Illinois might revive back-to-school sales tax holiday

Illinois lawmakers are looking at a bill that would cut sales taxes during back-to-school shopping. Illinois hasn’t had a sales tax holiday in years. The bill would lower the state sales tax from 6.25% to 1.25% on clothes and school supplies for six days in August 2025.

Back-to-school shoppers would save 5% on clothes, books and other school supplies under a bill state lawmakers are considering to lower the state sales tax for six days in August.

The break would go far in Illinois where families pay the seventh-highest sales taxes in the country at 8.9% when you average state and local rates. Midwest neighbors Iowa, Missouri, Ohio and Tennessee all offer back-to-school tax breaks regularly.

The tax break would reduce the state’s sales tax from 6.25% to 1.25%, but not change any locally imposed sales taxes. The tax holiday would run Aug. 6-8 and Aug. 13-15, 2025, giving families two chances to save money under Senate Bill 1673, sponsored by state Sen. Christopher Belt, D-East St. Louis. Illinoisans pay the highest sales tax among the 10 biggest states by population, which have the most similar economies.

Back-to-school shopping means families on average spend nearly $600 per child. Illinois families could use tax relief year after year, not just when politicians are feeling generous. Permanent tax relief would help families better plan their budgets and afford what their children need for school.

Illinois had a similar tax break in 2022, which saved families about $50 million. There were no tax breaks in 2023 or 2024. The 2022 tax break happened during an election year.

The Tax Foundation was critical of sales tax holidays, stating the compliance costs for small businesses are not rewarded by new consumer demand. The holidays are popular, with 19 states participating in 2024.

“Since sales tax holidays shift the timing of demand but do little to increase its magnitude, sales tax holidays reduce state and local tax collections for little or no economic benefit,” the foundation stated.