Breadcrumb

Tax Structure

For more information contact: dceo.bizdev@illinois.gov

Personal and Corporate Income Taxes

Personal Income Taxes

Income earned in Illinois or received by Illinois residents is taxed at 5%.  Partnerships and S-corporations pay a 1.5% personal property replacement tax and S-corporations' owners pay the 5% personal income tax on their share of the corporation's income.

Advantages:

  • There are no local personal income taxes in Illinois
  • Retirement income is not taxed in Illinois

Corporate Income Taxes

Corporate income apportioned to Illinois is taxed at 9.5% which includes a 7.0% state income tax and a 2.5 percent personal property replacement tax (S-corporations pay 1.5 percent). A unitary group of corporations files a combined return in Illinois.

Advantages:

  • The 2.5% replacement tax generates a credit equivalent to deducting the replacement tax before paying the regular corporate income tax.
  • Income apportionment is based solely on in-state sales.
  • Corporations with more than 80% of their payroll and property outside the U.S. are not included in combined returns. Corporations with unique apportionment formulas are not included in combined returns.
  • Credits include a 0.5 percent credit for investment in mining, manufacturing or retailing, plus an additional 0.5% if employment increases over 1%; and an additional 0.5% investment tax credit plus a $500 jobs tax credit in Illinois Enterprise Zones. The Illinois EDGE program provides a credit equal to 3% of the wages of a new or expanding business' added employees.
  • Dividends paid by corporations operating in Illinois Enterprise Zones and interest on loans to Enterprise Zones businesses are deductible.
  • There are no local corporate income taxes in Illinois.