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What is Replacement Tax and when is it paid?

Replacement Tax, also known as Personal Property Replacement Tax, is a tax imposed as of July 1, 1979, and replaces money lost by local governments when their power to impose personal property taxes was taken away. Replacement tax is collected from corporations, partnerships, and other business entities by the State of Illinois and paid to local governments.

Corporations submit their replacement tax along with their state income tax payments. Estimated payments are made quarterly.

Partnerships and subchapter S corporations pay replacement income tax on an annual basis. No estimated payments are required unless they elect to pay pass-through entity tax.

Trusts pay replacement income tax on an annual basis. No estimated payments are required.

Utilities are required to make quarterly estimated payments to pay the replacement tax they owe on their invested capital. Estimated payments are due by the fifteenth of March, June, September, and December. A final return is due by the fifteenth day of March after the close of their taxable year.                                                     

For more information regarding the replacement tax, see Illinois Income Tax Act, Sections 201(c) and (d), and  Personal Property Replacement Taxes information page on our website.

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