TAX NEWS - 2010

Chicago Sales Tax: Back-to-school shoppers to get partial sales tax break

Parents will see a little extra change in their pocketbooks under a measure Gov. Pat Quinn signed into law this afternoon that will temporarily waive the state sales tax for back-to-school purchases.

Under the legislation, the state's 5 percent sales tax will be eliminated for clothing and shoes. The so-called "sales tax holiday" would run from Aug. 6 to Aug. 15. The individual items of clothing and pairs of shoes have to cost less than $100 to qualify, so pricey gym shoes and high-end jeans won't get shoppers the tax break.

While the state's portion of the sales tax would be waived, shoppers still will have to pay sales tax levied by cities or counties, meaning the tax rate on purchases in Chicago would be 4.75 percent.

The bottom line is that back-to-school shoppers in Illinois will save 5 cents for every $1 spent.

"This is a tax break for ordinary working families," said Quinn during a bill signing event at Sears on State Street.

The partial sales tax holiday isn't limited to back-to-school shoppers, the governor's office acknowledged today. Anyone buying clothes or shoes will get the break.

Quinn, who is running for election this fall, pushed to provide the temporary tax break because he said it would help working families and inject activity into the economy. But critics contend the measure will cost the state much-needed tax revenue at a time when Illinois is operating billions of dollars in the red.

The independent Commission on Government Forecasting and Accountability estimates that the sales tax holiday would cost the state anywhere from $20.6 million to $67.1 million. But Quinn said the state may actually make money because shoppers would be lured into buying other items that do not qualify for the tax exemption.

The legislation had conflicting wording on whether sporting goods and computer accessories were included in the sales tax holiday, and the Illinois Department of Revenue decided to exclude those items, Quinn officials said.