Understanding Taxpayer and Tax Collector Roles
Whenever you live in a bordering county, you are affected as both a taxpayer and a tax collector:
Taxpayer:
A consumer of goods
Tax Collector:
A business owner responsible for collecting the correct sales tax from customers
How does this all play out? How is this even a big deal?
County Sales Tax Comparison: Dupage vs. Will
To answer those questions, think about every time you go to make a big purchase:
Furniture Example:
- Dupage County Sales Tax: 7.25%
- Will County Sales Tax: 7.0%
You can get a 0.25% discount simply by shopping in Joliet (Will County) instead of Naperville (Dupage County).
Smokers’ Savings:
- Save 0.25% per pack of cigarettes by buying in Will County.
Challenges for Business Owners
As a business owner, this creates a disadvantage:
- A gas station just 1 mile away in Will County can sell the same cigarettes for less.
- A furniture store in Will County also sells goods cheaper, just due to the tax rate.
Problem: It’s impossible to compete on price when cheaper tax rates are just down the street.
As a result, business owners may:
- Take a profit hit to stay competitive
- Still need to stay compliant with the Illinois Department of Revenue
Vehicle Purchases Work Differently
This all changes when you’re buying a car:
Sales tax is based on where you live, not where you buy the vehicle.
Example: Buying a Jeep Wrangler in Joliet? You’ll still pay the same state tax as if you purchased it in Dupage County.
What About Property Tax?
Yes, your property tax will be higher in Dupage County.
If you’re selling property, that higher tax burden doesn’t matter much since:
- Property values in Dupage County generally fare better than in Will County.
Final Advice
In summary:
- Always prioritize business decisions over tax consequences.
Consider your clientele:
- Do they prioritize saving money on cigarettes?
- Or are they focused on convenience and willing to pay more?
Frequently Asked Questions
Why does sales tax vary between Dupage and Will County?
The sales tax differs because each county in Illinois sets its own tax rate above the state base. Dupage County charges 7.25%, while Will County charges 7.0%, creating a 0.25% difference that can influence where consumers choose to shop.
How does county tax affect small business competitiveness?
Businesses in higher-tax counties like Dupage may lose customers to nearby lower-tax counties like Will. This tax gap makes it hard to compete on price, often forcing businesses to absorb the cost or risk losing market share.
Do I pay sales tax based on where I shop or where I live?
It depends on the purchase. For most retail items, the sales tax is based on where you buy the item. However, for vehicle purchases, the sales tax is based on your residence, not the dealership’s location.
HIs property tax affected by county location?
Yes, property taxes are typically higher in Dupage County. However, property values also tend to be stronger there, which can offset the higher taxes in terms of long-term investment.
Should I make business decisions based solely on tax rates?
No. While tax differences are important, they shouldn’t be the sole factor. Understanding your target customer’s priorities like price sensitivity vs. convenience is more critical for long-term success.