--- title: "Illinois LLC Taxes: What You'll Actually Owe in 2026 | LLC Attorney" description: "How Illinois LLC taxes work in 2026: the flat 4.95% income tax, the Personal Property Replacement Tax that single-member LLCs are exempt from, sales tax, the $75 Annual Report, and the S-Corp election." canonical: https://llcattorney.com/states/il/llc-taxes-illinois image: https://llcattorney.com/images/share-cover.png source_path: /states/il/llc-taxes-illinois --- Key Takeaways - Illinois taxes LLC pass-through income at Flat 4.95% - Personal Property Replacement Tax (PPRT): 1.5% of net Illinois income (2.5% for LLCs taxed as C-corporations), due 15th day of the 4th month after year-end (April 15 for calendar-year filers) - Sales Tax: 6.25% (combined: 6.25%–11%) - Annual Report due Before the first day of the LLC's anniversary month (up to 45 days early), $75 fee - Federal self-employment tax of 15.3% applies to net LLC profit regardless of state - Illinois recognizes the federal S-Corp election automatically, but the election does not exempt you from PPRT — S-corps pay the same 1.5% rate on net Illinois income that multi-member partnership-taxed LLCs do, filed via Form IL-1120-ST. - Same-day formation and compliance filing available through LLC Attorney at no markup on state fees Illinois has a flat 4.95% personal income tax, but the number that actually determines your total LLC tax bill here is your member count. Single-member LLCs are disregarded entities and owe nothing beyond the personal income tax and Annual Report — but the moment your LLC has two or more members, or elects S-corp status, it owes an additional 1.5% Personal Property Replacement Tax on net Illinois income. This guide covers exactly what an Illinois LLC owes in 2026 — state and federal tax obligations, the single-member vs. multi-member PPRT distinction that trips up more owners than any other Illinois rule, the $75 Annual Report, and when an S-Corp election still makes sense once you factor in the PPRT layer. 4.95%Flat state income tax 6.25%State sales tax rate $75Annual Report fee 1.5%PPRT (multi-member LLCs & S-corps only) ## Illinois Personal Income Tax on LLC Profit By default, an Illinois LLC is a pass-through entity for federal purposes — the LLC itself doesn't pay federal income tax, and profit flows through to the owners' personal returns, taxed once at Illinois's flat 4.95% rate. But Illinois adds a separate entity-level wrinkle on top of this personal-level tax that many other pass-through states don't have — see the Personal Property Replacement Tax below, which is the single most important thing to get right on an Illinois LLC's tax picture. **Illinois's rate: Flat 4.95%** The Illinois Constitution requires a flat individual income tax rate, and 4.95% has held steady for several years — every dollar of LLC pass-through profit is taxed once at this rate on the member's personal return, with no local income tax add-on anywhere in the state. ## Illinois's Personal Property Replacement Tax (PPRT) Whether your Illinois LLC owes PPRT comes down entirely to member count and tax classification: a single-member LLC taxed as a disregarded entity owes $0 in PPRT, full stop. A multi-member LLC taxed as a partnership, or any LLC that's elected S-corp status, owes 1.5% of net Illinois income. An LLC taxed as a C-corporation owes 2.5%. This is reported alongside the entity's regular income tax return, not as a separate standalone filing. This is Illinois's single most important LLC-specific trap, and the distinction is easy to blur: PPRT applies to multi-member LLCs taxed as partnerships and to S-corporations, both at 1.5% — but single-member LLCs are fully exempt, because they're disregarded entities for both federal and Illinois purposes. Adding a second member (even a spouse) to a previously single-member LLC creates a new 1.5% entity-level tax that wasn't there before. Illinois recognizes the federal S-corp election automatically, but electing S-corp status doesn't avoid PPRT — S-corps pay the same 1.5% rate multi-member partnership-taxed LLCs do. ## Illinois Sales Tax Illinois's Retailers' Occupation Tax (its name for sales tax) averages 8.96% combined statewide, ranging from 6.25% in rural areas to over 11% in parts of Chicago, since home-rule municipalities and counties can each layer on their own rate. As of January 1, 2026, Illinois eliminated the 1% state grocery tax, though some localities may still impose their own local grocery tax on top. Most retailers of tangible personal property and specifically enumerated services need to register and collect. - State rate: **6.25%**, combined: 6.25%–11% - Registration: Form REG-1 (via MyTax Illinois, mail, or in-person), No fee fee with the Illinois Department of Revenue - Registration through MyTax Illinois generally processes in 1–2 business days, and the Department of Revenue assigns your filing frequency based on collection volume. ## Illinois Annual Report Requirement Illinois requires every LLC to file Annual Report with the Illinois Secretary of State, due Before the first day of the LLC's anniversary month (up to 45 days early). Filing fee: $75. Missing the deadline triggers a flat $100 late penalty on top of the $75 base fee. New entities are exempt from filing in their formation year — the first report isn't due until the following year. Reinstatement requires filing all delinquent Annual Reports plus accumulated fees and penalties through the Illinois Secretary of State. ## Federal Self-Employment Tax and How Your Illinois LLC Is Classified Regardless of which state you're in, LLC owners who materially participate in the business owe federal self-employment tax — 15.3% on net profit, covering Social Security (up to the $184,500 (2026) wage base) and Medicare (no cap). ### Single-Member LLCs A single-member Illinois LLC defaults to a disregarded entity — you report income and expenses on Schedule C of your personal Form 1040 and compute self-employment tax on Schedule SE. Critically, this is also the classification that exempts you from PPRT entirely. ### Multi-Member LLCs A multi-member Illinois LLC defaults to partnership taxation, filing Form 1065 (and its Illinois counterpart, Form IL-1065) and issuing each member a Schedule K-1. Unlike the single-member default, this classification directly triggers the 1.5% Personal Property Replacement Tax at the entity level. ## Should Your Illinois LLC Elect S-Corp Taxation? An S-Corp election lets you split LLC profit into a reasonable salary (payroll-taxed) and distributions (not subject to self-employment tax), once the business is consistently profitable enough to justify the added payroll complexity. **Illinois's treatment:** Illinois recognizes the federal S-Corp election automatically, but the election does not exempt you from PPRT — S-corps pay the same 1.5% rate on net Illinois income that multi-member partnership-taxed LLCs do, filed via Form IL-1120-ST. The Illinois-specific math here is genuinely different from most flat-tax states: because S-corp status doesn't avoid PPRT, the full calculation has to weigh federal self-employment-tax savings against both Illinois's flat 4.95% personal rate and the 1.5% entity-level PPRT layered on top — a real, ongoing cost that a single-member LLC would never have owed in the first place. ## Illinois LLC Tax Costs at a Glance Tax / Fee Amount Notes Personal Property Replacement Tax (PPRT) (Form IL-1065 (partnerships/multi-member LLCs) or Form IL-1120-ST (S-corps)) 1.5% of net Illinois income (2.5% for LLCs taxed as C-corporations) Due 15th day of the 4th month after year-end (April 15 for calendar-year filers) Annual Report $75 Due Before the first day of the LLC's anniversary month (up to 45 days early); $100 flat penalty if missed Sales Tax 6.25% Combined: 6.25%–11% Federal self-employment tax 15.3% Applies to net profit up to the $184,500 (2026) Social Security wage base (Medicare portion has no cap) State personal income tax (on your share of LLC profit) Flat 4.95% The Illinois Constitution requires a flat individual income tax rate, and 4.95% has held steady for several years — every dollar of LLC pass-through profit is taxed once at this rate on the member's personal return, with no local income tax add-on anywhere in the state. Illinois registered agent (professional service) $49–$300/yr LLC Attorney service available ## How to Handle Your Illinois LLC's Taxes ### If You Do It Yourself **Step 1 — Get your federal EIN before anything else.** Apply for your EIN for free directly at irs.gov — a purely federal application with no Illinois-specific step. **Step 2 — Confirm your default federal tax classification.** A single-member LLC defaults to a disregarded entity (Schedule C); a multi-member LLC defaults to partnership taxation (Form 1065 plus Schedule K-1 for each member). Neither requires a separate election — this is automatic unless you file Form 8832 or Form 2553 to change it. **Step 3 — Register with the Illinois Department of Revenue if required for state income tax withholding or estimated payments.** The Illinois Constitution requires a flat individual income tax rate, and 4.95% has held steady for several years — every dollar of LLC pass-through profit is taxed once at this rate on the member's personal return, with no local income tax add-on anywhere in the state. **Step 4 — Register for sales tax if you sell taxable goods or services.** File Form REG-1 (via MyTax Illinois, mail, or in-person) with the Illinois Department of Revenue at tax.illinois.gov (MyTax Illinois), No fee fee. Registration through MyTax Illinois generally processes in 1–2 business days, and the Department of Revenue assigns your filing frequency based on collection volume. **Step 5 — Register for payroll/reemployment tax the moment you hire your first employee.** The moment you hire your first employee, register with the Illinois Department of Employment Security (IDES). The 2026 new-employer UI rate is 3.350% standard (3.450% for administrative support and waste management, NAICS 56), which includes a built-in 0.550% fund-building surcharge, with a 2026 State Experience Factor of 102%. **Step 6 — Set up quarterly estimated tax payments.** If you expect to owe $1,000 or more in combined federal and Illinois tax for the year, both the IRS and Illinois DOR expect quarterly estimated payments covering income tax, PPRT (if applicable), and federal self-employment tax on your LLC profit. **Step 7 — Calendar your Personal Property Replacement Tax (PPRT) due date.** Personal Property Replacement Tax (PPRT) (Form IL-1065 (partnerships/multi-member LLCs) or Form IL-1120-ST (S-corps)) is due 15th day of the 4th month after year-end (April 15 for calendar-year filers), 1.5% of net Illinois income (2.5% for LLCs taxed as C-corporations). Missing it puts your LLC in bad standing with the Illinois Department of Revenue. **Step 8 — File your Annual Report every Illinois deadline.** Annual Report is due Before the first day of the LLC's anniversary month (up to 45 days early) with the Illinois Secretary of State, $75 fee. Missing it triggers $100 flat penalty. **Step 8 — Decide whether an S-Corp election makes sense once your LLC is consistently profitable.** The Illinois-specific math here is genuinely different from most flat-tax states: because S-corp status doesn't avoid PPRT, the full calculation has to weigh federal self-employment-tax savings against both Illinois's flat 4.95% personal rate and the 1.5% entity-level PPRT layered on top — a real, ongoing cost that a single-member LLC would never have owed in the first place. **Step 9 — Watch for Illinois-specific tax traps.** The single-member vs. multi-member PPRT distinction is the single most important Illinois-specific trap — many business owners don't realize adding a second member (or a spouse) to their LLC triggers a new 1.5% entity-level tax that wasn't there before. Confirm the exact 2026 UI taxable wage base directly with IDES, since sources have cited slightly different figures this year. **Step 10 — Keep business and personal finances completely separate.** Commingling funds is the single biggest reason courts pierce the LLC liability shield, and it also makes tax preparation far more error-prone. Run all business income and expenses through a dedicated business bank account and keep receipts. Ready to Launch Your Business in Illinois?Follow our fast, easy process to get started right now.[Start My Business](https://app.llcattorney.com/formation?intake_type=formation) ### If LLC Attorney Does It for You 1. Submit your information at llcattorney.com — entity classification, expected revenue, and whether you'll be hiring employees or collecting sales tax. 2. LLC Attorney obtains your EIN, registers you with the Illinois Department of Revenue and Illinois Department of Revenue as needed, and sets up your compliance calendar for Annual Report and Personal Property Replacement Tax (PPRT). 3. Receive reminders before every deadline through your client portal, plus access to flat-fee attorney consultations (no retainer) when an S-Corp election or multi-state question needs a licensed professional's judgment call. ## When Should You Talk to a Tax Professional About Your Illinois LLC? A CPA is worth consulting in Illinois specifically when you're adding a second member to a previously single-member LLC (since that alone creates new PPRT exposure), when deciding whether an S-Corp election's federal SE-tax savings still outweigh the 1.5% PPRT layer, or when reconciling conflicting figures like the 2026 UI wage base before running payroll. ### Is Illinois a State Where Tax Complexity Matters More? Illinois adds a genuine layer of complexity most flat-tax states don't have: the Personal Property Replacement Tax turns on member count and tax classification in a way that's easy to get wrong, and it applies on top of — not instead of — the personal income tax members already pay. ## What You Actually Get With LLC Attorney's Illinois Compliance Service Adding a business partner to your Illinois LLC is a structural decision with a real tax consequence attached — it can trigger a 1.5% entity-level tax that a single-member LLC never owes. LLC Attorney's Illinois service makes sure that trade-off is visible before you make the change, not after. - EIN obtained for you at no extra charge. - State tax and sales tax registration handled as part of formation, starting at $49. - An ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) tracks every Illinois deadline — Annual Report, Personal Property Replacement Tax (PPRT), and registered agent renewal. - Access to professionally trained Business Success Advisors at no charge, plus flat-fee attorney consultations (no retainer) for S-Corp election analysis and multi-state nexus questions. Illinois rewards LLCs that understand the PPRT member-count rule before they restructure — LLC Attorney keeps your Illinois filings and classification decisions aligned so a second member never becomes an unplanned tax bill. ## Get Your Illinois LLC's Taxes Set Up Correctly Getting your EIN, tax registrations, and compliance calendar right from day one prevents expensive corrections later. LLC Attorney's Illinois formation service starts at $49, and an ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) keeps you ahead of every deadline after that. See our [full pricing](/pricing) for all service tiers. Ready to Launch Your Business in Illinois?Follow our fast, easy process to get started right now.[Start My Illinois LLC](https://app.llcattorney.com/formation?intake_type=formation) ## Frequently Asked Questions ### Does my Illinois LLC have to pay franchise tax? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) It depends entirely on your member count. Illinois has no traditional franchise tax, but it does impose the Personal Property Replacement Tax (PPRT) — 1.5% of net Illinois income — on multi-member LLCs taxed as partnerships and on S-corporations. Single-member LLCs are fully exempt because they're disregarded entities. ### Do I need to collect sales tax in Illinois? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Only if you sell taxable tangible personal property or specifically enumerated services. Register for free through MyTax Illinois (Form REG-1), then collect the 6.25% state rate plus applicable local add-ons — combined rates average 8.96% and can exceed 11% in parts of Chicago. The 1% state grocery tax ended January 1, 2026. ### What is the Illinois Annual Report and when is it due? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Every Illinois LLC files an Annual Report with the Secretary of State, due before the first day of your LLC's anniversary month (you can file up to 45 days early), for a $75 fee. New entities skip filing in their formation year — the first report is due the following year. ### What happens if I miss a Illinois LLC tax or filing deadline? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Missing the Annual Report deadline triggers a flat $100 late penalty on top of the $75 base fee. Reinstatement requires filing every delinquent report plus accumulated fees and penalties with the Secretary of State. ### Should my Illinois LLC elect S-Corp taxation? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) It depends on your profit level, but Illinois adds a real wrinkle: electing S-corp status doesn't avoid the 1.5% Personal Property Replacement Tax — S-corps pay the same PPRT rate multi-member LLCs do. So the calculation has to weigh federal self-employment-tax savings against both the flat 4.95% personal rate and the 1.5% PPRT layered on top. ### How is a single-member LLC taxed in Illinois? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) A single-member Illinois LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and pay self-employment tax via Schedule SE. Critically, this classification also exempts you entirely from the 1.5% Personal Property Replacement Tax that multi-member LLCs owe. ### I operate in multiple states — which state's taxes apply to my LLC? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) If your LLC does business in a state other than the one it's formed in — an office, employees, inventory, or significant sales there — you may have created nexus requiring registration and tax obligations in that state too. This is fact-specific and worth a conversation with a tax professional if you operate in multiple states. ### How much will I actually pay in taxes on my Illinois LLC? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) For a typical Illinois LLC with in-state owners and no employees: a flat 4.95% state income tax on your share of profit, plus 1.5% PPRT at the entity level if you're a multi-member LLC or S-corp (single-member LLCs skip PPRT entirely), the $75 Annual Report, and federal income tax and 15.3% federal self-employment tax (up to the $184,500 Social Security wage base for 2026). Add 6.25%–11% sales tax only if you sell taxable goods or services. ### Does LLC Attorney help with LLC tax compliance? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Yes. LLC Attorney's ongoing compliance subscription tracks your Illinois filing deadlines, handles your Annual Report, and connects you with flat-fee attorney consultations (no retainer) when a tax question needs a licensed professional's judgment call. ## Learn More About Illinois - [Illinois LLC Formation](/states/il/llc-formation-illinois) - [Illinois Registered Agent](/states/il/registered-agent-illinois)