IL HB3480

Amends five Illinois tax acts (Use Tax, Service Use Tax, Service Occupation Tax, Retailers' Occupation Tax, and Telecommunications Excise Tax) to change how prepaid telephone calling arrangements are taxed effective January 1, 2026

Limits taxation of prepaid telephone calling arrangements to only those obtained through purchase of a physical item such as a preloaded phone, calling card, or other tangible personal property

Excludes from taxation prepaid phone service recharges made digitally or electronically without purchasing a physical product, effectively creating a tax exemption for online or app-based prepaid wireless refills

Redefines "prepaid telephone calling arrangements" across all affected tax statutes to require a tangible personal property purchase as a condition for the arrangement to be subject to state sales and use taxes

Maintains existing tax treatment through December 31, 2025, with the new narrower definition taking effect January 1, 2026