An Illinois tax on business income paid in addition to income tax: 1.5 percent for S corporations, partnerships, and trusts, 2.5 percent for C corporations. It is reported on the entity's Illinois return.
It is the cost that surprises new S corporation owners in Illinois, and it reduces the savings from the election. It is deductible on the federal return as a state tax paid by the business.
No. It applies to corporations, S corporations, partnerships, and trusts, not to Schedule C businesses.
Source: 35 ILCS 5/201(c) and (d)
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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