Taxes
Cost Saving Tax Climate For Your Business
Illinois ranks 37th in the latestTax Foundation's State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Illinois has a MORE ATTRACTIVE TAX CLIMATE FOR BUSINESS than neighboring states like Minnesota. In fact, Illinois’s tax rank is BETTER FOR BUSINESS than some southern states as well, including Alabama and Louisiana. Illinois’ individual income tax burden has consistently ranked below the national average.
Tax Foundation Report on State Business Tax Climates.
Personal Income Taxes
Income earned in Illinois or received by Illinois residents is taxed at 4.95 percent. Partnerships and S-Corporations pay a 1.5 percent personal property replacement tax and yearly corporation franchise taxes. Generally, income from an S corporation is passed on to the shareholders. Shareholders must include this income in their federal adjusted gross income (for individuals) or taxable income (for other taxpayers).
- There are no local personal income taxes in Illinois.
- Retirement income is not taxed in Illinois.
Corporate Income Taxes
The corporate tax rate in Illinois is currently a flat 9.5%. A unitary group of corporations file a combined return in Illinois.
- Illinois generally apportions income using a single sales factor formula and adheres to a market-based sourcing approach.
- Corporations with more than 80 percent of their payroll and property outside the United States are NOT included in combined returns.
- Credits and Deductions Under the Inflation Reduction act of 2022
- Interest on Loans to Enterprise Zone businesses are deductible.
Sales and Use Taxes
Retail purchases of tangible personal property are subject to a state sales tax or use tax rate of 6.25 percent.
Which Cities have Sales Tax – and the Local Tax – City tax plus State = Total
|
|
Sales Taxes(retailers' and service occupation taxes) |
Use Taxes(use and service use taxes) |
Automobile Renting Taxes |
Telecommunication Taxes |
|||||
|---|---|---|---|---|---|---|---|---|---|
City |
General Merchandise |
Qualifying Food & Drug |
Vehicle* |
General Merchandise |
Qualifying Food and Drugs |
Vehicle (RUT-25) and RUT-25-LSE |
Automobile Renting Tax (occupation) |
Automobile Renting Tax (use) |
Telecommunication Taxes |
|
LaSalle |
7.500% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
6.000% |
5.000% |
13.000% |
|
Peru |
7.500% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
11.000% |
|
Streator |
7.500%* |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
6.000% |
5.000% |
13.000% |
|
Ottawa |
7.000% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
12.000% |
|
Princeton |
8.000% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
13.000% |
|
Mendota |
6.500% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
6.000% |
6.000% |
13.000% |
|
Oglesby |
7.000% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
13.000% |
|
North Utica |
7.000% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
12.000% |
|
Spring Valley |
7.750% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
6.000% |
6.000% |
9.000% |
|
Ladd |
7.250% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
6.000% |
6.000% |
7.000% |
|
Hennepin |
6.250% |
1.000% |
6.250% |
6.250% |
1.000% |
6.250% |
5.000% |
5.000% |
10.000% |
*Streator Business Development District No. 1 =8.500%
Sales Tax |
|||
City |
General Merchandise |
Qualifying Food & Drug |
Vehicle* |
| LaSalle | 7.500% | 1.000% | 6.250% |
| Peru | 7.500% | 1.000% | 6.250% |
| Streator | 7.500% * | 1.000% | 6.250% |
| Ottawa | 7.000% | 1.000% | 6.250% |
| Princeton | 8.000% | 1.000% | 6.250% |
| Mendota | 6.500% | 1.000% | 6.250% |
| Oglesby | 7.000% | 1.000% | 6.250% |
| North Utica | 7.000% | 1.000% | 6.250% |
| Spring Valley | 7.750% | 1.000% | 6.250% |
| Ladd | 7.250% | 1.000% | 6.250% |
| Hennepin | 6.250% | 1.000% | 6.250% |
Use Tax |
|||
City |
General Merchandise |
Qualifying Food & Drug |
Vehicle* |
| LaSalle | 6.250% | 1.000% | 6.250% |
| Peru | 6.250% | 1.000% | 6.250% |
| Streator | 6.250% | 1.000% | 6.250% |
| Ottawa | 6.250% | 1.000% | 6.250% |
| Princeton | 6.250% | 1.000% | 6.250% |
| Mendota | 6.250% | 1.000% | 6.250% |
| Oglesby | 6.250% | 1.000% | 6.250% |
| North Utica | 6.250% | 1.000% | 6.250% |
| Spring Valley | 6.250% | 1.000% | 6.250% |
| Ladd | 6.250% | 1.000% | 6.250% |
| Hennepin | 6.250% | 1.000% | 6.250% |
Automobile Renting Taxes |
||
City |
Automobile Renting Tax (occupation) |
Automobile Renting Tax (use) |
| LaSalle | 6.000% | 5.000% |
| Peru | 5.000% | 5.000% |
| Streator | 6.000% | 6.000% |
| Ottawa | 5.000% | 5.000% |
| Princeton | 5.000% | 5.000% |
| Mendota | 6.000% | 6.000% |
| Oglesby | 5.000% | 5.000% |
| North Utica | 5.000% | 5.000% |
| Spring Valley | 6.000% | 6.000% |
| Ladd | 6.000% | 6.000% |
| Hennepin | 5.000% | 5.000% |
Telecommunication Taxes |
|
City |
Rate |
| LaSalle | 13.000% |
| Peru | 11.000% |
| Streator | 13.000% |
| Ottawa | 12.000% |
| Princeton | 13.000% |
| Mendota | 13.000% |
| Oglesby | 13.000% |
| North Utica | 12.000% |
| Spring Valley | 9.000% |
| Ladd | 7.000% |
| Hennepin | 10.000% |
*If the vehicle or trailer is titled and registered to an out-of-state location, you (the dealer) may be required to collect tax. Refer to ST-58, Reciprocal - Non-Reciprocal Vehicle Tax Rate Chart.
For more information, refer to Illinois Department of Revenue. These rates are from 2024. All data is updated as of May 2025.
Local sales tax rates vary.
- Current information building materials exemptions.
- Medicines and medical appliances are taxed at a reduced rate of 1% plus applicable local taxes.
Illinois Motor Fuel Tax Rates and Fees |
Franchise Taxes on Business Income in Illinois
Illinois imposes an annual franchise tax on both Illinois corporations and non-Illinois corporations for the privilege of doing business in the state. You calculate the corporation franchise tax by multiplying your corporation’s paid-in capital by the franchise tax rate of 0.1%. However, even if your corporation has no paid-in capital, you are still going to have to pay a minimum $25 franchise tax fee, annually. The maximum annual franchise tax is $2 million.
The franchise tax is paid with the required corporation annual report, along with a filing fee of $75.
Capital Stock Tax Rate
Capital Stock Tax Rate in Illinois is 0.100% with a maximum payment of $2,000,000.
Utility Taxes
Illinois imposes a tax on those in the business of selling, distributing, supplying or furnishing electricity or natural gas for use or consumption. Current listing of taxes and/or calculations.
- Illinois does NOT tax water and sewer utilities
- Electricity and natural gas tax exemptions are available in Illinois Enterprise Zones (certain job creation criteria apply)
Property Taxes
Business personal property tax was replaced with personal property replacement taxes (PPRT) in 1979.The statewide average effective tax rate is 2.11%. Local Property taxes are the primary source of income for all Illinois school districts. Taxes are levied per $100 of equalized assessed value (EAV) Assessments are based on market value, and vary based on county, and by residential, commercial or industrial use. Tax rates average approximately 7.82 percent of assessed value statewide. Property taxes are assessed for the County, Village, Library District, Township, Elementary School District, High School District, Community College District, and Park District.
- Illinois does not collect business personal property tax, this was replaced with personal property replacement taxes (PPRT) in 1979.
- All property other than real estate is exempt from the property tax in Illinois. Thus, all classes of personal property, including machinery, equipment, inventories, and intangibles, are exempt.
- Pollution controls are assessed at salvage value for purposes of assessment for ad valorem property taxes.
- Tax Increment Financing Zones (TIFs) are used in Illinois to promote development. There are 17 cities in North Central Illinois that have established TIF districts. Most of the industrial property in the region is in a TIF zone.
- Property Tax Collections as percentage of state-local revenue = 27.4 %
An Example of your Total Property Tax Bill in North Central Illinois:
Estimated Total Annual Property Taxes |
$10 Million Industrial Development |
$250,000 residence |
| Bureau County | $225,000 | $5,625 |
| LaSalle County | $251,000 | $6,275 |
| Putnam County | $170,000 | $4,250 |
Property Tax Comparison - Effective Business Tax Rate on Industrial and Commercial Development
County |
Average County Tax Rate % |
| Bureau County, IL | 2.220% |
| LaSalle County, IL | 2.320% |
| Putnam County, IL | 1.770% |
| Cook County, IL | 2.100% |
| City of Chicago | 2.100% |
| Will County, IL | 2.580% |
| DuPage County, IL | 2.200% |
| Kane County, IL | 2.610% |
| Grundy County, IL | 2.140% |
| Champaign County, IL | 2.260% |
| McLean County, IL (Bloomington) | 2.390% |
| Ogle County, IL (Rochelle) | 2.160% |
| Peoria County, IL (Peoria) | 2.470% |
| Porter County, IN (Portage) | 0.092% |
| St. Joseph County, IN (South Bend) | 0.940% |
| Dane County, WI (Madison) | 1.900% |
| Milwaukee County, WI | 2.340% |
| Scott County, IA (Davenport) | 1.670% |
*Under review, will be updated Summer 2025.
Unemployment Compensation Taxes
An unemployment compensation tax is applied to the first $13,916 in wages paid to each employee annually. A “new employer” rate applied for the first 3 years of operation: after 36 months, the employer plays its “experience-adjusted rate”. The 2024 New Employer rate is 3.65% multiplied by the state experience factor. Here are the Annual Employer Contribution Rates. Determine the Benefit Ratio, Multiply the Benefit Ratio by the State Experience Factor, and Add the Product to the Fund Building Rate.
For more information: Illinois Department of Employment Security
Historical Unemployment Tax Rate Information – State of Illinois |
|||||
Year |
Taxable Wage Base |
Min. Tax Rate |
Max. Tax Rate |
Standard Rate |
Small Employer Rate(gross wages under $50,000) |
| 2025 | $13,916 | 0.750% | 7.850% | 3.650% | 5.4% |
| 2024 | $13,590 | 0.850% | 8.100% | 3.950% | 5.4% |
| 2023 | $13,271 | 0.850% | 8.650% | 3.950% | 5.4% |
| 2022 | $12,960 | 0.725% | 7.625% | 3.525% | 5.4% |
| 2021 | $12,740 | 0.675% | 6.875% | 3.175% | 5.4% |
| 2020 | $12,740 | 0.625% | 6.825% | 3.125% | 5.4% |
| 2019 | $12,960 | 0.475% | 6.875% | 3.175% | 5.4% |
| 2017 | $12,960 | 0.55% | 7.35% | 3.45% | 5.4% |
| 2015 | $12,960 | 0.55% | 8.15% | 3.75% | 5.4% |
| 2009 | $12,300 | 0.6% | 6.8% | 3.1% | 5.4% |
| 2008 | $12,000 | 0.8% | 7.2% | 3.4% | 5.4% |
| 2007 | $11,500 | 1.0% | 8.2% | 3.9% | 5.4% |
| 2006 | $11,000 | 1.1% | 8.9% | 4.2% | 5.4% |
| 2005 | $10.500 | 1.2% | 9.8% | 4.7% | 5.4% |
Workers Compensation
In Illinois, virtually any business that has what could be considered an employee (with over $1,000 in annual payroll) is required to meet their statutory Workers' Compensation obligations by either getting an insurance policy by being approved as a self-insurer (only practical for large companies) or by becoming a member of a group self-insurance program.
Workers Compensation premiums are calculated by assigning classification to the business operations according to a system devised by the NCCI. Each classification has a particular rate, which is applied to remuneration (the rate is per hundred dollars of remuneration).
For more information, Illinois Workers Compensation Commission.
Sample Guide: Workers Compensation Rate Guide - Assigned Risk |
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|
|
Workers Comp Classification |
Low Rate |
High Rate |
| Machine Shop | 3632 | $2.29 | $6.50 |
| Electrical Work-Electrician | 5190 | $2.73 | $7.73 |
| Solar Energy Contractors-Installation | 5537 | $3.85 | $10.91 |
| Trucking-Short Haul and Long Haul | 7219 | $5.81 | $15.88 |
| Warehousing and Storage Facility | 8292 | $3.07 | $4.85 |
| Sales Professional | 8742 | $0.18 | $0.52 |
| Clerical Office Employee | 8810 | $0.07 | $0.20 |
| AVERAGE | AVERAGE | $2.57 | $6.65 |