HB2861 amends the Illinois Business Corporation Act of 1983 to phase out the franchise tax imposed on domestic corporations. Under the bill, for the period from January 1, 2026 through December 31, 2026, the first $100,000 in liability would be exempt from the franchise tax. Beginning January 1, 2027, domestic corporations would owe no franchise tax that would otherwise become due and payable, and the bill repeals the statutory provision governing that tax on January 1, 2027. The bill is effective immediately.
The measure continues a recent series of franchise tax reductions in Illinois, which had already increased the exempt amount in prior years. HB2861 would move the state from a partial exemption to a full repeal for domestic corporations, at least as to franchise taxes due on or after January 1, 2027. It affects domestic corporations subject to Section 15.35 of the Business Corporation Act and would eliminate a state tax obligation tied to corporate paid-in capital and annual reporting.
Impact
HB2861 would amend 805 ILCS 5/15.35 to reduce and then eliminate the franchise tax liability for domestic corporations. It would change the tax base by exempting the first $100,000 in liability for the 2026 tax period and then barring payment of any franchise tax due on or after January 1, 2027. The bill also repeals the underlying statutory provision on January 1, 2027, while preserving the existing rule that there are no refunds or prorations for taxes due on or after that date. The practical impact would be to reduce state revenue from domestic corporate franchise taxes and relieve domestic corporations of this filing-related tax obligation.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes, the available context suggests a generally pro-business, tax-relief orientation. The bill title and substance indicate support for reducing corporate tax burdens, particularly for domestic corporations. Because there are no transcripts or vote records provided, there is no documented public debate in the supplied materials showing formal support or opposition.
Contention
The main point of contention is likely fiscal: supporters would view the bill as tax relief and a way to improve the business climate, while opponents would likely focus on the loss of state revenue and the policy choice to fully repeal a corporate tax rather than retain it as a funding source. Another possible issue is equity, since the bill benefits domestic corporations specifically and does not address broader corporate tax policy. No specific objections or amendments are documented in the provided context, so these concerns are inferred from the bill’s subject matter rather than recorded debate.
To Amend Laws Concerning The Corporate Franchise Tax; To Repeal The Arkansas Corporate Franchise Tax Act Of 1979; And To Require An Annual Report For Corporations.