Illinois taxes

Illinois taxes personal income at a flat 4.95% and does not tax retirement income at all. A sole proprietor owes no separate business tax, and an LLC pays a $75 annual report fee. Illinois also taxes partnerships and corporations directly with a replacement tax: 1.5% of Illinois net income for a partnership or S corporation, even though the owners pay tax on the same profit, and 2.5% for a C corporation, which pays corporate income tax as well.

Personal income tax

Illinois residents file Form IL-1040, due April 15, 2026. You automatically get six more months to file, until October 15, 2026, but not more time to pay. The rate is a flat 4.95% for every filing status.

Illinois has no standard deduction. Instead each person gets a $2,850 exemption, and each dependent the same. Being 65 or older adds $1,000, and so does being blind. Above $250,000 of federal adjusted gross income, or $500,000 for a joint return, the whole exemption is lost at once.

Illinois does not tax retirement income of any kind: Social Security, pensions, 401(k)s, IRAs and government retirement plans all come out in full, with no age or income test.

Return

Form IL-1040

Due date

April 15, 2026, with an automatic extension to file until October 15, 2026

Rate

4.95% flat

Standard deduction

None

Exemption

$2,850 for you, your spouse and each dependent

Age 65 or over, or blind

$1,000 more for each

Exemption cut off

Above $250,000 of federal adjusted gross income, $500,000 for a joint return

Not taxed

All retirement income, including Social Security, pensions, 401(k)s and IRAs

Property tax credit

5% of the property tax paid on your Illinois home

Earned income credit

20% of the federal credit, and refundable

Sole proprietor

A sole proprietor with no LLC files no annual report with the Illinois Secretary of State and owes it no fee.

Your business profit is taxed on your own Form IL-1040, at the flat 4.95%.

Single-member LLC

Every Illinois LLC files an annual report, Form LLC-50.1, with the Secretary of State and pays $75, however few members it has and whether or not it traded. It is due before the first day of the anniversary month of formation. A late report carries a penalty on top.

The report goes to the Secretary of State, not the Department of Revenue. The LLC's profit is taxed on your own Form IL-1040.

Partnership

An Illinois partnership files Form IL-1065, the partnership replacement tax return. Illinois charges a replacement tax on the partnership itself: 1.5% of its Illinois net income.

That surprises people, because the same profit is also taxed on the partners' own returns. A partnership that sells into other states counts only its Illinois share, measured by Illinois sales over sales everywhere.

Illinois makes a partnership or S corporation pay Illinois tax on behalf of each owner who lives elsewhere, unless the owner files Form IL-1000-E or the business elects the pass-through entity tax. It is reported on Schedule B with the business's return. The amount is not worked out here, because it needs each owner's residence and share.

S corporation

An Illinois S corporation files Form IL-1120-ST, the S corporation replacement tax return. It pays the replacement tax itself at 1.5% of its Illinois net income.

The same profit is also taxed on the shareholders' own returns. Profit from sales into other states is split by Illinois sales over sales everywhere.

Illinois makes a partnership or S corporation pay Illinois tax on behalf of each owner who lives elsewhere, unless the owner files Form IL-1000-E or the business elects the pass-through entity tax. It is reported on Schedule B with the business's return. The amount is not worked out here, because it needs each owner's residence and share.

C corporation

A C corporation files Form IL-1120, the corporation income and replacement tax return. It pays the replacement tax at 2.5% of its Illinois net income, and Illinois corporate income tax on top of that.

A corporation selling into other states counts only its Illinois share, measured by Illinois sales over sales everywhere. The replacement tax has no minimum, so a loss year means none is owed.

Return

Form IL-1120

Replacement tax

2.5% of Illinois net income

Corporate income tax

Owed as well, on top of the replacement tax

Multi-state profit

Illinois sales over sales everywhere

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax Illinois charges. It assumes all your sales are in Illinois.

An estimate for planning, not tax advice.

Sources

• Illinois 2025 Form IL-1040 Instructions (tax.illinois.gov)
• tax.illinois.gov Personal Property Replacement Tax
• tax.illinois.gov Form IL-1065 instructions
• tax.illinois.gov Publication 129, Pass-through Entity Information
• tax.illinois.gov IL-1065 Instructions (R-07/26), lines 40 to 42

Last reviewed August 2026.