Illinois businesses pay the nation’s second-highest corporate income tax rates. Chicago is considering taxing them more.
By Bryce Hill | Illinois Policy Institute
Illinois levies the second-highest state corporate income tax rate in the nation, according to new rankings released Jan. 23 by the nonpartisan Tax Foundation.
Illinois’ flat corporate income tax rate tallies 9.5% and includes a 7% business income tax rate and a 2.5% Personal Property Replacement Tax for corporations. Only Minnesota, with a corporate income tax rate of 9.8%, taxes corporations at a higher rate.
Illinois had previously imposed the third-highest corporate income tax rate in the nation, however New Jersey’s corporate income tax fell from 11.5% to 9% beginning in 2024 as the state’s 2.5% corporation business tax surcharge expired.
New Jersey was not alone in making changes to reduce corporate income tax burdens. Six states made changes to their corporate income tax rates for 2024, with all of them being tax rate cuts. These changes furthered momentum for tax reductions that has been building since 2021.
Between 2021 and 2023 most states – 26, to be exact, including all of Illinois’ neighboring states – reduced their personal or corporate income tax rates or both. They returned an estimated $13 billion to taxpayers during those years.
Read more here.
Related: “Notable Companies Leaving Chicago & Why (Sep 2023),” “Big companies keep leaving Chicago. What’s going on?”
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