Illinois sits in the Midwest and borders Lake Michigan to the northeast. The state covers almost 150,000 km². Its borders include the Mississippi and the Ohio River. (More on the Buckeye State of Ohio here.) Several other rivers run through it, such as the Illinois River and the Kaskaskia River. Chicago is the only city in Illinois with more than a million people, and the third largest in the entire US. Of the state's roughly 13 million residents, 2.7 million live in Chicago.
Illinois has a booming economy. That comes down to its unique transportation infrastructure, its location, its talented workforce, its access to key markets and its positive business climate. The state offers real advantages for companies and workers alike.
Economic strength: the hallmark of the “Prairie State”
Illinois has grown into the world's 18th largest economy. Over time, the state has attracted innovative and well-known companies alike. Amazon, Caterpillar and Boeing all have a presence in “The Prairie State”. Among the more than 2,000 international companies based here, from 74 countries, are the headquarters of 37 Fortune 500 companies.
In 2017, Site Selection Magazine ranked Illinois third among all states for new and expanding businesses. Chicago even took first place among all metro areas in the country in that category.
The Illinois economy is highly diverse and is home to, among other things, the world's largest futures exchange. Nearly 300,000 people work in advanced research. More than 100 leading biopharmaceutical companies call the state home. In food processing, Illinois ranks second nationwide. In a word, Illinois industry is impressive. For domestic banks and holding companies, Chicago is the best address in the country. Financial services are a big reason Illinois has the fifth highest GDP in the nation.
Illinois is also one of the top 10 US states for foreign direct investment.
Global access from the heart of the USA
Strategically located in the middle of the country, Illinois is a hub of trade. From here, the entire North American market is within a four-hour flight. Chicago's O’Hare International Airport is one of the busiest in the world, with direct flights to 65 international business centers. Its dual-hub airport system is unique in North America.
Illinois is the only state with seven Class I railroads. It has the third largest interstate highway network in the US, and its intermodal port is the third largest in the world. The state's 13 port districts offer direct connections to the Atlantic Ocean, the Great Lakes and the Gulf of Mexico. Chicago is the largest container hub in the Western Hemisphere, handling 25 percent of all US freight traffic. This world-class infrastructure gives unmatched access to global markets.
The digital infrastructure is excellent too. Illinois also offers low-cost energy, plenty of water and other natural resources.
A huge talent pool
One of the state's greatest assets is its talent pool of nearly 6.5 million people. About a third of them hold at least a bachelor's degree. More than 200 higher education institutions in Illinois offer a broad, high-quality range of programs. The “Prairie State” is also home to three national laboratories.
Income tax in Illinois
Illinois levies an income tax of 4.95%. On top of that, federal income taxes apply.
Corporate tax in Illinois
Illinois levies a total corporate tax of 9.5% (7% corporate income tax plus 2.5% Personal Property Replacement Tax). On top of that, federal corporate tax applies.
Sales tax in Illinois
The USA has no VAT on the European model. Instead, states, counties and municipalities levy a local sales tax on the sale of goods (but not services).
Illinois sales tax rate
The state sales tax in Illinois is 6.25%. Cities and counties add an average of 2.49%, so the combined rate averages 8.74%.
Illinois nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date
October 1, 2018 (for state use tax)
January 1, 2021 (for local tax)
Included transactions:
Cumulative gross receipts from sales of tangible personal property, including property sold in connection with a service, into the state, excluding occasional sales; taxable services are not included
- From January 1, 2020, sales made through a marketplace facilitator are excluded from the threshold
Treatment of exempt sales:
Exempt sales, including exempt sales of property sold in connection with a service, are included; sales for resale are not included; exempt services are not included in the threshold either
Trigger:
Since January 1, 2026: sales volume only
Sales/transaction threshold:
$100,000 (the 200-transaction threshold was eliminated as of January 1, 2026)
Evaluation period:
Although the threshold covers the preceding 12 months, it must be determined quarterly. Additional exclusions apply to property that must be registered with the state.
Additional information:
- Registration requirements: A remote business must determine each quarter whether it exceeded the Illinois economic nexus threshold in the immediately preceding 12 months. If it did, it must register and begin collecting sales and use taxes by the first day of the next quarter. See FY 2019-05 for more details.
- Use tax guidance for remote sellers
- FAQs for marketplace facilitators, marketplace sellers and remote sellers
- Public Act 100-587
Illinois marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
January 1, 2020
Economic nexus threshold:
At least $100,000 in gross receipts from sales into Illinois in the current or previous calendar year (since January 1, 2026, only the $100,000 threshold counts, no longer the number of transactions). When calculating the threshold:
- Remote sellers should include marketplace sales made before January 1, 2020, and exclude them from January 1, 2020
- Marketplace facilitators should include all sales through the marketplace from January 1, 2020
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register with the Illinois Department of Revenue (DOR) and collect Illinois sales tax on sales not taxed by a marketplace facilitator.
- Remote marketplace sellers: You must register with the Illinois DOR once you exceed the economic nexus threshold, even if you only sell through one or two marketplaces. Contact the Illinois DOR for more information.
- In-state multichannel sellers: You must register with the Illinois DOR and collect tax on sales not taxed by a marketplace facilitator.
- In-state marketplace sellers: You must register. Contact the Illinois DOR for more information.
- Learn more here.
Find more state profiles in our overview of all US states. Which state is right for your company? Our guide Which US state is best for your company? explains. And how to run a US LLC with no US presence completely tax-free is shown by our sister site zerotax.llc.
Our services for Illinois:
Want to do business in Illinois? Our overview of US company formation helps you find the right entity and the right state, and in a consultation we go through your plans together.