How to make the Illinois PTET election.

Can your business elect?

Partnerships and S corporations, including LLCs taxed as either. Publicly traded partnerships under IRC Section 7704 cannot elect. Investment partnerships may elect but must still withhold for applicable nonresident partners before computing the PTE tax.

The election is made by the entity and covers all partners or shareholders; owners cannot opt in or out individually. A partnership's choice of tax base method applies to all partners for the year. In tiered structures, an electing upper-tier entity subtracts its distributive share of an electing lower-tier partnership's net income, and the lower-tier credit flows through to the upper tier's owners.

Rate: 4.95% flat.

For S corporations, the entity's Illinois net income (Illinois-apportioned and allocated income). For tax years ending on or after December 31, 2026, a partnership chooses each year either the Illinois-sourced income method (the Illinois-source portion of all partners' distributive shares) or the full distributive share method (the full distributive share of resident partners plus the Illinois-source share of nonresident partners).

Available for 2026. Public Act 104-0453 (effective December 12, 2025) removed the original sunset for tax years beginning before January 1, 2026, and Public Act 104-0468 (effective June 16, 2026) added a second tax base option for partnerships for tax years ending on or after December 31, 2026. New to PTET? See how the election works.

Deadlines

These dates are for a calendar-year business. Pay at least two business days early, since state payment sites slow down on deadline days.

Electing, step by step

Deadline: The election is made on the 2026 return and becomes irrevocable after the extended due date: October 15, 2027 for calendar-year partnerships and S corporations.

Start with 2025 Form IL-1065, Partnership Replacement Tax Return, from the Illinois Department of Revenue.

1. Prepare the 2026 Form IL-1065 (partnerships) or Form IL-1120-ST (S corporations).
2. In Step 1, check the box that reads 'Check this box if you elected to file and pay Pass-through Entity (PTE) Tax' (Line I on Form IL-1065, Line L on Form IL-1120-ST).
3. Partnerships also select the method used to figure the PTE tax base on the IL-1065, as Informational Bulletin FY 2027-01 requires for 2026.
4. Complete the PTE tax lines (Lines 60 and 61 and Schedule B) and report each owner's PTE credit on Schedule K-1-P or K-1-T.
5. If income was annualized on Form IL-2220, also check the next box (Line J on IL-1065, Line M on IL-1120-ST) and attach Form IL-2220.
6. File the return. The election is made each year and becomes irrevocable after the extended due date, October 15, 2027.

1

Paying the tax, step by step

Required when the amount payable as estimated tax is expected to exceed $500. For 2026 the quarterly due dates are April 15, June 15, September 15, and December 15, 2026, and the penalty safe harbor is timely installments totaling 90% of current-year or 100% of prior-year liability. Bulletin FY 2027-01 says the first payment due on or after June 16, 2026 should catch up amounts owed for earlier quarters under the new partnership base rules; penalties are computed on Form IL-2220.

What you need

• An account with MyTax Illinois for the business. Set it up before the first deadline.
• The business's FEIN and Illinois account number.
• A MyTax Illinois username and password for the business.
• The business checking or savings account routing and account numbers.
• The installment amount from Appendix C of the IL-1065 or IL-1120-ST instructions (or the Bulletin FY 2027-01 worksheet for the full distributive share method).

Start at MyTax Illinois, Illinois's official site.

1. Log in to the business's MyTax Illinois account (the business must be registered with IDOR first).
2. Open the business income tax account for the IL-1065 or IL-1120-ST.
3. Select More account options, then View Account Periods, and choose the 2026 tax period.
4. Select Make a Payment, enter the payment type and amount (an estimated payment, an extension payment, or the balance with the return), and pay from a checking or savings account.
5. Credit card (with a convenience fee) and ACH credit (Form EFT-1) are also accepted. To pay by mail, use Form IL-1065-V or Form IL-1120-ST-V with a check payable to Illinois Department of Revenue.

Filing the return: Form IL-1065 is due April 15, 2027 and Form IL-1120-ST is due March 15, 2027 for calendar-year 2026 entities. Both get an automatic extension to October 15, 2027 (six months for IL-1065, seven months for IL-1120-ST). The PTE tax must be paid by the original due date; the extension covers filing only.

Claiming the credit

Each owner receives a credit equal to 4.95% of its distributive share of net income, limited to the PTE tax actually paid, reported on Schedule K-1-P. Individuals claim it in the payments section of Form IL-1040, and any excess is treated as an overpayment and refunded.

Good to know

• The electing entity must add back the PTE tax deducted federally when computing its Illinois base income.
• Pass-through withholding for nonresident members does not apply in an election year, and Form IL-1000-E exemption certificates are disregarded.
• A nonresident individual whose only Illinois income is from electing entities, and whose credit covers the Illinois liability, is not required to file Form IL-1040.
• The PTE tax is in addition to the 1.5% Personal Property Replacement Income Tax paid by partnerships and S corporations.
• If the entity does not pay the full PTE tax, partners or shareholders are liable for the unpaid amount based on their share of net income.
• Paying your personal Illinois estimates? See how to pay Illinois estimated taxes.
• Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Illinois Department of Revenue's own publications and 35 ILCS 5/201(p).

• 35 ILCS 5/201 (Illinois Compiled Statutes, including subsection (p))
• IDOR Informational Bulletin FY 2027-01 (Public Act 104-0468 partnership base methods)
• IDOR Informational Bulletin FY 2026-15 (PTE tax sunset removed, Public Act 104-0453)
• IDOR Publication 129, Pass-through Entity Information
• 2025 Form IL-1065 instructions (R-07/26)
• 2025 Form IL-1120-ST instructions (R-07/26)
• 2025 Form IL-1065 (Step 1, Line I PTE tax election box)
• 2025 Form IL-1120-ST (Step 1, Line L PTE tax election box)
• MyTax Illinois functions, Business Login Functions: Make a Payment
• IDOR, Make a Payment (businesses)

This guide is for general education and reflects rules as of October 2026. Tax law and agency websites change, and your situation may have details that change the answer. Please talk with your tax professional before acting on it.