Illinois LLC Tax Filing: Forms & Rates (2026)

Q: How is an Illinois LLC taxed?

By federal default, a single-member Illinois LLC is a disregarded entity taxed on the owner's Form 1040, and a multi-member LLC is a partnership filing Form 1065. At the state level, an LLC taxed as a partnership pays the 1.5% Illinois personal property replacement tax on its net income and files Form IL-1065, while the members pay Illinois individual income tax at 4.95% on their shares.

Q: What is the Illinois replacement tax for an LLC?

The personal property replacement tax is an Illinois income tax on business entities. An LLC taxed as a partnership pays 1.5% of its Illinois net income; an LLC taxed as a C corporation pays 2.5%. It is reported on the same Illinois return the entity files (IL-1065 for partnerships, IL-1120 for corporations).

Q: Does a single-member LLC file an Illinois tax return?

A single-member LLC that is a disregarded entity for federal tax generally reports its income on the owner's Illinois individual return (Form IL-1040) rather than filing a separate entity return, because a disregarded single-member LLC is not subject to the replacement tax as a separate entity. If it elects corporate or S-corporation treatment, it files the corresponding Illinois entity return.

Q: Can an Illinois LLC elect S-corp status?

Yes. An LLC files IRS Form 2553 to be taxed as an S corporation federally. In Illinois, an S corporation files Form IL-1120-ST and pays the 1.5% replacement tax; the income then flows through to the members' Illinois individual returns at 4.95%.

Q: Does an Illinois LLC need to register for sales tax?

If the LLC sells taxable goods or certain services, it must register with the Illinois Department of Revenue using Form REG-1 and collect the Retailers' Occupation (sales) Tax. The state rate is 6.25%, and local taxes can raise the combined rate. Registration is free.

Q: When are Illinois LLC tax returns due?

Illinois partnership and S-corporation replacement tax returns (IL-1065 and IL-1120-ST) are generally due the 15th day of the fourth month after the close of the tax year, which is April 15 for calendar-year filers. Members' individual Illinois income tax returns (IL-1040) are due the same day as the federal return. Confirm current dates with the Department of Revenue.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

An Illinois LLC is taxed by federal default as a disregarded entity (single-member) or a partnership (multi-member); it pays no separate federal income tax. At the state level, an LLC taxed as a partnership pays the 1.5% Illinois personal property replacement tax on its net income and files Form IL-1065, while its members pay Illinois individual income tax at 4.95% on their distributive shares. Sales are taxed at the 6.25% state rate.

Quick Answer

Federal default: Single-member = disregarded (Schedule C); multi-member = partnership (Form 1065)
State entity return: Form IL-1065 (partnership) or IL-1120-ST (S corp), to the Illinois Department of Revenue
Replacement tax: 1.5% on net income for partnerships/S corps; 2.5% for C corporations
Member income tax: 4.95% flat Illinois individual income tax
Sales tax: 6.25% state Retailers' Occupation Tax; register with Form REG-1 (free)
Entity return due: 15th day of the 4th month after year-end (April 15 for calendar-year filers)

How an Illinois LLC Is Taxed: Federal Default

The Illinois Limited Liability Company Act creates the entity, but it does not decide how the LLC is taxed - federal classification does. By default, the IRS treats a single-member LLC as a disregarded entity, meaning the owner reports the LLC's income directly on Schedule C of the individual Form 1040, and a multi-member LLC as a partnership, which files an informational Form 1065 and issues a Schedule K-1 to each member. In both cases the LLC itself pays no separate federal income tax; profit "passes through" to the owners. See the IRS classification rules and our overview of single-member LLCs and what an LLC is.

An LLC can override the default by electing to be taxed as a corporation. Filing IRS Form 2553 makes it an S corporation; filing Form 8832 makes it a C corporation. This federal choice then determines which Illinois entity return the LLC files, because Illinois piggybacks on the federal classification. Before electing, weigh the tradeoffs in LLC or S corp and LLC vs S-corp tax.

Illinois Personal Property Replacement Tax

Illinois is unusual in imposing the personal property replacement tax (often just "replacement tax"), an income-based tax on business entities that replaced revenue lost when Illinois abolished the personal property tax. Unlike the federal system, Illinois taxes the pass-through entity itself, not only the owners. An LLC taxed as a partnership pays replacement tax at 1.5% of its Illinois net income and reports it on Form IL-1065. An LLC taxed as an S corporation also pays 1.5% and files Form IL-1120-ST. An LLC taxed as a C corporation pays 2.5% replacement tax on top of the regular Illinois corporate income tax and files Form IL-1120.

A key nuance: a single-member LLC that is disregarded for federal tax is generally not a separate taxpayer for the replacement tax, so its income is reported on the owner's return rather than a separate entity return. Once the LLC has two or more members (partnership) or makes a corporate election, the entity-level replacement tax applies. Rates are published by the Illinois Department of Revenue.

Illinois Income Tax on LLC Members

Because a default LLC is a pass-through, its members owe Illinois individual income tax on their shares of the profit. Illinois uses a flat 4.95% individual income tax rate, so a member's Illinois tax roughly tracks their share of net income regardless of bracket. Members report their distributive share on Form IL-1040, using the Schedule K-1-P the LLC provides. This is separate from - and in addition to - the 1.5% replacement tax the entity already paid; Illinois does not fully credit one against the other, which is why the replacement tax is effectively an extra layer for Illinois pass-throughs.

Members who are Illinois residents pay the 4.95% on their entire distributive share; nonresident members generally pay Illinois tax only on the Illinois-source portion, and the LLC may be required to withhold Illinois tax on nonresident members' shares. For federal purposes the same profit is also subject to income tax and, for active members, self-employment tax. Use the self-employment tax calculator to estimate the federal payroll-tax layer.

Electing S-Corp Status in Illinois

Many Illinois LLCs elect S-corporation treatment to reduce self-employment tax on the owners' profits. After filing federal Form 2553, the LLC is an S corporation for both federal and Illinois purposes. Federally it files Form 1120-S; in Illinois it files Form IL-1120-ST and pays the 1.5% replacement tax on its Illinois net income. The remaining profit passes through to members, who pay the 4.95% Illinois individual income tax on their shares. Owners who work in the business must also take reasonable compensation as W-2 wages, which are subject to Illinois withholding.

The S-corp election does not change the LLC's legal structure with the Illinois Secretary of State - it remains an LLC that filed Articles of Organization (Form LLC-5.5) and still files the $75 annual report. It only changes how the entity is taxed. Whether the election saves money depends on profit level and payroll costs; compare the paths in S-corp vs C-corp and LLC vs corporation.

Illinois Sales Tax and Business Registration (REG-1)

Illinois calls its sales tax the Retailers' Occupation Tax. If your LLC sells taxable tangible goods (and some services), you must register with the Illinois Department of Revenue using Form REG-1, obtain a Certificate of Registration, and collect tax on your sales. The state rate is 6.25%; counties, municipalities, and special districts add local taxes, so the combined rate at your location can be higher. Registration through the Department of Revenue is free, and you can register online through MyTax Illinois. A retailer files sales-tax returns (Form ST-1) on a monthly, quarterly, or annual schedule the Department assigns based on your tax liability.

Registering with Form REG-1 also sets up other state tax accounts your LLC may need, such as withholding tax if you have employees. For the licensing side - local business registrations and professional licenses that are separate from tax accounts - see business licensing in Illinois.

Withholding, PTE Election, and Employer Accounts

If your Illinois LLC has employees, it must register for and remit Illinois withholding income tax (Form IL-941) in addition to federal payroll taxes, and it may owe Illinois unemployment insurance to a separate agency. An LLC with nonresident members may also have to withhold Illinois income tax on those members' distributive shares and report it on the entity return.

Illinois also offers an elective pass-through entity (PTE) tax. A partnership or S corporation can elect to pay Illinois income tax at the entity level at the 4.95% rate, and the members then claim a credit on their Illinois returns. The election is designed as a workaround to the federal $10,000 cap on state-and-local-tax deductions, letting the entity deduct the state tax federally. Whether it helps depends on each member's situation, so confirm the current rules and election mechanics with the Department of Revenue or a tax professional before relying on it.

Illinois LLC Tax Forms and Due Dates (2026)

The forms your Illinois LLC files depend on its federal tax classification. The table summarizes the main filings. Because a specific due date can shift when it falls on a weekend or holiday, and the Department can assign different sales-tax filing frequencies, confirm your exact dates on the Department of Revenue site or in the form instructions.

Tax classification	Illinois return	Rate	Typical due date
Single-member (disregarded)	IL-1040 (owner)	4.95% on owner	Federal Form 1040 due date
Multi-member (partnership)	IL-1065	1.5% replacement	15th day of 4th month after year-end
S corporation (elected)	IL-1120-ST	1.5% replacement	15th day of 4th month after year-end
C corporation (elected)	IL-1120	7% income + 2.5% replacement	15th day of the month after federal due date
Sales (retailers)	ST-1	6.25% state	Monthly/quarterly/annual as assigned
Employer withholding	IL-941	4.95% withheld	Quarterly
Business registration	REG-1	$0 (free)	Before first taxable activity

The 7% figure above is the Illinois corporate income tax rate that applies only if the LLC has elected C-corporation treatment; combined with the 2.5% replacement tax it produces a 9.5% effective Illinois entity rate. Most small LLCs never reach this row because they stay in the default pass-through columns.

Federal Self-Employment and Quarterly Estimated Tax

Beyond Illinois taxes, a default LLC's owners owe federal income tax and, on active business earnings, 15.3% self-employment tax (12.4% Social Security up to the annual wage base, plus 2.9% Medicare). Because no employer withholds on pass-through profit, owners generally must pay quarterly estimated taxes to both the IRS and Illinois to avoid underpayment penalties. An S-corp election can trim the self-employment layer by splitting profit into wages and distributions, but it adds payroll filings. For the broader picture, see how to file business taxes and when business taxes are due.

Every LLC needs a federal EIN before it can register for Illinois tax accounts, hire employees, or file most returns; getting one is free from the IRS. Keep your formation current too - the tax accounts assume an active LLC in good standing with its registered agent and annual report filed.

Frequently Asked Questions

How is an Illinois LLC taxed?

By federal default a single-member LLC is disregarded (owner files Schedule C and IL-1040) and a multi-member LLC is a partnership (Form 1065 and IL-1065). Illinois adds a 1.5% replacement tax at the entity level for partnerships and S corps, and members pay 4.95% Illinois income tax on their shares. See business tax.

What is the Illinois replacement tax for an LLC?

It is an entity-level Illinois income tax: 1.5% of net income for LLCs taxed as partnerships or S corporations, and 2.5% for LLCs taxed as C corporations. It is reported on the same Illinois return the entity files (IL-1065, IL-1120-ST, or IL-1120).

Does a single-member LLC file an Illinois tax return?

A disregarded single-member LLC generally reports its income on the owner's Form IL-1040 rather than a separate entity return and is not a separate replacement-tax payer. If it elects corporate or S-corp treatment, it files the matching Illinois entity return.

Can an Illinois LLC elect S-corp status?

Yes. File IRS Form 2553. The LLC then files Form IL-1120-ST, pays the 1.5% replacement tax, and the profit flows through to members at 4.95%. Owner-workers must take reasonable W-2 wages.

Does an Illinois LLC need to register for sales tax?

If it sells taxable goods or certain services, yes - register free with Form REG-1 and collect the 6.25% state Retailers' Occupation Tax (local taxes can add more). See Illinois business licensing.

When are Illinois LLC tax returns due?

Partnership and S-corp replacement tax returns (IL-1065, IL-1120-ST) are generally due the 15th day of the fourth month after year-end - April 15 for calendar-year filers. Member IL-1040 returns follow the federal individual due date.

Sources

Illinois Department of Revenue - Income Tax Rates (4.95% individual; 1.5% replacement tax for partnerships and trusts; 2.5% for corporations; 7% corporate income tax).
Illinois Department of Revenue - Partnership income tax (Form IL-1065).
Illinois Department of Revenue - Business Registration (Form REG-1).
Illinois Department of Revenue - Business Income Tax overview (IL-1120, IL-1120-ST, IL-1065).
Illinois Department of Revenue - Withholding Income Tax (Form IL-941).
Illinois Department of Revenue - Tax Rates (sales and use tax; 6.25% state Retailers' Occupation Tax).
IRS - Limited Liability Company (LLC) (federal default classification).
IRS - Single-Member Limited Liability Companies (disregarded entity).
IRS - About Form 2553, Election by a Small Business Corporation.
IRS - About Form 1065, U.S. Return of Partnership Income.
IRS - Self-Employment Tax (15.3% rate).
IRS - Get an Employer Identification Number (free EIN).
Legal Information Institute - 26 CFR § 301.7701-3, Classification of certain business entities.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Tax laws, rates, forms, and due dates change; verify current requirements with the Illinois Department of Revenue and the IRS before acting.