SB1833 amends the Illinois Income Tax Act to change how Illinois base income is calculated for taxpayers with business activity both inside and outside the state. The bill would require taxpayers to exclude from Illinois base income the portion of income or loss from a trade or business, and from a pass-through entity, that is not derived from or connected with Illinois sources. In practical terms, it is a sourcing/apportionment change intended to ensure Illinois taxes only income tied to Illinois activity.
The bill also adds a new subsection effective for tax years beginning on or after January 1, 2026, repeating the same exclusion rule in a separate provision and making it exempt from Section 250. The measure is effective immediately upon enactment, and it would amend Section 203 of the Illinois Income Tax Act, which governs base income for individuals, corporations, trusts, estates, and partnerships. Because the bill is framed as a modification to base income, it would affect how taxpayers and the Department of Revenue determine what income is subject to Illinois tax, especially for multistate businesses and owners of pass-through entities.
Impact
SB1833 would alter Illinois tax law by narrowing the income included in Illinois base income for multistate business activity. It would affect Section 203 of the Illinois Income Tax Act and, by extension, taxpayers whose business income is earned partly outside Illinois, including owners of partnerships, S corporations, and other pass-through entities. The practical effect would be to reduce Illinois taxable income for amounts not connected to Illinois sources, potentially lowering tax liability for some taxpayers and requiring updated apportionment/sourcing calculations by the Department of Revenue.
Sentiment
There is no recorded committee transcript or vote history in the provided materials, so no formal legislative debate or recorded sentiment is available. Based on the bill text alone, the measure appears to reflect a pro-taxpayer, pro-business approach to sourcing income by limiting Illinois taxation to income connected with the state. The absence of votes or testimony means support or opposition cannot be directly assessed from the available record.
Contention
The main point of contention likely concerns revenue and tax sourcing. Supporters would likely view the bill as a fairness measure that prevents Illinois from taxing income earned outside the state, especially for multistate businesses and pass-through owners. Opponents may argue that the change could reduce state revenue, complicate apportionment rules, or create opportunities for taxpayers to shift income out of Illinois. The bill’s focus on income from businesses operating both within and without Illinois suggests the most affected parties would be multistate businesses, pass-through entities, and the Department of Revenue.