Illinois Contractor Sales Tax 2026

Illinois sales tax for contractors 2026. Labor taxable? Materials? Real rules from state revenue department.

Illinois sales tax rate for contractors

  • Combined rate: 6.25% + local (~8.8% combined avg)
  • Construction labor taxable: NO - real property labor is exempt
  • Tax authority: Illinois Department of Revenue

How Illinois treats contractor labor

Contractor pays Use Tax on materials. Real property labor exempt. Sale of TPP to customer is taxable retail sale.

Illinois-specific rules

Illinois has separate residential and commercial rules. Chicago has additional Home Rule and other taxes. Roofing requires state license; general contractor licensed at local level.

Illinois mechanics lien rights

Beyond sales tax, Illinois contractor billing must respect the mechanics lien deadline of 4 months from last work (residential); 2 years to file suit. Preliminary notice: 60-day notice required from subcontractors on owner-occupied residential.

Illinois contractor licensing

Illinois Department of Financial and Professional Regulation (IDFPR) - required for licensed work. Varies by trade (plumbing $300, roofing $125). Board: https://www.idfpr.illinois.gov.

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Illinois contractor resources by trade