Illinois shoppers haven't had a back-to-school sales tax holiday since 2022.
That changes this August.
Illinois Governor JB Pritzker signed SB 3019 — the state's $56 billion budget bill — on June 16, 2026. Among its provisions: a 10-day back-to-school sales tax holiday running August 7 through August 16, 2026.
During that period, qualifying clothing and footwear priced less than $125 are subject to a reduced state sales tax rate of 1.25% — instead of the normal 6.25%.
Four years in the making. Ten days of reduced taxes. And a broader category of qualifying items than most people realize.
Here's everything Illinois shoppers and retailers need to know before August 7.
Illinois's back-to-school sales tax holiday isn't a new concept. The state ran similar holidays in prior years — including 2022, when the reduced 1.25% rate applied to qualifying back-to-school items.
In 2022, Illinois reduced the sales tax rate for back-to-school items from 6.25% to 1.25%. While efforts were made in the Illinois legislature to bring it back, no such sales tax holiday had been included since — until this year.
The holiday's return in 2026 comes as part of a broader budget deal that also included new taxes on social media, digital assets, fantasy sports, and cryptocurrency — all passed in the same June 1 budget bill and signed June 16. The holiday is the consumer-friendly piece of a tax package that otherwise expanded Illinois's revenue base significantly.
This is where Illinois's 2026 holiday is more expansive than most people realize.
The holiday doesn't just cover clothing and footwear. From August 7 through August 16, 2026, a reduced tax rate of 1.25% applies to clothing with a retail seller price of less than $125 — and also to school supplies, school art supplies, instructional materials, and computer supplies. The Sales Tax People
Breaking that down:
Clothing and footwear — under $125 per item:
Shirts, jeans, dresses, shoes, boots, jackets, coats, uniforms, and similar everyday clothing items. The $125 threshold applies per item — a $124 pair of shoes qualifies, a $126 pair does not.
School supplies:
The standard back-to-school lineup — notebooks, folders, pencils, pens, scissors, calculators, rulers, and similar supplies used for school.
School art supplies:
Paints, brushes, sketchbooks, colored pencils, and similar materials used for art classes.
Instructional materials:
Textbooks, workbooks, reference books, and similar materials used for learning.
Computer supplies:
Items used with computers — mice, keyboards, USB drives, printer paper, and similar accessories.
That's a significantly broader category than most neighboring states. While Texas limits its August 7-9 holiday to clothing under $100 and school supplies under $100, Illinois's 10-day window covers computer supplies and school art supplies that most other states leave out entirely.
This is the most important distinction Illinois shoppers and retailers need to understand.
Illinois's holiday is not a tax-free period. It's a reduced-rate period.
Qualifying items are subject to a reduced rate of state sales tax of 1.25% instead of the normal 6.25%.
The 5% reduction in state rate translates to real savings — but it's not zero. On a $100 purchase, Illinois shoppers pay $1.25 in state tax instead of $6.25. That's $5 in savings per $100 spent.
And local taxes still apply on top of the reduced state rate. Illinois has some of the most complex local sales tax structures in the country — combined rates ranging from 6.25% to 11% depending on the jurisdiction. The holiday reduces the state portion from 6.25% to 1.25% — but the local layer stays at whatever rate applies to the delivery address.
For a shopper in Chicago — where the combined rate is 10.25% — the holiday brings their total rate on qualifying items to approximately 5.25% (1.25% state + 4% Chicago local). That's still meaningful savings, but not zero.
For retailers, this creates a specific compliance requirement: the system needs to apply the reduced 1.25% state rate on qualifying items while continuing to apply the correct local rate unchanged. Getting either piece wrong — reducing local taxes or failing to reduce the state rate — creates compliance errors.
Most state back-to-school holidays run two to three days. Illinois's 2026 holiday runs ten.
According to Governor Pritzker's office, families shopping for school supplies, clothing, computers, and other necessities will benefit from the reduced rate August 7-16.
Ten days is more comparable to Connecticut's Tax-Free Week (August 16-22) than to the standard weekend-only format. The longer window gives Illinois shoppers more flexibility to plan purchases — and gives retailers a longer compliance obligation to manage.
The holiday runs from 12:01 a.m. on Friday, August 7 through the end of Sunday, August 16 — covering two full weekends plus the week in between. That's the peak back-to-school shopping window for most Illinois families.
Illinois isn't the only state with a sales tax holiday the week of August 7. Here's how the regional picture looks:
Iowa — August 7-8. Clothing and footwear under $100. Full exemption (state and local).
Missouri — August 7-9. Clothing under $100, school supplies under $50, computers under $1,500. Full exemption.
Wisconsin — No holiday.
Indiana — No holiday.
Kentucky — No holiday.
Illinois — August 7-16. Clothing and footwear under $125, school supplies, school art supplies, instructional materials, and computer supplies. Reduced rate (1.25% state, local taxes still apply).
The key differences: Illinois has the longest window and covers more categories — but it's a reduced rate, not a full exemption. Iowa and Missouri offer full exemptions for their shorter windows. For shoppers near state borders, the choice between a full exemption in Iowa or Missouri for two to three days versus a reduced rate in Illinois for ten days will depend on what they're buying and how close they are to a border.
For Illinois retailers, the ten-day window means a longer compliance period than most competitors in neighboring states — but also a longer opportunity to capture back-to-school shopping traffic.
The same budget bill that created the sales tax holiday also froze Illinois's annual gas tax increase.
Illinois typically increases its state motor fuel tax annually on July 1. The July 1, 2026 increase — scheduled at 1.3 cents per gallon — was pushed back six months to January 1, 2027 by SB 3019.
For Illinois retailers with delivery fleets or logistics operations, the gas tax freeze is a modest but real operational benefit through the end of 2026. And for consumers, it means the cost of driving to back-to-school sales doesn't increase during the holiday period itself.
Illinois's back-to-school holiday hasn't run since 2022 — which means some retailers' systems may not have been configured for it in years. Here's what needs to happen before August 7:
1. Update your state rate to 1.25% on qualifying items. Your POS and ecommerce tax engine needs to apply the reduced 1.25% state rate to qualifying clothing, footwear, school supplies, art supplies, instructional materials, and computer supplies during the August 7-16 window. The normal 6.25% state rate still applies to non-qualifying items.
2. Keep local taxes unchanged. The reduced rate applies to the state portion only. Local taxes — city, county, transit district — continue at their normal rates for qualifying items. Illinois's local tax structure is complex, and getting this right requires address-level rate accuracy.
3. Verify the $125 threshold applies per item. The clothing and footwear threshold is $125 per item, not per transaction. A customer buying five $120 shirts pays the reduced rate on all five. A customer buying one $130 jacket pays the full 6.25% state rate.
4. Contact your software vendor now. Illinois's holiday hasn't run since 2022. Some tax software platforms may need manual configuration to apply the reduced rate correctly. Verify with your vendor that the August 7-16 reduced rate is programmed — don't assume it updates automatically.
5. Handle online orders correctly. For ecommerce sellers, the reduced rate applies to orders placed and paid for during the August 7-16 window — even if delivery occurs after August 16. The transaction date determines the applicable rate, not the delivery date.
6. Mandatory participation. All businesses open during the holiday are required to participate and cannot advertise that they'll pay or absorb the sales tax on nonqualifying items. The reduced rate is mandatory for qualifying items — and you cannot use the holiday as a marketing tool for non-qualifying products. The Sales Tax People
The switch from 6.25% to 1.25% state rate represents an 80% reduction in state sales tax on qualifying items. Here's what that looks like for a typical Illinois back-to-school shopping trip:
| Item | Price | Normal State Tax (6.25%) | Holiday State Tax (1.25%) | Savings |
|---|---|---|---|---|
| Sneakers | $110 | $6.88 | $1.38 | $5.50 |
| Jeans | $75 | $4.69 | $0.94 | $3.75 |
| School backpack | $65 | $4.06 | $0.81 | $3.25 |
| Laptop accessories | $85 | $5.31 | $1.06 | $4.25 |
| Art supplies | $45 | $2.81 | $0.56 | $2.25 |
| Full back-to-school haul | $600 | $37.50 | $7.50 | $30.00 |
$30 in state tax savings on a $600 back-to-school haul. Add in local tax still applying, and the total savings are somewhat less than a full exemption — but across a ten-day window and a broad category of qualifying items, Illinois's 2026 holiday is genuinely more valuable than the reduced-rate format might initially suggest.
For a full look at every state's 2026 sales tax holiday — dates, qualifying items, price thresholds, and compliance requirements — visit our complete 2026 sales tax holiday guide.
Selling clothing, school supplies, or computer accessories in Illinois and want to make sure your systems are configured correctly for the August 7-16 reduced rate — or managing sales tax holiday compliance across multiple states this summer? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup and make sure you're applying the right rates before the first day of the holiday.