Quick Reference: 2025 Tax Year Filing Deadlines
| Entity Type | Form | Due Date | Extension Deadline |
|---|---|---|---|
| S-Corporation | IL-1120-ST | March 15, 2026 | October 15, 2026 |
| Partnership/LLC | IL-1065 | April 15, 2026 | October 15, 2026 |
| C-Corporation | IL-1120 | April 15, 2026 | October 15, 2026 |
| Employment Tax | IL-941 | Quarterly* | N/A |
| Sales Tax | ST-1 | Monthly/Quarterly** | N/A |
* Quarterly deadlines: April 30, July 31, October 31, January 31
** Based on tax volume
Understanding the Illinois Business Tax Landscape
Illinois presents a complex but manageable tax environment for businesses, with over 1.2 million small businesses employing nearly half the state’s workforce. The Prairie State imposes different obligations depending on your business structure, from simple pass-through reporting to comprehensive corporate income tax returns combined with replacement taxes.
The state’s approach centers around three main tax categories: business income taxes that vary dramatically by entity type, employment taxes that require quarterly attention, and sales taxes with increasingly complex rules around digital commerce and leasing arrangements.
Business Income Tax Rates and Requirements
Tax Rate Comparison by Entity Type
| Entity Type | Income Tax | Replacement Tax | Total Rate |
|---|---|---|---|
| C-Corporation | 7.0% | 2.5% | 9.5% |
| S-Corporation | 0% | 2.5% | 2.5% |
| Partnership | 0% | 2.5% | 2.5% |
| PTE Election | 4.95% | N/A | 4.95% |
Corporate Income Tax Structure
Illinois imposes a combined 9.5% tax rate on C-corporation income, comprising a 7% income tax and a 2.5% replacement tax. This dual structure creates one of the higher combined corporate rates in the Midwest, applying to all Illinois C-corporation profits.
This combined rate applies to all Illinois C-corporation income, with returns due April 15, 2026 for calendar year 2025 operations. Corporations filing Form IL-1120 receive an automatic six-month extension to submit their return, moving the due date to October 15, 2026. However, any tax owed must still be paid by the original deadline of April 15, 2026, to avoid interest and penalties.
Illinois Quarterly Estimated Payment Schedule:
- April 15, 2025
- June 16, 2025
- September 15, 2025
- January 15, 2026
Estimated payments are required if expected liability reaches $400 or more, calculated based on either 90% of the current year’s expected liability or 100% of the prior year’s actual tax.
S-Corporation and Partnership Advantages
S corporations and partnerships in Illinois continue to benefit from favorable tax treatment. These pass-through entities are not subject to the state’s 7% corporate income tax. Instead, they pay the 2.5% Personal Property Replacement Tax (PPRT) at the entity level, while income flows through to the owners for personal income tax purposes.
Illinois also offers a permanent Pass-Through Entity (PTE) tax election, allowing qualifying partnerships and S corporations to pay an optional 4.95% income tax at the entity level. This election enables owners to bypass the federal SALT deduction cap, which—while now increased to $40,000 for joint filers under the 2025 One Big Beautiful Bill Act—still limits deductions for many high-income taxpayers.
The PTE election remains a powerful planning tool for owners seeking to maximize federal deductions. Unlike individual SALT deductions, the PTE tax is fully deductible at the entity level, regardless of the cap. The election is made annually and provides flexibility to optimize tax strategy based on each year’s income and deduction profile.
Mandatory E-Filing Requirements for Employers
Illinois employment tax compliance centers around mandatory electronic filing for Form IL-941 withholding returns. The state withholds income tax at 4.95% of employee wages, with quarterly returns due by the last day of the month following each quarter’s end.
Employment Tax Schedule
| Quarter | Period | IL-941 Due Date | UI-3/40 Due Date |
|---|---|---|---|
| Q1 | Jan-Mar | April 30, 2025 | April 30, 2025 |
| Q2 | Apr-Jun | July 31, 2025 | July 31, 2025 |
| Q3 | Jul-Sep | October 31, 2025 | October 31, 2025 |
| Q4 | Oct-Dec | January 31, 2026 | January 31, 2026 |
Payment Frequency Requirements
The payment frequency depends on your annual withholding amount:
- Monthly payments: Less than $12,000 annually withheld
- Semi-weekly payments: $12,000+ annually withheld
Quarter-monthly payments: $12,000+ withheld in any prior quarter
The electronic filing mandate includes limited waiver provisions, requiring Form IL-900-EW approval for paper filing exceptions.
Unemployment Insurance Details
Unemployment insurance adds another layer of complexity, with rates ranging from 0.725% to 7.85% applied to the first $13,916 of each employee’s wages. New employers start at 3.525% for their first three years before moving to experience-based rating systems.
Sales Tax Evolution: Leases and Digital Commerce
Illinois sales tax rules expanded significantly in 2025, with new treatment of most tangible personal property leases as retail sales. Under the revised rules, lessors must collect sales tax at the time the lease begins, shifting the burden from ongoing lease payments to upfront transactions.
The state’s base sales tax rate remains 6.25%, but local surtaxes can push the combined rate up to 11% in some jurisdictions, including parts of Cook County and Chicago. These rules now apply to a broader set of taxable transactions, including some digital goods and services, and create new compliance obligations for lessors, SaaS providers, and marketplace facilitators.
Sales Tax Filing Schedule
| Tax Collected | Filing Frequency | Return Due |
|---|---|---|
| $200 or more per month | Monthly | By the 20th of the following month |
| $50 – $199 per month average | Quarterly | By the 20th of the month after quarter ends |
| Less than $50 per month average | Annually | January 20 |
Key Sales Tax Rates
- General merchandise: 6.25% state rate
- Food, drugs, medical appliances: 1.0% state rate
- Local taxes: Up to 4.75% additional (varies by jurisdiction)
- Total maximum: 11% in some areas
Illinois offers a 1.75% discount on the sales tax collected, provided returns are filed and paid on time. Starting in 2025, this discount is capped at $1,000 per reporting period (monthly, quarterly, or annual) for returns due on or after January 1, 2025. The discount incentivizes timely electronic filing and payment through MyTax Illinois, which simplifies compliance and ensures eligibility for the full collection allowance.
Filing Methods and Payment Options
The MyTax Illinois system serves as the primary interface for most business tax functions, handling everything from return filing to payment processing. The platform’s integration with federal systems streamlines data transfer while maintaining Illinois-specific compliance requirements.
Available Payment Methods:
- Electronic Funds Transfer (EFT) through MyTax Illinois
- ACH credit through financial institution
- Credit/debit card payments (processing fees apply)
- Check or money order (mail only)
Extension Strategies and Amendment Procedures
Illinois provides generous automatic extensions without requiring separate filings:
- C-corporations: 6-month automatic extension
- S-corporations: 7-month automatic extension
- Partnerships: 6-month automatic extension
However, these extensions cover filing obligations only, not payment requirements. Businesses expecting to owe tax can file Form IL-505-B to make an extension payment. This helps avoid late payment charges and provides flexibility for completing the return after the deadline.
Amendment Forms by Entity Type
| Entity | Amendment Form | Filing Method |
|---|---|---|
| C-Corporation | IL-1120-X | Mail only |
| S-Corporation | IL-1120-ST-X | Mail only |
| Partnership | IL-1065-X | Mail only |
Penalty Structure and Compliance Incentives
Illinois penalty structures emphasize timely compliance over perfect accuracy:
Standard Penalties
| Violation Type | Penalty Rate | Minimum |
|---|---|---|
| Late filing | 2% of tax due per month (max 20%) | $10 per return |
| Late payment | 2% of unpaid tax per month (max 20%) | Based on tax owed |
Interest also accrues from the original due date, even when a filing extension is granted. This makes early or estimated payments advantageous for taxpayers unsure of their final liability.
Illinois does not offer automatic penalty abatement. Relief is only granted when a taxpayer demonstrates reasonable cause, such as unforeseen hardship, disaster, or reliance on incorrect written advice from IDOR.
Professional Resources and Support
Key Contact Information:
- Illinois Department of Revenue Taxpayer Assistance: (217) 782-3336
- Electronic Filing Support: Available through MyTax Illinois
- ERO Assistance: (217) 524-4772
Professional assistance becomes particularly valuable given Illinois’s frequent regulatory changes and the interaction between state and federal requirements. CPAs familiar with Illinois tax law can navigate the complexities while ensuring optimal tax positioning.
Looking Ahead: Planning for Success
Illinois’s 2025 tax environment rewards businesses that move beyond basic compliance and take a strategic, long-term view. With provisions like bonus depreciation, expanded QSBS exclusions, and a permanent Pass-Through Entity (PTE) tax election, there are real opportunities to reduce tax liability and reinvest in growth—if you’re structured correctly and planning ahead.
But staying ahead isn’t automatic. Evolving rules around sales tax, e-filing mandates, and multi-state conformity mean that even small oversights can have costly consequences. Success requires understanding how federal and Illinois-specific changes interact and ensuring your tax strategy evolves alongside your business.
Ahlbeck & Cook helps business owners make sense of it all. We guide clients through complex state and federal rules to maximize deductions, optimize entity structures, and improve after-tax outcomes. Whether you’re planning an expansion, evaluating a PTE election, or preparing for a future exit, we deliver the clarity and confidence you need to make smart, forward-looking decisions.
Contact Ahlbeck & Cook today to get support with your Illinois business tax planning needs.
