SERVICE OCC TAX-PHARMACY

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3932

Introduced 2/6/2026, by Sen. Terri Bryant

SYNOPSIS AS INTRODUCED:

35 ILCS 115/3-10

Amends the Service Occupation Tax Act. Provides that, if a pharmacy,
pharmacist, or durable medical equipment provider, submits a claim to a
third party payer for the sale of covered tangible personal property, then
the third-party payer wholly assumes the responsibility of the serviceman
to remit the tax to the State for any claim that is paid, reimbursed, or
remunerated to the pharmacy, pharmacist, or durable medical equipment
provider.
LRB104 19452 HLH 32900 b

A BILL FOR

SB3932
LRB104 19452 HLH 32900 b
1

AN ACT concerning revenue.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Service Occupation Tax Act is amended by
5
changing Section 3-10 as follows:

6

(35 ILCS 115/3-10)
7

Sec. 3-10.
Rate of tax.
Unless otherwise provided in this
8
Section, the tax imposed by this Act is at the rate of 6.25% of
9
the "selling price", as defined in Section 2 of the Service Use
10
Tax Act, of the tangible personal property, including, on and
11
after January 1, 2025, tangible personal property transferred
12
by lease. For the purpose of computing this tax, in no event
13
shall the "selling price" be less than the cost price to the
14
serviceman of the tangible personal property transferred. The
15
selling price of each item of tangible personal property
16
transferred as an incident of a sale of service may be shown as
17
a distinct and separate item on the serviceman's billing to
18
the service customer. If the selling price is not so shown, the
19
selling price of the tangible personal property is deemed to
20
be 50% of the serviceman's entire billing to the service
21
customer. When, however, a serviceman contracts to design,
22
develop, and produce special order machinery or equipment, the
23
tax imposed by this Act shall be based on the serviceman's cost

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1
price of the tangible personal property transferred incident
2
to the completion of the contract.
3

Beginning on July 1, 2000 and through December 31, 2000,
4
with respect to motor fuel, as defined in Section 1.1 of the
5
Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
6
the Use Tax Act, the tax is imposed at the rate of 1.25%.
7

With respect to gasohol, as defined in the Use Tax Act, the
8
tax imposed by this Act shall apply to (i) 70% of the cost
9
price of property transferred as an incident to the sale of
10
service on or after January 1, 1990, and before July 1, 2003,
11
(ii) 80% of the selling price of property transferred as an
12
incident to the sale of service on or after July 1, 2003 and on
13
or before July 1, 2017, (iii) 100% of the selling price of
14
property transferred as an incident to the sale of service
15
after July 1, 2017 and prior to January 1, 2024, (iv) 90% of
16
the selling price of property transferred as an incident to
17
the sale of service on or after January 1, 2024 and on or
18
before December 31, 2028, and (v) 100% of the selling price of
19
property transferred as an incident to the sale of service
20
after December 31, 2028. If, at any time, however, the tax
21
under this Act on sales of gasohol, as defined in the Use Tax
22
Act, is imposed at the rate of 1.25%, then the tax imposed by
23
this Act applies to 100% of the proceeds of sales of gasohol
24
made during that time.
25

With respect to mid-range ethanol blends, as defined in
26
Section 3-44.3 of the Use Tax Act, the tax imposed by this Act

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1
applies to (i) 80% of the selling price of property
2
transferred as an incident to the sale of service on or after
3
January 1, 2024 and on or before December 31, 2028 and (ii)
4
100% of the selling price of property transferred as an
5
incident to the sale of service after December 31, 2028. If, at
6
any time, however, the tax under this Act on sales of mid-range
7
ethanol blends is imposed at the rate of 1.25%, then the tax
8
imposed by this Act applies to 100% of the selling price of
9
mid-range ethanol blends transferred as an incident to the
10
sale of service during that time.
11

With respect to majority blended ethanol fuel, as defined
12
in the Use Tax Act, the tax imposed by this Act does not apply
13
to the selling price of property transferred as an incident to
14
the sale of service on or after July 1, 2003 and on or before
15
December 31, 2028 but applies to 100% of the selling price
16
thereafter.
17

With respect to biodiesel blends, as defined in the Use
18
Tax Act, with no less than 1% and no more than 10% biodiesel,
19
the tax imposed by this Act applies to (i) 80% of the selling
20
price of property transferred as an incident to the sale of
21
service on or after July 1, 2003 and on or before December 31,
22
2018 and (ii) 100% of the proceeds of the selling price after
23
December 31, 2018 and before January 1, 2024. On and after
24
January 1, 2024 and on or before December 31, 2030, the
25
taxation of biodiesel, renewable diesel, and biodiesel blends
26
shall be as provided in Section 3-5.1 of the Use Tax Act. If,

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1
at any time, however, the tax under this Act on sales of
2
biodiesel blends, as defined in the Use Tax Act, with no less
3
than 1% and no more than 10% biodiesel is imposed at the rate
4
of 1.25%, then the tax imposed by this Act applies to 100% of
5
the proceeds of sales of biodiesel blends with no less than 1%
6
and no more than 10% biodiesel made during that time.
7

With respect to biodiesel, as defined in the Use Tax Act,
8
and biodiesel blends, as defined in the Use Tax Act, with more
9
than 10% but no more than 99% biodiesel material, the tax
10
imposed by this Act does not apply to the proceeds of the
11
selling price of property transferred as an incident to the
12
sale of service on or after July 1, 2003 and on or before
13
December 31, 2023. On and after January 1, 2024 and on or
14
before December 31, 2030, the taxation of biodiesel, renewable
15
diesel, and biodiesel blends shall be as provided in Section
16
3-5.1 of the Use Tax Act.
17

At the election of any registered serviceman made for each
18
fiscal year, for whom the aggregate annual cost price of
19
tangible personal property transferred as an incident to the
20
sales of service is less than 35%, or 75% in the case of
21
servicemen transferring prescription drugs or servicemen
22
engaged in graphic arts production, of the aggregate annual
23
total gross receipts from all sales of service, the tax
24
imposed by this Act shall be based on the serviceman's cost
25
price of the tangible personal property transferred incident
26
to the sale of those services. This election may also be made

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1
by a serviceman maintaining a place of business in this State
2
who makes retail sales from outside of this State to Illinois
3
customers but is not required to be registered under Section
4
2a of the Retailers' Occupation Tax Act. Beginning January 1,
5
2026, this election shall not apply to any sale of service made
6
through a marketplace that has met the threshold in subsection
7
(d) of Section 3 of this Act.
8

Beginning January 1, 2026, the tax shall be imposed at the
9
rate of 6.25% of 50% of the entire billing to the service
10
customer for all sales of service made through a marketplace
11
that has met the threshold in subsection (d) of Section 3 of
12
this Act. In no event shall 50% of the entire billing be less
13
than the cost price of the property to the marketplace
14
serviceman or the marketplace facilitator on its own sales of
15
service.
16

Until July 1, 2022 and from July 1, 2023 through December
17
31, 2025, the tax shall be imposed at the rate of 1% on food
18
prepared for immediate consumption and transferred incident to
19
a sale of service subject to this Act or the Service Use Tax
20
Act by an entity licensed under the Hospital Licensing Act,
21
the Nursing Home Care Act, the Assisted Living and Shared
22
Housing Act, the ID/DD Community Care Act, the MC/DD Act, the
23
Specialized Mental Health Rehabilitation Act of 2013, or the
24
Child Care Act of 1969, or an entity that holds a permit issued
25
pursuant to the Life Care Facilities Act. Until July 1, 2022
26
and from July 1, 2023 through December 31, 2025, the tax shall

SB3932
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LRB104 19452 HLH 32900 b
1
also be imposed at the rate of 1% on food for human consumption
2
that is to be consumed off the premises where it is sold (other
3
than alcoholic beverages, food consisting of or infused with
4
adult use cannabis, soft drinks, and food that has been
5
prepared for immediate consumption and is not otherwise
6
included in this paragraph).
7

Beginning on July 1, 2022 and until July 1, 2023, the tax
8
shall be imposed at the rate of 0% on food prepared for
9
immediate consumption and transferred incident to a sale of
10
service subject to this Act or the Service Use Tax Act by an
11
entity licensed under the Hospital Licensing Act, the Nursing
12
Home Care Act, the Assisted Living and Shared Housing Act, the
13
ID/DD Community Care Act, the MC/DD Act, the Specialized
14
Mental Health Rehabilitation Act of 2013, or the Child Care
15
Act of 1969, or an entity that holds a permit issued pursuant
16
to the Life Care Facilities Act. Beginning July 1, 2022 and
17
until July 1, 2023, the tax shall also be imposed at the rate
18
of 0% on food for human consumption that is to be consumed off
19
the premises where it is sold (other than alcoholic beverages,
20
food consisting of or infused with adult use cannabis, soft
21
drinks, and food that has been prepared for immediate
22
consumption and is not otherwise included in this paragraph).
23

On and after January 1, 2026, food prepared for immediate
24
consumption and transferred incident to a sale of service
25
subject to this Act or the Service Use Tax Act by an entity
26
licensed under the Hospital Licensing Act, the Nursing Home

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LRB104 19452 HLH 32900 b
1
Care Act, the Assisted Living and Shared Housing Act, the
2
ID/DD Community Care Act, the MC/DD Act, the Specialized
3
Mental Health Rehabilitation Act of 2013, or the Child Care
4
Act of 1969, or an entity that holds a permit issued pursuant
5
to the Life Care Facilities Act is exempt from the tax imposed
6
by this Act. On and after January 1, 2026, food for human
7
consumption that is to be consumed off the premises where it is
8
sold (other than alcoholic beverages, food consisting of or
9
infused with adult use cannabis, soft drinks, candy, and food
10
that has been prepared for immediate consumption and is not
11
otherwise included in this paragraph) is exempt from the tax
12
imposed by this Act.
13

The tax shall be imposed at the rate of 1% on prescription
14
and nonprescription medicines, drugs, medical appliances,
15
products classified as Class III medical devices by the United
16
States Food and Drug Administration that are used for cancer
17
treatment pursuant to a prescription, as well as any
18
accessories and components related to those devices,
19
modifications to a motor vehicle for the purpose of rendering
20
it usable by a person with a disability, and insulin, blood
21
sugar testing materials, syringes, and needles used by human
22
diabetics. For the purposes of this Section, until September
23
1, 2009: the term "soft drinks" means any complete, finished,
24
ready-to-use, non-alcoholic drink, whether carbonated or not,
25
including, but not limited to, soda water, cola, fruit juice,
26
vegetable juice, carbonated water, and all other preparations

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LRB104 19452 HLH 32900 b
1
commonly known as soft drinks of whatever kind or description
2
that are contained in any closed or sealed can, carton, or
3
container, regardless of size; but "soft drinks" does not
4
include coffee, tea, non-carbonated water, infant formula,
5
milk or milk products as defined in the Grade A Pasteurized
6
Milk and Milk Products Act, or drinks containing 50% or more
7
natural fruit or vegetable juice.
8

When a pharmacy, pharmacist, or durable medical equipment
9
provider, acting as a serviceman, submits a claim to a
10
third-party payer, including a pharmacy benefit manager, a
11
health plan, or a Medicare Administrative Contractor, for the
12
sale of covered tangible personal property, the third-party
13
payer wholly assumes the responsibility of the serviceman to
14
remit the tax to the State in accordance with this Section for
15
any claim that is paid, reimbursed, or remunerated to the
16
pharmacy, pharmacist, or durable medical equipment provider.
17
As used in this paragraph, "covered tangible personal
18
property" means prescription or nonprescription medicines,
19
drugs, medical appliances, products classified as Class III
20
medical devices by the United States Food and Drug
21
Administration that are used for cancer treatment pursuant to
22
a prescription, as well as any accessories and components
23
related to those devices, insulin, blood sugar testing
24
materials, syringes, and needles.

25

Notwithstanding any other provisions of this Act,
26
beginning September 1, 2009, "soft drinks" means non-alcoholic

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1
beverages that contain natural or artificial sweeteners. "Soft
2
drinks" does not include beverages that contain milk or milk
3
products, soy, rice or similar milk substitutes, or greater
4
than 50% of vegetable or fruit juice by volume.
5

Until August 1, 2009, and notwithstanding any other
6
provisions of this Act, "food for human consumption that is to
7
be consumed off the premises where it is sold" includes all
8
food sold through a vending machine, except soft drinks and
9
food products that are dispensed hot from a vending machine,
10
regardless of the location of the vending machine. Beginning
11
August 1, 2009, and notwithstanding any other provisions of
12
this Act, "food for human consumption that is to be consumed
13
off the premises where it is sold" includes all food sold
14
through a vending machine, except soft drinks, candy, and food
15
products that are dispensed hot from a vending machine,
16
regardless of the location of the vending machine.
17

Notwithstanding any other provisions of this Act,
18
beginning September 1, 2009, "food for human consumption that
19
is to be consumed off the premises where it is sold" does not
20
include candy. For purposes of this Section, "candy" means a
21
preparation of sugar, honey, or other natural or artificial
22
sweeteners in combination with chocolate, fruits, nuts or
23
other ingredients or flavorings in the form of bars, drops, or
24
pieces. "Candy" does not include any preparation that contains
25
flour or requires refrigeration.
26

Notwithstanding any other provisions of this Act,

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1
beginning September 1, 2009, "nonprescription medicines and
2
drugs" does not include grooming and hygiene products. For
3
purposes of this Section, "grooming and hygiene products"
4
includes, but is not limited to, soaps and cleaning solutions,
5
shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
6
lotions and screens, unless those products are available by
7
prescription only, regardless of whether the products meet the
8
definition of "over-the-counter-drugs". For the purposes of
9
this paragraph, "over-the-counter-drug" means a drug for human
10
use that contains a label that identifies the product as a drug
11
as required by 21 CFR 201.66. The "over-the-counter-drug"
12
label includes:
13

(A) a "Drug Facts" panel; or
14

(B) a statement of the "active ingredient(s)" with a
15

list of those ingredients contained in the compound,
16

substance or preparation.
17

Beginning on January 1, 2014 (the effective date of Public
18
Act 98-122), "prescription and nonprescription medicines and
19
drugs" includes medical cannabis purchased from a registered
20
dispensing organization under the Compassionate Use of Medical
21
Cannabis Program Act.
22

As used in this Section, "adult use cannabis" means
23
cannabis subject to tax under the Cannabis Cultivation
24
Privilege Tax Law and the Cannabis Purchaser Excise Tax Law
25
and does not include cannabis subject to tax under the
26
Compassionate Use of Medical Cannabis Program Act.

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1
(Source: P.A. 103-9, eff. 6-7-23; 103-154, eff. 6-30-23;
2
103-592, eff. 1-1-25; 103-781, eff. 8-5-24; 104-6, eff.
3
6-16-25; 104-417, eff. 8-15-25.)

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