Taxation in Illinois

Updated on Tuesday 31st July 2018

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As quick facts about the taxation in Illinois, foreign investors should know that the income tax is set at 7% and the sales tax has a 6.25% rate, but a reduction applies in certain circumstances. If you would like to open a company in Illinois, you should address for support to our team of company formation agents in USA. They can handle the registration procedure with the authorities in charge and they can also offer information about the tax structure for each type of business form in Illinois or in any American state.

The corporate income tax in Illinois

The flat rate of 7% for corporate income tax in Illinois is imposed for limited liability companies and for S corporations in this state. Besides this tax, there are other fees a company in Illinois is subject to.

What is the personal property replacement tax in Illinois?

Partnerships, corporations and limited liability companies in Illinois need to pay the personal property replacement tax (PPRT), a fee imposed by the local authorities for businesses with establishments in this state. This type of tax is collected by the authorities in Illinois and transferred to the local governments as a replacement for the personal property tax for business forms like partnerships, corporations, etc., which was eliminated a few years ago. The personal property replacement tax is set at 1.5% rate for LLCs and partnerships. A rate of 2.5% is imposed for S corporations in Illinois and it is applicable to the incomes of the company.

What is the annual franchise tax in Illinois?

The annual franchise tax in Illinois is the type of tax imposed for the privilege of having a business in this state.  This is subject to 15% rate of the paid-in capital in the first year of business. A 1% rate is the franchise tax imposed on the corporation’s net worth for the next years. S corporations and partnerships in Illinois need to pay the annual franchise tax. We invite you to talk to our advisors about how to open a company in the USA, especially in Illinois, and about the tax regime in this state. 

Other tax facts in Illinois

The subsequent taxes are imposed in Illinois, as follows:
  • the property tax is collected in Illinois’ municipalities and the average rate is 2.13%;
  • the general sales tax in Illinois is set at 6.25%, but a reduced sales tax of 1% is imposed for groceries, medicines and medical equipment;
  • vehicles purchased in Illinois are subject to a sales tax ranging from 6.25% to 8.5%;
  • the estate tax is set at 16% for domains worth more than $4 million.

We are at your disposal if you want to start a business in USA, including Illinois, so please do not hesitate to contact us at any time.