Illinois Individual Income Tax Return (Form IL-1040) for sole proprietors and single-member LLCs. Covers the flat 4.95% rate, Illinois base income computation from federal AGI, Schedule M addition and subtraction modifications, property tax credit (Schedule ICR), earned income credit, and the full return assembly. Primary source: 35 ILCS 5/.
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IL flat rate
4.95% flat individual rate35 ILCS 5/201(b)(5.4); 2025 IL-1040 instr.
Starting point
Federal AGI (1040 Line 11) is the starting point (IL-1040 Line 1)35 ILCS 5/203(a); 2025 IL-1040 instr.
Standard deduction
IL allows no standard or itemized deduction; base income less subtractions/exemptions86 Ill. Admin. Code 100.2410; IL-1040 instr.
Per person exemption
$2,850 per person for 2025IDOR FY2025-16; 2025 IL-1040 instr.
MFJ exemption (taxpayer + spouse)
$5,700 MFJ (2 x $2,850)IDOR FY2025-16.
Per dependent exemption
$2,850 per dependentIDOR FY2025-16.
Age 65+ / legally blind additional exemption
Additional $1,000 per qualifying condition (65+/blind)35 ILCS 5/204; IL-1040 instr.
Exemption phase-out cliff — Single/HoH/MFS
Exemption fully disallowed if federal AGI > $250,000 (Single/HoH/MFS)35 ILCS 5/204(d); IL-1040 instr.
Reviewed against the cited tax authorities by a licensed accountant on 2026-06-03. Items flagged for further clarification are tracked separately and excluded here. This block is generated from verified
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Obligation category: IT (Income Tax) Functional role: Return assembly Status: Complete
This is a Tier 2 content skill for preparing the Illinois Form IL-1040 for a full-year Illinois resident who is a sole proprietor or single-member LLC owner. Illinois imposes a flat 4.95% income tax rate, starting from federal adjusted gross income (AGI) and applying Illinois-specific modifications.
In scope:
Out of scope (refused):
Due date table (35 ILCS 5/505)
| Item | Date | Source |
|---|---|---|
| Filing deadline | April 15, 2026 (for tax year 2025) | 35 ILCS 5/505 |
| Extension deadline | October 15, 2026 (automatic 6-month extension with federal extension) | 35 ILCS 5/505(b) |
Rates and thresholds table (see rows)
| Item | Amount | Source |
|---|---|---|
| Illinois flat income tax rate | 4.95% | 35 ILCS 5/201(b)(5.4) |
| Personal exemption -- single | $2,625 | 35 ILCS 5/204 (2025 amount, indexed) |
| Personal exemption -- MFJ | $5,250 | 35 ILCS 5/204 |
| Personal exemption -- each dependent | $2,625 | 35 ILCS 5/204 |
| Property tax credit rate | 5% of property taxes paid on principal residence | 35 ILCS 5/208 |
| Earned income credit | 20% of federal EIC (refundable) | 35 ILCS 5/212 (2025) |
| K-12 education expense credit | 25% of expenses over $250, max credit $750 | 35 ILCS 5/218 |
Common additions for self-employed individuals:
Addition modifications table (see rows)
| Addition | Description | Source |
|---|---|---|
| A-1 | Interest and dividends from state/local bonds of other states | 35 ILCS 5/203(a)(2)(F) |
| A-5 | Bonus depreciation add-back (IL does not conform to IRC §168(k)) | 35 ILCS 5/203(a)(2)(D-25) |
| A-18 | Net loss add-back (if federal AGI includes IL net loss deduction from prior years that IL has not allowed) | 35 ILCS 5/203(e) |
| A-24 | SALT deduction add-back -- Illinois requires add-back of any state income tax deducted federally (this is automatic since IL starts from AGI, not taxable income) | N/A -- structural |
Common subtractions:
Subtraction modifications table (see rows)
| Subtraction | Description | Source |
|---|---|---|
| S-1 | U.S. government interest (Treasury bonds, savings bonds) | 35 ILCS 5/203(a)(2)(N) |
| S-2 | Illinois income tax refund included in federal AGI | Structural (IL tax is not deductible for IL) |
| S-7 | Social Security and railroad retirement income included in federal AGI | 35 ILCS 5/203(a)(2)(F) |
| S-8 | IL retirement income subtraction (contributions to qualified IL plans) | 35 ILCS 5/203(a)(2)(F) |
| S-19 | Illinois special depreciation (replace federal bonus with IL straight-line MACRS) | 35 ILCS 5/203(a)(2)(D-25) |
Input: Federal AGI: $100,000 (all Schedule C). No additions. Social Security subtraction: $0. No property tax. Single, no dependents. Expected: Base income: $100,000. Exemption: $2,625. Net income: $97,375. Tax: $97,375 x 4.95% = $4,820.06.
Input: Federal AGI: $150,000. No modifications. MFJ, 2 dependents. Property taxes paid: $8,000. Expected: Exemptions: $5,250 + (2 x $2,625) = $10,500. Net income: $139,500. Tax: $139,500 x 4.95% = $6,905.25. Property tax credit: $8,000 x 5% = $400. Net tax: $6,505.25.
Input: Federal AGI includes $50,000 of bonus depreciation on a $50,000 asset (5-year MACRS). Year 1. Expected: Addition: $50,000. Subtraction: $10,000 (year 1 standard MACRS on 5-year property). Net addition: $40,000. Track remaining $40,000 as future IL subtractions.
Input: Federal AGI: $60,000 including $12,000 of Social Security benefits taxed federally. Expected: Subtraction: $12,000. IL base income: $48,000.
Input: Federal EIC: $2,000. Single, 1 child. Expected: IL EIC: $2,000 x 20% = $400 (refundable).
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Review status
Accountant-reviewed
Reviewed by a named licensed practitioner against the stated sources, as general reference material.
Other Illinois computations in the OpenAccountants Tax Library.
Exemption phase-out cliff — MFJ
Fully disallowed if federal AGI > $500,000 (MFJ)35 ILCS 5/204(d); IL-1040 instr.
Property tax credit
5% of IL property tax on principal residence, nonrefundable35 ILCS 5/208; Schedule ICR.
Property tax credit — AGI cap
Disallowed above $250K(S)/$500K(MFJ)35 ILCS 5/208; Schedule ICR instr.
K-12 education expense credit
25% of qualified K-12 expenses over $250, max $750, nonrefundable35 ILCS 5/201(m); Schedule ICR.
K-12 credit — AGI cap
Disallowed above $250K(S)/$500K(MFJ)Schedule ICR instr.
Illinois EIC
20% of federal EIC, refundable (2023+)35 ILCS 5/212; Schedule IL-E/EIC.
EIC subject to AGI cap?
IL EIC is not subject to the exemption cliff35 ILCS 5/212.
§168(k) bonus depreciation
IL decouples from federal bonus; add back on Schedule M / IL-456235 ILCS 5/203(b)(2)(E-10); IL-4562 instr.
Social Security
Social Security taxed federally is fully subtracted35 ILCS 5/203(a)(2); IL-1040 Line 5.
U.S. government bond interest
Interest on U.S. obligations is subtracted35 ILCS 5/203(a)(2)(N); Schedule M.
Net loss limitation
This is a CORPORATE net loss deduction provision (IL-1120), not individual. The cap is $500,000/yr for tax years ending on/after 12/31/2024 and before 12/31/2027; the $100,000 cap applied only through tax years ending before 12/31/2024.35 ILCS 5/207; 2025 IL-1120 instr. (R-12/25); PA 103-0592.
Deadline
April 15, 2026 for TY202535 ILCS 5/505; IL-1040 instr.
Extension
IL grants an automatic 6-month extension to ALL filers regardless of any federal extension (no IL form). A federal extension only matters if more than 6 months is needed. The 'with federal extension' condition is wrong.2025 IL-1040 instr., 'When is my return due / Automatic extension.'
Residency test
IL determines residency by domicile and presence for other than a temporary or transitory purpose. IL has no 'place of abode + day-count' statutory-residency test (that is a NY/CA-style test).35 ILCS 5/1501(a)(20); 86 Ill. Admin. Code 100.3020.
Filing requirement
An Illinois resident must file Form IL-1040 if: 1. They are required to file a federal income tax return, OR 2. They want to claim a refund of Illinois income tax withheld, OR 3. They have Illinois base income exceeding the personal exemption amount.35 ILCS 5/502(a).
Due date table
| Item | Date | Source | |------|------|--------| | Filing deadline | April 15, 2026 (for tax year 2025) | 35 ILCS 5/505 | | Extension deadline | October 15, 2026 (automatic 6-month extension with federal extension) | 35 ILCS 5/505(b) |35 ILCS 5/505
Automatic extension detail
Illinois automatically grants a 6-month extension if the taxpayer has a federal extension. No separate Illinois extension form is required. However, estimated tax payments are still due by April 15.35 ILCS 5/505(b)
Rates and thresholds table
| Item | Amount | Source | |------|--------|--------| | Illinois flat income tax rate | 4.95% | 35 ILCS 5/201(b)(5.4) | | Personal exemption -- single | $2,625 | 35 ILCS 5/204 (2025 amount, indexed) | | Personal exemption -- MFJ | $5,250 | 35 ILCS 5/204 | | Personal exemption -- each dependent | $2,625 | 35 ILCS 5/204 | | Property tax credit rate | 5% of property taxes paid on principal residence | 35 ILCS 5/208 | | Earned income credit | 20% of federal EIC (refundable) | 35 ILCS 5/212 (2025) | | K-12 education expense credit | 25% of expenses over $250, max credit $750 | 35 ILCS 5/218 |see rows
Note on personal exemption
Illinois does NOT have a standard deduction or itemized deductions at the state level. The personal exemption is the only below-the-line deduction.35 ILCS 5/204
Federal AGI starting point
Enter federal adjusted gross income from federal Form 1040, Line 11. This is the starting point for Illinois.35 ILCS 5/203(a)
Addition modifications table
| Addition | Description | Source | |----------|-------------|--------| | A-1 | Interest and dividends from state/local bonds of other states | 35 ILCS 5/203(a)(2)(F) | | A-5 | Bonus depreciation add-back (IL does not conform to IRC §168(k)) | 35 ILCS 5/203(a)(2)(D-25) | | A-18 | Net loss add-back (if federal AGI includes IL net loss deduction from prior years that IL has not allowed) | 35 ILCS 5/203(e) | | A-24 | SALT deduction add-back -- Illinois requires add-back of any state income tax deducted federally (this is automatic since IL starts from AGI, not taxable income) | N/A -- structural |see rows
Key structural point
Because Illinois starts from federal AGI (not federal taxable income), the federal standard deduction, itemized deductions, and QBI deduction do NOT flow into the Illinois computation. This means there is no SALT add-back issue -- it is handled structurally.N/A -- structural
Subtraction modifications table
| Subtraction | Description | Source | |-------------|-------------|--------| | S-1 | U.S. government interest (Treasury bonds, savings bonds) | 35 ILCS 5/203(a)(2)(N) | | S-2 | Illinois income tax refund included in federal AGI | Structural (IL tax is not deductible for IL) | | S-7 | Social Security and railroad retirement income included in federal AGI | 35 ILCS 5/203(a)(2)(F) | | S-8 | IL retirement income subtraction (contributions to qualified IL plans) | 35 ILCS 5/203(a)(2)(F) | | S-19 | Illinois special depreciation (replace federal bonus with IL straight-line MACRS) | 35 ILCS 5/203(a)(2)(D-25) |see rows
Illinois base income formula
Federal AGI + additions - subtractions = Illinois base income.35 ILCS 5/203
Personal exemptions
$2,625 per taxpayer (single: $2,625; MFJ: $5,250); $2,625 per dependent claimed on the federal return35 ILCS 5/204
Illinois net income formula
Illinois base income - exemptions = Illinois net income. If negative, enter zero.35 ILCS 5/204
Illinois tax formula
Illinois net income x 4.95% = Illinois income tax.35 ILCS 5/201(b)(5.4)
Credit order
Apply credits in this order: 1. Property tax credit (Schedule ICR): 5% of property taxes paid on the principal residence. Non-refundable. 2. K-12 education expense credit (Schedule ICR): 25% of qualifying expenses exceeding $250, max credit $750. Non-refundable. 3. Credit for taxes paid to other states: If the taxpayer earned income in another state that was taxed by that state, Illinois allows a credit to prevent double taxation. Non-refundable. 4. Illinois Earned Income Credit (Schedule IL-E/EIC): 20% of federal EIC. Refundable.35 ILCS 5/208; 35 ILCS 5/201(m); 35 ILCS 5/212
Withholding and payments
Illinois withholding from W-2s and 1099s. Estimated tax payments made (Form IL-1040-ES). Overpayment from prior year applied.35 ILCS 5/803
Balance due/refund formula
Tax after credits - withholding - estimated payments = balance due (if positive) or refund (if negative).IL-1040 instr.
Bonus depreciation add-back and replacement
Illinois requires taxpayers to add back federal bonus depreciation (IRC §168(k)) and instead claim the standard MACRS depreciation that would have been allowable without bonus depreciation. This creates a timing difference, not a permanent one. Track the depreciation schedules carefully.35 ILCS 5/203(a)(2)(D-25)
Net loss deduction limitation
Illinois limits the net loss deduction to $100,000 per year for individuals (enacted 2021, extended through 2027). Excess losses carry forward.35 ILCS 5/203(e)(2).
No standard deduction
Illinois has NO standard deduction and NO itemized deductions at the state level. The only below-the-line deduction is the personal exemption. This catches taxpayers who expect a state deduction mirroring the federal one.86 Ill. Admin. Code 100.2410
Social Security subtraction
All Social Security benefits included in federal AGI are subtracted for Illinois purposes. Illinois does not tax Social Security income.35 ILCS 5/203(a)(2)(F).
Residency determination
Illinois uses a "place of abode" test, not a day-count test. If a taxpayer maintains a place of abode in Illinois and is present in Illinois for more than an aggregate of 12 months during a three-year period, they are presumed to be an Illinois resident.35 ILCS 5/1501(a)(20).
Gambling winnings
Illinois does not allow a subtraction for gambling losses. If federal AGI includes net gambling winnings (after losses are deducted as federal itemized deductions), the Illinois computation starts from AGI which includes gross gambling winnings. The losses deducted federally as itemized deductions do not reduce IL base income.unsure
Rendered from the canonical facts model · method attested Jun 3, 2026 (covers the method, not the currency of individual figures). General reference only — confirm with a qualified professional before acting.
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