Utility Taxes

Electricity

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Electricity Excise Tax

Statutory Reference – 35 ILCS 640/2-1 to 640/99

This tax is imposed on persons distributing, supplying, furnishing or selling electricity in Illinois for use and consumption (not for resale). Businesses subject to this tax are authorized to pass the tax onto their customers.

Allowable Deductions – The following sales of electricity are exempt from tax:

• Sales for resale
• Sales in interstate commerce
• Sales to businesses certified by the Illinois Department of Commerce and Community Affairs and located in an enterprise zone
• Sales to the federal government
• Sales to municipal corporations owning and operating a local transportation system for public service in Illinois

Utilities are also allowed a tax credit when they are required to purchase electricity produced from methane gas that is generated from landfills.

Tax Rate – Each month, municipal systems and electric cooperatives collect tax from each purchaser an amount equal to the lesser of 5 percent or $.0032 per kilowatt-hour (kwh) per customer. Delivering suppliers collect the following tax amounts from each purchaser monthly:

• $.0033 per kilowatt-hours (kwhs) for the first 2,000 kwhs
• $.00319 per kwh for the next 48,000 kwhs
• $.00303 per kwh for the next 50,000 kwhs
• $.00297 per kwh for the next 400,000 kwhs
• $.00286 per kwh for the next 500,000 kwhs
• $.00270 per kwh for the next 2 million kwhs
• $.00254 per kwh for the next 2 million kwhs
• $.00233 per kwh for the next 5 million kwhs
• $.00207 per kwh for the next 10 million kwhs
• $.00202 per kwh for all kwhs in excess of 20 million kwhs

Self-assessing purchasers pay 5.1 percent of the purchase price for all electricity distributed, supplied, furnished, sold, transmitted and delivered to them in a month.

Local taxes – Municipalities may impose a tax on persons purchasing electricity for use or consumption (and not for resale) within the corporate limits of the municipality. Taxes are collected based on a schedule of maximum rates calculated on a monthly basis for each purchaser. This schedule of rates is found in the Illinois Municipal Code. The Department of Revenue does not collect these locally imposed taxes. The City of Bloomington, Town of Normal and any other municipality collects these taxes in McLeanCounty.

SOURCE: Illinois Department of Revenue; http://www.iltax.com/Businesses/excise/elecexcise.htm

Telecommunications

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Telecommunications Tax

Statutory Reference – 35 ILCS 630/1 to 630/21

The tax is imposed on intrastate messages (i.e., those that originate or terminate in Illinois and are billed to a service address in Illinois) as well as interstate messages. The types of telecommunications which are taxable include, but are not limited to, messages or information transmitted through use of local, toll, or wide area telephone services; private line services; channel services; telegraph services; teletypewriter; computer exchange services; cellular mobile telecommunication services; specialized mobile radio; stationary two-way radio; paging services; any other form of mobile and portable one-way or two-way communications and any other transmission of messages or information by electronic or similar means.

Tax Rate – The rate is 7 percent of gross charges.

Allowable Deductions and Nontaxable Sales

The following telecommunication messages are not subject to this tax:

• Sales for resale
• Sales in interstate commerce
• Sales to businesses certified by the Illinois Department of Commerce and Community Affairs and located in an enterprise zone
• Sales to federal and state governments and to state universities for their use and not for resale
• Sales between a parent corporation and its subsidiaries provided there is no markup and the parent paid the tax to the provider

Prepaid telephone calling arrangements (prepaid calling cards) are not subject to Telecommunications Excise Tax but are subject to sales tax.

Local Taxes 

The Municipal Telecommunications Tax includes both intrastate and interstate telecommunications. The rate, which can be imposed in quarter-percent increments, cannot exceed 6 percent. The department collects the municipal tax for all municipalities that have an ordinance in effect.

The City of Bloomington levies a 6 percent tax on intrastate and interstate telecommunications. The Town of Normal also levies a 6 percent tax on intrastate and interstate telecommunications. Both of these are in addition to the 7 percent the state assesses.