104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2861
 
Introduced 2/6/2025, by Rep. Tony M. McCombie
 
SYNOPSIS AS INTRODUCED:
 
805 ILCS 5/15.35  from Ch. 32, par. 15.35
     Amends the Business Corporation Act of 1983. Provides that, on or after January 1, 2026 and prior to January 1, 2027, the first $100,000 in liability is exempt from the franchise tax payable by domestic corporations. Provides that, in the case of a domestic corporation, no payment is required for a franchise tax that would have been due and payable on or after January 1, 2027. Repeals the provision concerning franchise taxes payable by domestic corporations on January 1, 2027. Effective immediately.


LRB104 10889 SPS 20971 b

 
 
A BILL FOR
 
HB2861LRB104 10889 SPS 20971 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois, 
3represented in the General Assembly:
 
4    Section 5. The Business Corporation Act of 1983 is amended 
5by changing Sections 15.35 as follows:
 
6    (805 ILCS 5/15.35)  (from Ch. 32, par. 15.35)
7    (Text of Section from P.A. 102-16, 103-8, and 103-592)
8    Sec. 15.35. Franchise taxes payable by domestic 
9corporations. For the privilege of exercising its franchises 
10in this State, each domestic corporation shall pay to the 
11Secretary of State the following franchise taxes, computed on 
12the basis, at the rates and for the periods prescribed in this 
13Act:
14        (a) An initial franchise tax at the time of filing its 
15    first report of issuance of shares.
16        (b) An additional franchise tax at the time of filing 
17    (1) a report of the issuance of additional shares, or (2) a 
18    report of an increase in paid-in capital without the 
19    issuance of shares, or (3) an amendment to the articles of 
20    incorporation or a report of cumulative changes in paid-in 
21    capital, whenever any amendment or such report discloses 
22    an increase in its paid-in capital over the amount thereof 
23    last reported in any document, other than an annual 
 
 
HB2861- 2 -LRB104 10889 SPS 20971 b

1    report, interim annual report or final transition annual 
2    report required by this Act to be filed in the office of 
3    the Secretary of State.
4        (c) An additional franchise tax at the time of filing 
5    a report of paid-in capital following a statutory merger 
6    or consolidation, which discloses that the paid-in capital 
7    of the surviving or new corporation immediately after the 
8    merger or consolidation is greater than the sum of the 
9    paid-in capital of all of the merged or consolidated 
10    corporations as last reported by them in any documents, 
11    other than annual reports, required by this Act to be 
12    filed in the office of the Secretary of State; and in 
13    addition, the surviving or new corporation shall be liable 
14    for a further additional franchise tax on the paid-in 
15    capital of each of the merged or consolidated corporations 
16    as last reported by them in any document, other than an 
17    annual report, required by this Act to be filed with the 
18    Secretary of State from their taxable year end to the next 
19    succeeding anniversary month or, in the case of a 
20    corporation which has established an extended filing 
21    month, the extended filing month of the surviving or new 
22    corporation; however if the taxable year ends within the 
23    2-month period immediately preceding the anniversary month 
24    or, in the case of a corporation which has established an 
25    extended filing month, the extended filing month of the 
26    surviving or new corporation the tax will be computed to 
 
 
HB2861- 3 -LRB104 10889 SPS 20971 b

1    the anniversary month or, in the case of a corporation 
2    which has established an extended filing month, the 
3    extended filing month of the surviving or new corporation 
4    in the next succeeding calendar year.
5        (d) An annual franchise tax payable each year with the 
6    annual report which the corporation is required by this 
7    Act to file.
8    On or after January 1, 2020 and prior to January 1, 2021, 
9the first $30 in liability is exempt from the tax imposed under 
10this Section. On or after January 1, 2021, and prior to January 
111, 2024, the first $1,000 in liability is exempt from the tax 
12imposed under this Section. On or after January 1, 2024, and 
13before January 1, 2025, the first $5,000 in liability is 
14exempt from the tax imposed under this Section. On and after 
15January 1, 2025 and before January 1, 2026, the first $10,000 
16in liability is exempt from the tax imposed under this 
17Section. On or after January 1, 2026 and before January 1, 
182027, the first $100,000 in liability is exempt from the tax 
19imposed under this Section. The provisions of this Section 
20shall not require the payment of any franchise tax that would 
21otherwise have been due and payable on or after January 1, 
222027. There shall be no refunds or proration of franchise tax 
23for any taxes due and payable on or after January 1, 2027 on 
24the basis that a portion of the corporation's taxable year 
25extends beyond January 1, 2027.
26    This Section is repealed on January 1, 2028.
 
 
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1(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23; 
2103-592, eff. 6-7-24.)
 
3    (Text of Section from P.A. 102-282, 102-558, 103-8, and 
4103-592)
5    Sec. 15.35. Franchise taxes payable by domestic 
6corporations. For the privilege of exercising its franchises 
7in this State, each domestic corporation shall pay to the 
8Secretary of State the following franchise taxes, computed on 
9the basis, at the rates and for the periods prescribed in this 
10Act:
11        (a) An initial franchise tax at the time of filing its 
12    first report of issuance of shares.
13        (b) An additional franchise tax at the time of filing 
14    (1) a report of the issuance of additional shares, or (2) a 
15    report of an increase in paid-in capital without the 
16    issuance of shares, or (3) an amendment to the articles of 
17    incorporation or a report of cumulative changes in paid-in 
18    capital, whenever any amendment or such report discloses 
19    an increase in its paid-in capital over the amount thereof 
20    last reported in any document, other than an annual 
21    report, interim annual report or final transition annual 
22    report required by this Act to be filed in the office of 
23    the Secretary of State.
24        (c) An additional franchise tax at the time of filing 
25    a report of paid-in capital following a statutory merger 
 
 
HB2861- 5 -LRB104 10889 SPS 20971 b

1    or consolidation, which discloses that the paid-in capital 
2    of the surviving or new corporation immediately after the 
3    merger or consolidation is greater than the sum of the 
4    paid-in capital of all of the merged or consolidated 
5    corporations as last reported by them in any documents, 
6    other than annual reports, required by this Act to be 
7    filed in the office of the Secretary of State; and in 
8    addition, the surviving or new corporation shall be liable 
9    for a further additional franchise tax on the paid-in 
10    capital of each of the merged or consolidated corporations 
11    as last reported by them in any document, other than an 
12    annual report, required by this Act to be filed with the 
13    Secretary of State from their taxable year end to the next 
14    succeeding anniversary month or, in the case of a 
15    corporation which has established an extended filing 
16    month, the extended filing month of the surviving or new 
17    corporation; however if the taxable year ends within the 
18    2-month period immediately preceding the anniversary month 
19    or, in the case of a corporation which has established an 
20    extended filing month, the extended filing month of the 
21    surviving or new corporation the tax will be computed to 
22    the anniversary month or, in the case of a corporation 
23    which has established an extended filing month, the 
24    extended filing month of the surviving or new corporation 
25    in the next succeeding calendar year.
26        (d) An annual franchise tax payable each year with the 
 
 
HB2861- 6 -LRB104 10889 SPS 20971 b

1    annual report which the corporation is required by this 
2    Act to file.
3    On or after January 1, 2020 and prior to January 1, 2021, 
4the first $30 in liability is exempt from the tax imposed under 
5this Section. On or after January 1, 2021 and prior to January 
61, 2024, the first $1,000 in liability is exempt from the tax 
7imposed under this Section. On or after January 1, 2024, and 
8before January 1, 2025, the first $5,000 in liability is 
9exempt from the tax imposed under this Section. On and after 
10January 1, 2025 and before January 1, 2026, the first $10,000 
11in liability is exempt from the tax imposed under this 
12Section. On or after January 1, 2026 and before January 1, 
132027, the first $100,000 in liability is exempt from the tax 
14imposed under this Section. The provisions of this Section 
15shall not require the payment of any franchise tax that would 
16otherwise have been due and payable on or after January 1, 
172027. There shall be no refunds or proration of franchise tax 
18for any taxes due and payable on or after January 1, 2027 on 
19the basis that a portion of the corporation's taxable year 
20extends beyond January 1, 2027.
21    This Section is repealed on January 1, 2028.
22(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21; 
23103-8, eff. 6-7-23; 103-592, eff. 6-7-24.)
 
24    Section 99. Effective date. This Act takes effect upon 
25becoming law.