Illinois Contractor Sales Tax 2026: Labor, Materials, Rules

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

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