The year’s end provides many opportunities to celebrate and others to anticipate. As 2026 begins, there are a few new reasons to be optimistic about filing your taxes, as there have been changes in state law in several recent years. Being aware of these benefits to your bottom line can put a positive spin on tax day.
A qualified, experienced tax attorney can explain recent Illinois tax law changes and what you need to do to take advantage of any benefits they offer. Several were designed specifically to help residents and business owners save money.
Tax Changes for Business Owners, Homeowners
Under Illinois HB 2755, several changes were made to provide tax credits and other tax breaks to small businesses operating in the state. If you made certain investments in 2025, employed people who fit a specific profile, or derived income from a pass-through corporation, these are important changes to know about as you prepare to file your individual or business tax return in April 2026.
REV Illinois and MICRO Investment tax credits apply to those who made specific investments in vehicles and manufacturing. Specifically,
- REV is applicable to businesses that invested in energy-efficient vehicles or clean energy technology. For those who qualify, the tax credit is deducted from the total taxes due.
- The MICRO credit is for small manufacturers who expanded their operations and staff in 2025, qualifying for tax credit. Taxes are reduced by the amount of investment credit earned.
- Your business may be eligible for a $7,500 credit per employee if they are “returning citizens” who were recently incarcerated. The maximum credit allowed is $1 million per year.
- Homeowners and other residents will see a 1 percent reduction in state taxes on groceries, unless local officials adopt a 1 percent increase.
These tax-credit changes have varying effects on typical households but are worth noting if you qualify (e.g., small business-owners, employers, or families considering hiring someone eligible).
Corporate and pass through income changes
If you have a farm, small business, or side hustle, the following changes under HB 2755 tax changes for 2025 income could be important to you:
- Global Intangible Low-Taxed Income (GILTI), which impacts companies doing business internationally, has been reset. Deductions are now limited to 50 percent of income for Illinois taxes, which could raise taxes for some.
- New rules for allocation and apportionment of income from partnerships, S-corporations and other passthrough entities have changed. This can affect the amount you pay if your income is derived from a small business.
Catch Up On Debt Through Tax Amnesty
If you owe past-due taxes for state licensing fees or from income earned through remote retail sales, there are amnesty opportunities in 2026. Find out if you’re eligible for relief from past due amounts or related penalties by contacting the Illinois Department of Revenue and filing within the deadlines stated.
Other Recent Changes to Illinois Tax Law
In the past few years incremental changes have been made to Illinois income tax laws that shift the burden on individuals and small businesses. Here are some that may lower your taxes if you qualify:
- Expanded Earned Income Tax Credit. The earned income tax credit was expanded in recent years to encompass low- and moderate-income individuals including childless workers ages 18-25 and workers over age 65 without dependents. This applies to income-eligible residents only.
- Personal exemptions were raised in 2023, even for those who rent their homes.
- Teachers of K-12 classrooms are given tax credit for income spent on classroom materials.
- Child tax credits were increased for those with a child under age 12 and for sole proprietors with dependent children.
How to Capture All Applicable Tax Breaks
People who are managing a growing family or trying to run a small business may find it difficult to stay current with tax law changes in Illinois. An experienced business and tax attorney from Legacy & Life Law Firm can help your business capture as many tax credits and deductions as possible. Call for a consultation.