WeVote
Log In

Bill

Bill

HB 5738

USE/OCC TX-MOTOR FUEL

104th Regular Session Introduced by Jason Bunting and 25 co-sponsors

Imposes a temporary 1.25% use/occupation tax on motor fuel and gasohol from Jul 1 to Dec 31, 2026, with specified fund distributions and admin rules.

0
WeVote Research Nonpartisan
Bill Summary · HB 5738

Overview

HB5738 proposes a temporary rate change and related administrative adjustments to Illinois’ Use Tax Act, Service Use Tax Act, Service Occupation Tax Act, and Retailers’ Occupation Tax Act. The bill would set a temporary 1.25% rate on use and occupation taxes for motor fuel and gasohol from July 1, 2026 through December 31, 2026, and adjusts how proceeds are distributed and reported. It also contains numerous baseline tax-structure provisions carried over from existing law (and prior Public Acts) related to rates, exemptions, reporting, electronic filing, and fund allocations.

Main purpose and intent

  • Provide a temporary rate reduction/augmentation mechanism affecting motor fuel-related taxes and the corresponding distribution of tax proceeds.
  • Maintain or recalibrate the broader tax framework (rates, credits, and fund allocations) consistent with the temporary 1.25% rate for specified fuel items.
  • Align administration (filing methods, electronic filing, and reporting) with current practice while implementing temporary changes for motor fuel.

Key provisions and changes

  • Motor fuel/gasohol tax rate: From July 1, 2026 through December 31, 2026, impose use and occupation taxes on motor fuel and gasohol at a rate of 1.25%.
  • Proceeds distribution: The bill references distributions of tax revenues to various funds (State and Local Sales Tax Reform Fund, Road Fund, McCormick Place Expansion Fund, Build Illinois Fund, Tax Compliance and Administration Fund, etc.) and specifies how the 1.25% rate would be treated for these allocations during the 2026 period.
  • Gasohol and fuel-specific rules: The text includes detailed, existing language on how gasohol proceeds are allocated over time (percentages of proceeds allocated to different funds may be adjusted consistent with the 1.25% temporary rate for the specified period).
  • General tax act adjustments: Amends multiple sections to reflect the 1.25% temporary treatment for motor fuel items and to ensure consistency with the 6.25% general rate structure for other items.
  • Retailer incentives and reporting: Maintains electronic filing requirements (for higher-volume filers) and the vendor discount framework, with updates to reflect the temporary rate and related distributions.
  • Bond/funding provisions: The bill specifies deposits to the State and Local Sales Tax Reform Fund, various specific funds (e.g., Capital Projects Fund, Clean Air Act Permit Fund, Build Illinois Fund), and targeted distributions to road funding, school funds, and related public works. It includes long-term schedule-like provisions for deposits tied to the temporary rate and existing public-private partnership funding mechanisms.
  • For aviation fuel and cannabis: The act continues current requirements that aviation fuel taxes be remitted electronically and that cannabis-related taxes be filed electronically, with the same reporting structure preserved.

Who/what is affected

  • Retailers and service providers required to collect and remit use, occupation, and sales taxes under the four Acts.
  • Taxpayers purchasing motor fuel and gasohol (customers) will be indirectly affected via the temporary 1.25% tax rate in mid-2026.
  • State funds and programs receiving dedicated distributions from the motor fuel tax revenue, including road funding, school funds, and capital projects.
  • Department of Revenue operations, including filing methods (electronic) and administrative rules for the temporary period.

Procedural and timeline aspects

  • Effective date for the 1.25% motor fuel tax rate: July 1, 2026, through December 31, 2026.
  • Administrative rules: Department of Revenue to implement and administer the temporary rate and allocations, including electronic filing requirements and quarterly reporting options as applicable.
  • Long-term fund allocation framework: The bill embeds extensive schedules for deposits into multiple funds; these schedules would operate in parallel with the temporary period and reflect ongoing statutory structures.

Note: The text is highly technical and interwoven with existing Illinois tax law. The core takeaway is the temporary 1.25% rate for motor fuel-related taxes in mid-2026, plus corresponding, specified distributions and administration rules.

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

Sign in to ask a question.