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SB 3486

INC TAX-COMBINED REPORTING

104th Regular Session Introduced by Javier Cervantes and 13 co-sponsors

Illinois bill requiring multi-state corporations to pay income tax based on combined profits rather than per-state allocation to prevent profit-shifting and increase state revenue.

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Bill Summary · SB 3486

Legislative bill overview

SB 3486 proposes implementing combined reporting for Illinois corporate income tax, a method that requires multi-state corporations to calculate taxes based on their total combined income rather than income attributed to each state separately. This approach is designed to prevent tax avoidance strategies where companies shift profits to low-tax jurisdictions while maintaining operations in Illinois.

Why is this important

Combined reporting could significantly increase corporate tax revenue for Illinois, potentially generating hundreds of millions in additional state income. However, it would increase compliance costs for multi-state businesses operating in Illinois and could influence corporate location decisions, making it a consequential tax policy change with both revenue and economic competitiveness implications.

Potential points of contention

  • Business compliance burden: Multi-state corporations would face increased administrative complexity and costs in calculating combined tax liability, potentially disproportionately affecting smaller regional businesses
  • Economic competitiveness concerns: Illinois could become less attractive for corporate headquarters or expansion if combined reporting results in higher effective tax rates compared to neighboring states without such requirements
  • Revenue projections uncertainty: Actual revenue gains depend on corporate response and IRS regulations; some businesses may relocate, reducing the net tax benefit while others adjust accounting practices

Compiled from official sources — confirm details with the bill’s official record.

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