Income Tax Preparation & Small Business Accounting

S.9, Illinois—Multiple Taxes: PTE Tax, Bonus Depreciation, Film Credit Changes

Enacted December 16, 2025

Illinois enacted legislation that:

• eliminates the January 1, 2026 sunset date for the pass-through entity tax that S corporations and partnerships can elect to pay on income earned in the state;
• extends bonus depreciation addition and subtraction adjustments to corporations, partnerships, estates, trusts, and individuals who claim a federal deduction under either IRC Secs. 168(k) or 168(n);
• removes the January 1, 2026 sunset date for the subtraction adjustment estates and trusts can claim for excess business losses disallowed under IRC Sec. 461(I)(1)(B); and
• authorizes municipalities and counties that issue sales tax and revenue (STAR) bonds for economic development projects to impose a tax of up to 1% within a STAR project district on sales of tangible personal property and sales of services incident to the transfer of tangible personal property.

The legislation extends corporation and productions in the state until January 1, 2039. Effective for productions beginning on or after July 1, 2025, the credits equal:

• 35% of Illinois production spending for the use of tangible personal property, the purchase of vendor services, and the employment of state residents;
• 30% of Illinois production spending on salaries for up to 13 nonresident employees other than actors, 4 nonresident actors in productions costing under $20 million, 5 nonresident actors in productions costing between $20 million and $40 million, and 6 nonresident actors in productions costing more than $40 million;
• 15% of Illinois labor expenses for employment of residents who live in geographic areas of high poverty or high unemployment.
• 5% of Illinois labor expenses for employment of state residents on productions filming outside of Cook, DuPage, Kane, Lake, McHenry, and Will Counties;
• 5% of Illinois production spending on a television series relocating to the state from another jurisdiction and
• 5% of Illinois spending on productions that meet green sustainability certification requirements set by the Illinois Department of Commerce and Economic Opportunity.
  

Other film production credit changes include:

• expanding eligible expenses to cover airfare purchased from an Illinois airlines;
• limiting eligible labor expenses to no more than 2 executive producers for productions beginning on or after July 1, 2025; and
• requiring production companies, or their payroll service companies, to withhold income tax from compensation paid to companies that loan out employees to the production company, like artists, crew, actors, producers, and directors.

P.A. 104-453 (S.B. 1911), Laws 2025, effective December 12, 2025 and as noted.