Page 8 Fiscal Year 2003 Payments to Local Governments
Replacement taxes include Personal Property Replacement Tax, Electricity Distribution Tax,
Invested Capital Taxes, and the state Telecommunications Infrastructure Maintenance Fee (TIMF).
Personal Property Replacement Income Tax is imposed on
the income of corporations at the rate of 2.5 percent; and
the income of partnerships, trusts, and S corporations at the rate of 1.5 percent.
The Electricity Distribution Tax is imposed on electric utilities or alternative retail electric
suppliers who
distribute electricity for use or consumption (not for resale); and
are not electric cooperatives, school districts, or units of local government.
The tax is based on the kilowatt-hours (kwhs) distributed at the following monthly rates:
$0.00031 for the first 500 million kwhs
$0.0005 for the next 1 billion kwhs
$0.0007 for the next 2.5 billion kwhs
$0.0014 for the next 4 billion kwhs
$0.0018 for the next 7 billion kwhs
$0.00142 for the next 3 billion kwhs
$0.00131 for all kwhs distributed in excess of 18 billion kwhs
The tax rate for Invested Capital Taxes is 0.8 percent of invested capital. These taxes are
imposed on
electric cooperatives that are required to file reports with the Rural Utilities Service;
persons engaged in the business of distributing, supplying, furnishing, or selling natural gas
who are subject to the Gas Revenue Tax; and
water companies subject to taxes imposed by the Illinois Income Tax Act.
The state TIMF is imposed on persons in the business of transmitting, supplying, or furnishing
telecommunications and all associated services in Illinois for compensation (i.e.,
telecommunications retailers). The state TIMF is imposed on the gross charges at the rate of 0.5
percent.
Net collections from replacement taxes are distributed eight times annually to local taxing districts.
Distributions are made in January, March, April, May, July, August, October, and December.
The formula for distributing replacement tax collections is as follows:
51.65 percent is distributed to Cook County taxing districts, which is then distributed to the
taxing districts in the county on the basis of each district’s share of personal property tax
collection for the 1976 tax year
48.35 percent is distributed to taxing bodies in downstate counties, which is distributed
based on each district’s share of personal property tax collection for the 1977 tax year.
The term “sales tax” actually refers to several tax acts. Sales tax is generally a combination of
“occupation” taxes that are imposed on sellers’ receipts and “use” taxes that are imposed on
amounts paid by purchasers. Sellers owe the occupation tax to the department; they reimburse
themselves for this liability by collecting use tax from the buyers. “Sales tax” is the combination of
all state, local, mass transit, water commission, home rule occupation and use, non-home rule
occupation and use, park and recreation district, and county public safety taxes.
The basic rate for general merchandise (including items that must be titled or registered) is 6.25
percent. This basic rate is allocated as shown below.
5.00 state portion ( 80 percent of total collections)
+ 1.25 local portion ( 20 percent of total collections)
6.25 total basic rate (100 percent of total collections)
Note: Depending on the sale location, the actual sales tax rate may be higher than the basic rate
because of locally imposed home rule, non-home rule, water commission, mass transit, park and
recreation district, and county public safety sales taxes. See “Taxes Collected for Local
Governments.”
The basic rate for qualifying food, drugs, and medical appliances* is 1 percent. Local
governments receive 100 percent of these collections.
*See 86 Ill. Adm. Code 130.310.
Tax Rates
and Distribution Formulas
Replacement Taxes
• Personal Property
Replacement Income Tax
• Electricity Distribution Tax
• Invested Capital Taxes
• Telecommunications
Infrastructure Maintenance
Fee
State “Sales” Tax
