lodging sign (figure sleeping)

The sales tax on lodging and telecommunications will soon increase in Naperville, Illinois.

Two local taxes are set to increase in Naperville, Illinois: the telecommunications tax, and the hotel/motel/room rental tax. Any additional upcoming rate changes in the state have yet to be announced.

The city tax on landlines and mobile phones will jump from 5 percent to 6 percent as of July 1, 2018. There will be no other changes to the telecommunications tax. See Ordinance 18-024 for more details.

On April 1, 2018, the Naperville hotel and motel tax will increase from 4.4% to 5.5%. In addition to raising the rate, the ordinance clarifies that the tax applies to short-term rentals of 30 days or less by “all persons engaged in the business of renting, leasing, or letting rooms, including online rental companies.” Furthermore, it expands the definition of “hotel or motel” to include lodging booked through Airbnb, VRBO, Craigslist, or similar websites. See Ordinance 18-025 for more details.

The Naperville hotel and motel tax is in addition to the state tax on lodging. Airbnb already collects and remits the Illinois Hotel Operators Occupation Tax, a state tax levied on the listing price as well as cleaning fees for stays of 29 nights or less. And it collects and remits local lodging taxes in several Illinois localities, including Chicago, Cook County, and Evanston. As of yet, no agreement between Airbnb and Naperville has been announced.

The Naperville City Council has also discussed increasing the city’s home rule sales tax and downtown food and beverage tax from 0.5 percent to 0.75 percent, but no action has been taken. According to the Chicago Tribune, a vote is expected February 20.

Sales and use tax compliance is complicated for all businesses, particularly for those that have to collect and remit lodging tax to multiple tax authorities. Tax automation software facilitates tax compliance in all states. Learn more.