Personal & 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.
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.
- 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.