Illinois Enacts Major Corporate Tax Changes in H.B. 2755 — Here’s What You Need to Know

On June 16, 2025, Illinois enacted H.B. 2755, a sweeping tax bill that introduces significant changes impacting corporate taxpayers, pass-through entities, and manufacturers operating in the state. Below is a summary of the most notable provisions you should be aware of:

Beginning with tax years ending on or after Dec. 31, 2025, Illinois will allow a 50% deduction for GILTI (Global Intangible Low-Taxed Income).This replaces the prior 100% dividend-received deduction (DRD) for taxpayers with at least 80% ownership in a controlled foreign corporation (CFC), or a 65% DRD for ownership below 80%.

The Advancing Innovative Manufacturing (AIM) Credit is a new incentive ranging from 3% to 7%, available to businesses investing $10 million or more in facility upgrades related to automation, modernization, or production streamlining. To qualify, the business must:

• Manufacture or develop critically needed goods in Illinois

  
  

• Not participate in other overlapping state credit programs

  
  

• Begin credit-eligible activity after Jan. 1, 2026

  
  

Effective immediately, gains or losses from the sale of interests in S corporations or partnerships (excluding investment partnerships) will be sourced to Illinois if the pass-through entity was taxable in Illinois, based on its average apportionment factor over the current and previous two years.

This represents a shift away from prior residence-based sourcing and may result in Illinois taxation of transactions by nonresidents.

For additional information and help with tax planning, contact a member of ECS team.