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Illinois Sales Tax Interchange Legislation

Friday, June 07, 2024 9:00 AM | Anonymous member (Administrator)

This week the Illinois House passed HB4951 and all amendments, including Senate Floor Amendment 2. This provision of the bill prohibits interchange fees to be levied upon sales tax or gratuities for electronic payment transactions.

When will this go into effect?

Amendment 2 of HB4951 is scheduled to go into effect July 1, 2025.

What does this mean for my dealership?

At this moment and for the near future, nothing changes.

Next year, depending on your current processor’s capabilities, you may need to purchase new equipment to accommodate the change in law. Compliance with this change in the law is mandatory. Penalties for non-compliance may be $1,000 per occurrence.

This is an excellent example of how important it is to select a processor that is an industry leader in technology and sufficiently resourced to address the legal requirements of each State. Cost Advisor is an exclusive agent of Fiserv, the largest processor of financial transactions in the world. Our team is already taking steps to address this change and will have compliant solutions in place for our merchants by the effective date.

After this goes into effect, what can I expect?

  • Reduced Interchange Fees: Your dealership will no longer pay interchange fees on the portion of a transaction that is attributed to sales taxes.
  • Potential Savings: By not having to pay interchange fees on sales taxes, merchants could see a reduction in their credit card processing expenses.
  • Operational Adjustments: Merchants may need to work with their payment processors to ensure compliance with the new regulations. This might involve updating point-of-sale systems and reconfiguring how transactions are processed to separate the taxable and non-taxable portions correctly.
  • Industry Impact: This legislative change could set a precedent, potentially influencing similar measures in other states. It's important for merchants to stay informed about both the benefits and the logistical changes required to comply with the new law.

For more detailed information, you can refer to the full legislative text on the Illinois General Assembly website at Or you can contact CATA Associate Member Bill Brudenell of Cost Advisor at 847-505-9210 for more information.

Chicago Automobile Trade Association
18W200 Butterfield Rd.
Oakbrook Terrace, IL 60181 
(630) 495-2282


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