state sales tax rate will increase to 5%, and tax will apply to previously untaxed digital goods including digital books, audio visual, audio, games, information services, and remotely accessed software regardless of method of delivery or access. For full details, review our recent tip which also includes some unusual exceptions.
If you need help understanding how any of these impact your business, reach out to us for assistance.