Illinois offers a vibrant environment for business, with over 1.4 million small businesses employing about 44% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Illinois is crucial. This guide provides an overview of the various taxes small businesses in Illinois must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Illinois
Business owners in Illinois may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Business Income Tax
Applicable Entities: C corporations, LLCs with C corp elections
Tax Rate: 7%
Filing Requirements: File Form IL-1120 by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30. File by September 15 for tax years ending on June 30.
Estimated Payments: Required if the expected liability for the year is at least $400. Payments are due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax years.
Pass-Through Entity (PTE) Tax
Applicable Entities: S corporations, partnerships, LLCs
Tax Rate: 4.95%
Filing Requirements: For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, file Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: Required if liability exceeds $500. Payments are due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Sales and Use Tax
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate:4.95%
Filing Requirements: File quarterly returns on Form IL-941 by April 30, July 31, October 31, and January 31. Make payments monthly or semi-weekly (as assigned) on Form IL-501.
Unemployment Insurance Tax
Applicable Entities: Employers that have paid $1,500 in wages in a single calendar quarter or employed one or more people for 20 weeks in a given calendar year
Tax Rate: Varies based on the business’s experience rating
Filing Requirements: File quarterly reports on Form UI3/40 by April 30, July 31, October 31, and January 31.
Personal Property Replacement Tax
Applicable Entities: C corporations, S corporations, LLCs, partnerships
Tax Rate: 2.5% for C corporations; 1.5% otherwise
Filing Requirements: For C corporations, file Form IL-1120 by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30 or by September 15 for tax years ending on June 30. For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 4.95% on distributive share income
Filing Requirements: For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
How to File and Pay Illinois Business Taxes
Business taxes in Illinois can be filed and paid through various methods:
Online Filing and Payment: Use MyTax Illinois for electronic submissions and payments.
Mail: Send forms and payments to the address on the form or voucher.
Important Deadlines
Keep track of these key dates to avoid penalties:
Business Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30 and by September 15 for tax years ending on June 30
Estimated Tax Payments: Due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax year
Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume
Withholding Tax Returns: Due quarterly by April 30, July 31, October 31, and January 31.
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Illinois offers several tax credits and incentives for small businesses, including:
Enterprise Zone Investment Credit: Includes a variety of incentives and exemptions for investments by businesses located or expanding in a designated enterprise zone.
New Markets Development Tax Credit: Available for qualified investments made in a community development entity. Credits are allowed on the second anniversary of the investment (7%) plus the next four anniversaries (8%).
Credit for Wages Paid to Ex-Felons: Equal to .05% of qualified wages paid to qualified ex-offenders. Total credits for all tax years for wages paid to a particular employee can’t exceed $1,500.
Research and Development Tax Credit: 6.5% of theexcess of qualified research expenses over the base amount. Qualified research expenses generally include wages, supplies, computer rental, and contract research.
Illinois’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down the taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Business income tax | PTE tax | Replacement tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making the PTE tax election | No | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTE tax election | Depends on how it’s structured | Depends on how it’s structured and if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTE tax election | No | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Illinois small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
Illinois Small Business Taxes: The Employer’s Complete 2024 Guide
Illinois offers a vibrant environment for business, with over 1.2 million small businesses employing about 45% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Illinois is crucial. This guide provides an overview of the various taxes small businesses in Illinois must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Illinois
Business owners in Illinois may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Business Income Tax
Applicable Entities: C corporations, LLCs with C corp elections
Tax Rate: 7%
Filing Requirements: File Form IL-1120 by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30. File by September 15 for tax years ending on June 30.
Estimated Payments: Required if expected liability for the year is at least $400. Payments are due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax years.
Pass-Through Entity (PTE) Tax
Applicable Entities: S corporations, partnerships, LLCs
Tax Rate: 4.95%
Filing Requirements: For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, file Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: Required if liability exceeds $500. Payments are due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Sales and Use Tax
Applicable Activities: Retail sales
Tax Rate: 6.25% on general merchandise, 1.0% on qualifying foods, drugs, and medical appliances (local rates may also apply)
Filing Requirements: File Form ST-1 monthly, quarterly, or annually based on sales volume.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: 4.95%
Filing Requirements: File quarterly returns on Form IL-941 by April 30, July 31, October 31, and January 31. Make payments monthly or semi-weekly (as assigned) on Form IL-501.
Unemployment Insurance Tax
Applicable Entities: Employers that have paid $1,500 in wages in a single calendar quarter or employed one or more people for 20 weeks in a given calendar year
Tax Rate: Varies based on business’s experience rating
Filing Requirements: File quarterly reports on Form UI3/40 by April 30, July 31, October 31, and January 31.
Personal Property Replacement Tax
Applicable Entities: C corporations, S corporations, LLCs, partnerships
Tax Rate: 2.5% for C corporations; 1.5% otherwise
Filing Requirements: For C corporations, file Form IL-1120 by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30 or by September 15 for tax years ending on June 30. For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 4.95% on distributive share income
Filing Requirements: For S corporations, file Form IL-1120-ST by the 15th day of the third month following the close of the tax year. For partnerships and LLCs, Form IL-1065 by the 15th day of the fourth month following the close of the tax year.
How to File and Pay Illinois Business Taxes
Business taxes in Illinois can be filed and paid through various methods:
Online Filing and Payment: Use MyTax Illinois for electronic submissions and payments.
Mail: Send forms and payments to the address on the form or voucher.
Important Deadlines
Keep track of these key dates to avoid penalties:
Business Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends for tax years not ending on June 30 and by September 15 for tax years ending on June 30
Estimated Tax Payments: Due quarterly on the 15th day of the fourth, sixth, ninth, and 12th months of the tax year
Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume
Withholding Tax Returns: Due quarterly by April 30, July 31, October 31, and January 31.
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Illinois offers several tax credits and incentives for small businesses, including:
Enterprise Zone Investment Credit: Includes a variety of incentives and exemptions for investments by businesses located or expanding in a designated enterprise zone.
New Markets Development Tax Credit: Available for qualified investments made in a community development entity. Credits are allowed on the second anniversary of the investment (7%) plus the next four anniversaries (8%).
Credit for Wages Paid to Ex-Felons: Equal to .05% of qualified wages paid to qualified ex-offenders. Total credits for all tax years for wages paid to a particular employee can’t exceed $1,500.
Research and Development Tax Credit: 6.5% of theexcess of qualified research expenses over the base amount. Qualified research expenses generally include wages, supplies, computer rental, and contract research.
Illinois’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down the taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Business income tax | PTE tax | Replacement tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making the PTE tax election | No | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTE tax election | Depends on how it’s structured | Depends on how it’s structured and if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTE tax election | No | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Illinois small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
