Illinois LLC Taxes

State entity taxes

Franchise / privilege tax: Personal Property Replacement Tax 1.5% on LLC income.

State income tax on members: Illinois taxes its residents on personal income. Members pay Illinois state income tax on their share of LLC pass-through income at ordinary rates.

Federal taxation

By default, single-member LLCs are disregarded entities and report on Schedule C of the owner’s personal return. Multi-member LLCs file Form 1065 (partnership). Either may elect S-Corp or C-Corp tax treatment via Form 2553 or Form 8832.

Sales tax

If your Illinois LLC sells tangible goods or certain taxable services, you generally need a state sales tax permit. Check the Illinois Department of Revenue / Taxation for the applicable rate and registration process.

Illinois-specific note

Illinois LLCs are subject to the Personal Property Replacement Tax of 1.5% on net income, in addition to flow-through state income tax on members.

Self-employment tax (federal)

Members of pass-through LLCs generally pay self-employment tax (15.3% on the first ~$168,600 of net earnings, plus 2.9%+ Medicare beyond that) on their distributive share. Electing S-Corp status can sometimes reduce SE tax but adds payroll-administration complexity.