climbing up the corporate ladder

Legal References

Definitions

The Illinois Income Tax is imposed on every taxpayer earning or receiving income in Illinois. The tax is calculated by multiplying net income by a flat rate. The Illinois Income Tax is based, to a large extent, on the federal income tax code.

Replacement Tax, also known as Personal Property Replacement Tax, is a tax on the net income of corporations, subchapter S corporations, partnerships, and trusts. 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, and trusts by the State of Illinois and paid to local governments.

Tax rate

Use the Tax Rate Database to determine the corporation income and replacement tax rates.

Tax base

The starting point for the Illinois Corporate Income and Replacement Tax Return is federal taxable income, which is income minus deductions. Next, the federal taxable income is changed by adding back certain items (e.g., state, municipal, and other interest income excluded from federal taxable income) and subtracting others (e.g., interest income from U.S. Treasury obligations). The result is “base income.”

See the Illinois Department of Revenue Income Tax Credits and Expirations spreadsheet for information about income tax credits. 

Filing requirements

You must file Form IL-1120, Corporation Income and Replacement Tax Return, if you are a corporation that

  • has net income or loss as defined under the Illinois Income Tax Act (IITA); or
  • is qualified to do business in the state of Illinois and is required to file a federal income tax return (regardless of net income or loss).

Due dates

  • Original return
For tax years beginning on or after January 1, 2016 -
Determine the date your tax year ends. If your tax year ends on
  • a date other than June 30, Form IL-1120 is due on or before the 15th day of the 4th month following the close of the tax year.
  • June 30, Form IL-1120 is due on or before the 15th day of the 3rd month following the close of the tax year.

Note: If you are a cooperative, Form IL-1120 is due on the 15th day of the 9th month following the close of the tax year regardless of when your tax year ends.

For tax years beginning before January 1, 2016 -
  • Form IL-1120 is due on or before the 15th day of the 3rd month following the close of the tax year.
  • Automatic filing extension
You are not required to file a form to obtain this automatic extension. However, if you expect tax to be due, you must pay any tentative tax due by the original due date of the returto avoid interest and penalty on tax not paid. An extension of time to file your Form IL-1120 does not extend the amount of time you have to pay your Illinois tax liabilitySee Make a Payment for payment options.
For tax years ending on or after December 31, 2021 -
Determine the date your tax year ends. If your tax year ends on
  • a date other than June 30, we grant you an automatic seven-month extension of time to file your corporate tax return.
  • June 30, we grant you an automatic eight-month extension of time to file your corporate tax return.

Note: If you are a cooperative, we grant you an automatic seven-month extension of time to file your corporate return regardless of when your tax year ends.

For further information, see FY 2023-02, Corporate Return Automatic Extension Due Date Change for the Tax Year Ending on December 31, 2021.

For tax years beginning on or after January 1, 2016 but ending before December 31, 2021 -
Determine the date your tax year ends. If your tax year ends on

  • a date other than June 30, we grant you an automatic six-month extension of time to file your corporate tax return.
  • June 30, we grant you an automatic seven-month extension of time to file your corporate tax return.

Note: If you are a cooperative, we grant you an automatic six-month extension of time to file your corporate return regardless of when your tax year ends.

For tax years beginning before January 1, 2016 -
  • We grant you an automatic seven-month extension of time to file your corporate tax return.

Note: If you are a cooperative, we grant you an automatic seven-month extension of time to file your corporate return.

  • Amended return

For amended returns claiming a credit or refund filed on or after June 25, 2021, IDOR has an automatic six month extension of time to issue an assessment of additional tax due if the amended return is filed within six months of the original expiration of the statute of limitations.

State Change
  • If your change creates or increases the Illinois net loss for the year, you must file Form IL-1120-X showing the increase in order to carry the increased loss amount to another year.
  • If your change increases the tax due to Illinois, you should file Form IL-1120-X and pay the tax, penalty, and interest promptly.
  • If your change decreases the tax due to Illinois and you are entitled to a refund or credit carryforward, you must file Form IL-1120-X within
    • three years after the due date of the return (including extensions),
    • three years after the date your original return was filed, or
    • one year after the date your Illinois tax was paid, whichever is latest.
Federal Change
  • If your federal change decreases the tax due to Illinois and you are entitled to a refund or credit carryforward, you must file Form IL-1120-X within two years plus 120 days of federal finalization.
  • If your federal change increases the tax due to Illinois, you must file Form IL-1120-X and pay any additional tax within 120 days of IRS partial agreement or finalization. To avoid late payment penalties, you must attach proof of the federal finalization date, showing the change was reported to Illinois within 120 days of IRS acceptance, or you may be assessed a late-payment penalty.

Note: You should not file Form IL-1120-X until you receive a federal finalization notification from the IRS stating that they have accepted your change, either by paying a refund, or by final assessment, agreement, or judgment. Acknowledgement that the IRS received your amended return is not acceptable proof of federal finalization.

Estimated payments

Corporations (other than S corporations) who can reasonably expect their income and replacement tax liability to be more than $400 must make quarterly estimated payments. Estimated Payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. Corporations are encouraged to use an electronic method to make estimated payments. Corporations who mail estimated tax payments must complete Form IL-1120-V, Payment Voucher for Corporation Income and Replacement Tax.

What if I need to correct or change my return?

If you need to correct or change your return after it has been filed, you must file Form IL-1120-X, Amended Corporation Income and Replacement Tax Return. Returns filed before the extended due date of the return are treated as your original return for all purposes. You should file Form IL-1120-X only after you have filed a processable Illinois Income Tax return. You must file a separate Form IL-1120-X for each tax year you wish to change. For more information see Form IL-1120-X Instructions. 

Note: Do not file another Form IL-1120 with "amended" figures to change your originally filed Form IL-1120.