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AT 10.25%, COOK COUNTY SALES TAX NOW HIGHEST IN U.S.! Clever Shoppers Find Way to Avoid It!

Coming to Chicago, or Suburban Cook County, near Chicago?  Bring lots of money!

Effective July 1st, our the combination of local, county, and state Sales Tax increased to 10.25%!  That's the highest of any big city in the country.

Sales Taxes increases were passed last Spring, to fill considerable budget holes for County Services, and Local Mass Transit.  Detractors of the Cook County portion of the tax increases point to what they consider a lot of "fat" in county government, which should have been trimmed to avoid the increase.  

Cook County Board President, Todd Stroger, disagrees.  In fact, his original proposal, thankfully defeated, called for a 10.75% sales tax in many parts of Cook County, the county that includes the City of Chicago.

As sales taxes increase in Cook County, however, so have the number of consumers finding legal ways around paying the increase.

The easy answer, for many, is The Internet.  Many online merchants only charge sales tax if they have a PHYSICAL PRESENCE here - a store, or a warehouse.  Thus, Chicagoans can purchase merchandise from Maine Clothing Merchant L.L. Bean and pay no sales tax.  Buying Land's End clothing and other merchandise - owned by Sears Holdings, headquartered in the Chicago Suburb of Rolling Meadows IL, is fully subject to the higher sales tax.

Technically, the State of Illinois assesses a 6.25% use tax on goods purchased outside of the state, but used here.  But the Illinois Use Tax is rarely enforced.  Autos, purchased in county or outside, always pay a reduced level of County and State Sales Tax.

Chicago area shoppers buying in physical retail stores, however, can often take advantage tax savings simply by driving a few miles away. 

Residents of the Chicago suburb of Hinsdale IL would pay the 10.25% higher Cook County Sales Tax on purchases from merchants on the Cook County Side of the community.  If they drive across County Line Road, and into adjacent Du Page County, however, the sales tax falls to a more-comfortable 7.25%That's a sizable $3.00 tax savings for every $100 spent- and it puts Hinsdale merchants on the Cook County side of town at a competitive disadvantage.

In Chicago Suburban Palatine IL, which abuts neighboring Lake County, Mayor Rita Mullins does much of her own shopping in the town of Lake Zurich, just over the Lake County Line.  Again, she saves a considerable 3% sales tax on her purchases.  These few dollars per shopping trip can really add up over a year's time, she contends.

Says Mayor Mullins, "It's another encumbrance to the working families' everyday life. There's the cost of gasoline. There's the sales tax. There's the rising cost of food. There are rising utility costs. ... When you combine all of it, how do working families and retired people cope everyday? In order to survive they have to make more and more cuts to their daily lives."

Mullins and other Palatine residents are so angry over Cook County's latest sales tax increase that they have threatened to secede from Cook County. Last week, the Palatine Village Council passed a resolution endorsing a bill in the Illinois Legislaturethat would make it easier for suburbs to do secede. Cook County President Stroger has said he wouldn't stand in the way of such a move, although it would cost the county millions of dollars in lost sales tax revenue. Most think the Palatine initiative has little chance of passage.

The new sales tax structure has left a patchwork of local sales tax rates in the Suburbs of Cook County.  Many communities, with lower municipal taxes, have combined sales tax rates ranging between 9 and 10 percent. 

Another beneficiary of the local increases in sales tax - the neighboring State of Wisconsin!  Sales taxes in most of Wisconsin are 5%- potentially saving Chicago Residents 5.25% on sales tax expenditures, and even those in Lake County a more modest, but significant, 2%.  This fall, some Wisconsin merchants are using billboards, radio, the Internet, and other advertising media to entice value-conscious shoppers to consider their neighbor state to the north for their "Back to School" shopping.

Throughout IL, taxes on food and medicine are considerably lower - 2% - and were not affected by the most recent sales tax jump.  Cars and trucks were also unaffected this time around, but local vehicle sales taxes always apply where the vehicle is being REGISTERED, not where it was actually PURCHASED.

See our post this morning @ BlogChicagoHomes.com for more info, as well as a link to Susan Chandler's story in the July 20th edition of The Chicago Sunday Tribune.

DEAN & DEAN'S TEAM CHICAGO

Comment balloon 11 commentsDean Moss • July 22 2008 04:01PM

Comments

Dean, that Hinsdale total sales tax is incredibly high. I hope they are getting their money's worth for all that contribution. Great strategies you provided to help others save some with the surrounding communities.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 10 years ago

DEan

Those are some heavy duty taxes

Sincerely

Tommy

Posted by Tom Braatz Waukesha County Real Estate 262-377-1459, Waukesha County Realtor Real Estate agent. SOLD! (Coldwell Banker) about 10 years ago

We have one party rule in Cook County.  This is the result. Sad sad sad.

Posted by Anonymous about 10 years ago

I think that is highway robery at 10.25%. How can this county do this? I learned something new today, thanks Dean.

Posted by Michael Wayne Jackson, Realtor - Senior Real Estate Specialist (Coldwell Banker) about 10 years ago

I have really enjoyed reading your blog. I am relatively new to AR and have noticed you have received a lot of points and have achieved a remarkable high ranking. Congratulations! May I ask if you have had success in turning your high ranking into business? I am curious if it has been a profitable venture personally as well as financially. Thanks for sharing and best of luck in your business.

Posted by James Wexler (wexzilla.com) about 10 years ago

James -

Thanks for the compliment, and thanks for visiting our blog!

I don't do this strictly for the referral business - I like to learn from and share with others.  It's also a great outlet to bang your thoughts out in writing, and forces you to keep up on what's happening in the business on a day to day basis.

I have gotten some business referrals here - more as our point score has increased along with our visibility.  And this is nice!  But it's not the PRIMARY REASON we blog on AR!

Call or Drop In Anytime!

DEAN & DEAN'S TEAM CHICAGO

Posted by Dean Moss, Dean's Team Chicago IL Real Estate Team (Dean's Team - Keller Williams Realty Partners Chicago IL) about 10 years ago

Stroger is a joke.  Unfortunately, a painful joke.

Posted by Anonymous about 10 years ago

What is the correct sales tax for a new vehicle purchase in Suburban Cook County, IL as of September 1, 2008?  PLEASE!!!!!!!!!!!!!

Posted by Lena about 10 years ago

Lena -

Click this link and enter the name of the municipality in which you are buying the new car to get the accurate tax rate.  It is the Tax Finder Page for the IL Department of Revenue.

Keep in mind that auto sales taxes are sometimes applied to the place where the auto is REGISTERED, not purchased.  For example, if you buy a car in Arlington Heights IL, but register it to a Chicago address, the sales tax is 8.50%, not the lower 7.25% it would be in the suburb.

Hope this makes some sense - write back if you have further questions.

DEAN & DEAN'S TEAM CHICAGO

Posted by Dean Moss, Dean's Team Chicago IL Real Estate Team (Dean's Team - Keller Williams Realty Partners Chicago IL) about 10 years ago

Holy cow, what a dubious distinction to have, the highest sales taxes in the nation!  I guess somebody's gotta have it, I'm just glad it's not here!

Posted by Janna Scharf, Coeur d'Alene Idaho Real Estate Expert (Keller Williams Realty Coeur d'Alene) almost 10 years ago

That tax is so high it is almost criminal.  I was in New Orleans about a year ago and could not beleive how high it was there.  It is hard to believe you are higher than New York City.   I could not live in a place that demands so much from its citizens to live.

Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (RE/MAX Paramount Properties) almost 10 years ago

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