Illinois charges a 6.25% state sales tax, with counties and cities layering on their own rates on top. For businesses buying manufacturing equipment, farm supplies, or goods for resale, sales tax exemptions can meaningfully reduce that number.
Illinois splits its exemptions across two different forms depending on what you're buying. This serves as a guide to help businesses determine which form is most appropriate for them.
What Actually Qualifies
Illinois exemptions are specific to the purchase. In Illinois, sales tax-exempt items typically include: categories that consistently qualify:
Machinery and equipment used more than half the time in manufacturing or assembling products for sale
Supplies and consumables used directly in the manufacturing process
Farm machinery, seed, feed, and fertilizer used in production agriculture
Prescription drugs and qualifying medical devices
Purchases made by qualifying nonprofit organizations for their exempt purpose
As of January 1, 2026, groceries are also exempt from Illinois's state-level tax. That said, individual counties and municipalities can now apply their own local grocery tax up to 1%, so what shows up on an invoice or receipt still depends on where the sale happens.
A few things people assume are exempt but aren't: everyday clothing, most consumable business supplies unrelated to production, and hand tools or safety gear used in manufacturing. The exemption follows the item's actual use, not the industry the buyer is in.
Illinois Sales Tax Exemption Forms
Illinois splits exemption documentation into two forms depending on why the purchase is tax-free.
Form CRT-61 covers resale. If you're buying inventory you'll turn around and sell, this is the certificate you give the seller.
Form ST-587 covers manufacturing, production agriculture, and coal or aggregate mining. If you're buying equipment or supplies used directly in producing goods, this is the one.
Both work the same basic way: you complete the certificate and hand it to the seller before the sale goes through. The seller keeps it on file to justify not collecting tax. If you use the wrong form, or the item doesn't actually meet the "used primarily for" threshold the state requires, the exemption can get denied even if your business genuinely qualifies for something else.
Where This Goes Wrong
Treating a resale certificate as if it also covers equipment purchases
Assuming an exemption applies indefinitely once it's been granted once.
Failing to keep updated certificates for every exemption
Automating Sales Tax Exemption
One or two exemption certificates are easy to keep track of by hand. The trouble starts when a business is managing certificates across dozens of vendors, two different exemption categories, and purchases where the "primarily used for manufacturing" test isn't obvious without someone actually checking. Manual tracking rarely catches a lapsed or misapplied certificate until the state does.
This is where automation earns its keep. Kintsugi's platform tracks exemption certificate status across vendors, flags gaps before they turn into audit findings, and keeps documentation organized so your team isn't rebuilding a paper trail after the fact. The judgment calls on what qualifies stay with our tax experts. The tracking is where automation removes the busywork.
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Related resource: For current rates, nexus thresholds, filing deadlines, and FAQs, see Kintsugi's Illinois Sales Tax Guide.
