Additionally, understanding how changes in state income tax rates may impact taxpayers can help individuals make informed decisions regarding their finances and tax obligations. While these entities do not pay the 7% corporate income tax, they may still be subject to other state taxes, including the personal property replacement tax. S corporations, for instance, pay a 1.5% replacement tax, while partnerships and LLCs classified as partnerships pay 1.5% on their Illinois-apportioned net income. In 2025, Illinois maintains a 9.5% corporate income tax rate — third highest among states that levy a corporate tax, according to data from the Tax Foundation.

Illinois Tax Brackets for Tax Year 2022

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Several states have recently adjusted their rates, including Pennsylvania, which is gradually lowering its corporate tax rate from 8.99% in 2023 to 4.99% by 2031. These changes reflect a trend of states modifying corporate tax rates to enhance competitiveness and attract businesses. One way to significantly reduce tax obligations is by investing in renewable energy tax credits.

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Estimated Payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. Corporations are encouraged to use an electronic method to make estimated payments. Corporations who mail estimated tax payments must complete Form IL-1120-V, Payment Voucher for Corporation Income and Replacement Tax.

However, it is important to note that Illinois is considering transitioning to a graduated income tax system, where different tax rates would apply to different income levels. This proposed change is subject to voter approval in a ballot initiative. The Illinois corporate tax rate applies specifically to businesses classified as C corporations, which are taxed separately from their owners. Unlike individual income tax, which applies to personal earnings, the corporate tax is based on a company’s net income derived from operations within the state. With up-to-date and precise information, business owners can make the most informed decision for their tax needs. S-Corporations and other flow-through entities aren’t subject to the double taxation of revenue imposed on a C-Corp, because they aren’t required to pay corporate taxes on their revenue.

Amendments and Appeals Process

Your employer will also withhold money from each of your paychecks to put toward your federal income taxes. The percentage that’s withheld will depend on things such as your income, your filing status (single, married filing jointly, etc.) and any tax credits you indicate on your W-4 form. The Illinois corporate tax rate is equal to 7% of federal taxable income, subject to adjustments. The corporation has until the fifteenth day of the fourth month after the end of the tax year to file its returns. This means corporations with tax years illinois income tax rate following the calendar year must file by April 15.

• The 2025 standard deduction across filing statuses has also been raised from the 2024 deduction.
• While there is no current plan to change this, ongoing debates about state finances, budget deficits, and funding for public services could lead to future proposals.
• Perhaps office supplies, repairs on your office computers, building repairs, or even purchasing your workers’ suitable clothing for their job (e.g. a plumber should be wearing a boiler suit).
• States like California and New York, for example, have several income tax brackets, with the highest rates reaching over 10%.
• Previously, the tax rate was raised from 3% to 5% in early 2011 as part of a statewide plan to reduce deficits.
• Businesses must calculate their tax liability using a single-sales factor formula, meaning only revenue sourced from Illinois is considered for taxation.

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• Illinois increased it’s corporate income tax from 7.3% to the current rate in January 2011.
• The exemption for tax year 2024 is a maximum of $5,550 for married couples filing jointly ($2,775 for single filers).
• The flat income tax rate remains at 4.95%, and there are still no tax brackets.
• By embedding key rates, worked examples, recapitulation by tax type, and limiting external links to essential official IDOR pages, this guide keeps the reader engaged and informed without needing to click away.

A relative, boy- or girlfriend, family member, or other person might qualify as an Other Dependent on your tax return. Not sure if your child or an other person will qualify to be a dependent on your tax return? Filing your Illinois state income tax doesn’t have to be overwhelming. Whether you’re a full-year resident, part-year resident, or nonresident, TurboTax is here to help simplify the process. There are also some items that are exempt from sales tax; a list of those items, including newspapers and magazines, can be found here.

Retirement Calculators

• This represents a significant increase in the tax rate for individuals in the state.
• Sales taxes can also vary by region, so navigating the local landscape with caution is critical.
• We’ll help you get Illinois-specific deductions and credits you qualify for to keep more money in your pocket.
• Additionally, the bill introduced a new tax bracket for high-income earners, with a rate of 7.99%.
• You will likely need to make estimated payments if your income is either fully or partially exempt from Illinois withholding.
• Read on to learn more about what to expect as a current or future Illinois taxpayer.
• This means that regardless of how much you earn, the tax rate remains the same.

The late filing penalty is 2% of the tax due per month, up to 20%, while the late payment penalty starts at 2% for the first month, up to 15%. Interest on unpaid taxes accrues from the original due date, with a current rate of 3% per annum. Severe cases of intentional tax evasion may lead to criminal charges under Illinois law.

This allows for a simplified probate process for qualifying small estates, where heirs can claim assets without having to go through a full probate proceeding. Additionally, the state provides options such as the Small Estate Affidavit to simplify the probate process for smaller estates. Illinois determines corporate tax liability based on apportionment rules, which allocate taxable income based on the percentage of business activity conducted within the state. Businesses must calculate their tax liability using a single-sales factor formula, meaning only revenue sourced from Illinois is considered for taxation. While Illinois has one of the highest corporate tax rates in the nation, pass-through entities such as S corporations and partnerships typically face different tax obligations.

You must file a separate Form IL-1120-X for each Bookkeeping vs. Accounting tax year you wish to change. The standard deduction, which Illinois does not have, is a deduction that is available by default to all taxpayers who do not instead choose to file an itemized deduction. In addition to the federal estate tax, which has a top marginal rate of 40 percent, 12 states and the District of Columbia impose estate taxes, while five states levy inheritance taxes.