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HB 2989

USE/OCC TX-HOLIDAY

104th Regular Session Introduced by Abdelnasser Rashid

Creates an annual 10-day August sales tax holiday exempting qualifying K-12 school supplies from state sales/use taxes, affecting shoppers, retailers, and local/state revenue.

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 2989

HB 2989 — Summary (USE/OCC TX — Holiday for School Supplies)

Sponsor: Rep. Abdelnasser Rashid
Introduced: February 2025 (filed Feb. 6 / record shows Feb. 18)
Companion: SB 1745
Status: Rule 19(a) / Re‑referred to Rules Committee (most recent procedural actions through May 2025)
Effective date: Immediately (if enacted)

Purpose / Intent

HB 2989 creates an annual statewide sales tax holiday for qualifying school supplies. The aim is to temporarily exempt certain purchases used for K–12 education from Illinois’ state sales- and use-tax (and to adjust the statutory allocation of related revenues) during a defined 10‑day period in August each year.

Key provisions

  • Establishes a sales tax holiday each year: the 10‑day period that begins on the first Monday in August.
  • Amends the Use Tax Act (35 ILCS 105) and the Retailers’ Occupation Tax Act (35 ILCS 120) to exempt qualifying school supply sales/uses during that period from the applicable state use and retailer occupation taxes.
  • Amends the State Finance Act (30 ILCS 105) — specifically sections governing the Local Government Tax Fund and related distributions (30 ILCS 105/6z‑18 and 6z‑20) — to address how revenues and allocations are treated in light of the sales tax holiday (including distribution language referencing the 6.25% general rate and prior 1.25% rates for specified items and prior holiday periods).
  • Effective immediately upon enactment.

Who is affected

  • Consumers (especially families purchasing school supplies) benefit from temporary state tax relief for qualifying items during the holiday.
  • Retailers who sell school supplies will need to adjust point‑of‑sale tax calculations and reporting for the holiday period.
  • State revenue and local government distributions: the State Treasurer/Comptroller and Department of Revenue procedures and allocations to the Local Government Tax Fund, STAR Bonds Revenue Fund, and other distribution mechanisms will be affected because statewide taxable sales are reduced during the holiday.
  • Local units of government may see a short‑term reduction in sales/use tax receipts (the bill contains statutory language to address allocation and accounting).

Procedural / timeline notes

  • Multiple committee actions in March–April 2025 (Revenue & Finance Committee, Tax Policy subcommittee), committee substitute reported favorably April 9, 2025.
  • Placed on General State Calendar April 25; read and postponed April 28; laid on table subject to call May 1.
  • Re‑referred under Rule 19(a) to the Rules Committee on March 21, 2025.
  • If enacted as written, the tax holiday would apply beginning the first Monday in August after enactment (10 consecutive days).

Fiscal implication (general)

The state will forego some sales/use tax revenue during the holiday; precise revenue impact depends on scope of exempt items and consumer response. The bill’s amendments to the Local Government Tax Fund and distribution provisions are intended to address allocation and administrative treatment of reduced collections during the holiday.

Compiled from official sources — confirm details with the bill’s official record.

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