What is the tax rate for businesses, trusts, and estates?

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Corporations, other than S corporations, pay 7 percent (.07) income tax and 2.5 percent (.025) replacement tax.

Subchapter S corporations and partnerships pay replacement tax of 1.5 percent (.015). S corporations and partnerships do not pay Illinois Income Tax. Generally, income from an S corporation or partnership is passed on to the shareholders or partners. The shareholders or partners must include this income in their federal adjusted gross income (for individuals) or federal taxable income (for other taxpayers). This is a starting point for calculating Illinois Income Tax.

Additionally, for the tax years ending on or after December 31, 2021, and beginning before January 1, 2026, S corporations and partnerships (other than a publicly traded partnership under Section 7704 of the Internal Revenue Code) may elect to pay pass-through entity tax on their net income for the privilege of earning or receiving income in Illinois. The pass-through entity tax rate is 4.95 (.0495). The S corporation or partnership electing to pay pass-through entity tax would then distribute a credit to each shareholder or partner in an amount equal to 4.95 (.0495) times the shareholder's or partner's distributive share of net income. See our Pass-through Entity Information (Publication 129) web page for more information.

Trusts and estates pay 4.95 percent (.0495) income tax. Trusts also pay replacement tax of 1.5 percent (.015). Estates do not pay replacement tax.

Exempt organizations may be formed as either a corporation or a trust. Therefore, exempt organizations pay both Illinois Income Tax and the Personal Property Replacement Tax, but the rates differ. For corporations, income tax is 7 percent (.07) for income received or accrued; for replacement tax, the rate is 2.5 percent (.025) of net income. For trusts, income tax is 4.95 (.0495) for income received or accrued; for replacement tax, the rate is 1.5 percent (.015) of net income.

Note: Check the Tax Rate Database for information about tax rates for prior years.

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