Starting with tax years ending on or after 31 December 2025, taxpayers must include 50% of GILTI, as defined under IRC section 951A, in their base income for Illinois tax purposes.
Illinois Governor J.B. Pritzker signed a bill (HB 2755) on 16 June 2025, announcing that the state will tax 50% of Global Intangible Low-Taxed Income (GILTI), starting in fiscal year 2026 under the 2026 budget.
HB2755 introduces changes to the rules governing how businesses allocate disallowed interest deductions under IRC Section 163(j).
GILTI
Starting with tax years ending on or after 31 December 2025, taxpayers must include 50% of GILTI, as defined under IRC section 951A, in their base income for Illinois tax purposes.
Interest deduction limitation
For tax years ending on or after 31 December 2025, businesses subject to the federal interest deduction limitation under IRC section 163(j) with both US and foreign related entities must follow a new allocation rule. The disallowed portion of the interest deduction must first be allocated to US-based entities. Any remaining disallowed amount can then be attributed to foreign-related entities.
Wholesale tobacco tax
HB2755 raises the wholesale tax on tobacco products from 36% to 45%.
Tax amnesty periods
HB275 introduces three tax amnesty periods for liabilities from taxable periods between 30 June 2018 and 1 July 2024. The first amnesty period is scheduled to run from 1 October 2025 to 15 November 2025.
