What is "replacement tax"? Why is it called that?

Replacement Tax, also known as Personal Property Replacement Tax, is a tax imposed as of July 1, 1979, on income of corporations, subchapter S corporations, partnerships, trusts and public utilities. This tax replaces money lost by local governments when their power to impose personal property taxes was taken away. Replacement tax is collected from corporations, subchapter S corporations, partnerships, trusts, and public utilities by the State of Illinois and paid to local governments.                                                       

For more information regarding the replacement tax, see Illinois Income Tax Act, Sections 201(c) and (d), and  Personal Property Replacement Taxes.

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