Illinois' franchise tax is part of the state's annual report filing and of the Application for Authority filed by foreign corporations (form BCA 13.15). It is one of the most complex Secretary of State annual filings.
Historically, companies handed the Illinois annual report to their tax accountant, because the instructions are complex, the paid-in capital and apportionment figures are easy to get wrong, and filing late adds penalties and interest under 805 ILCS 5/16.05. But now, customers can file it directly through Discern.
The franchise tax applies to corporations, both foreign and domestic, under 805 ILCS 5/15.35 and 805 ILCS 5/15.65. LLCs are not subject to it. This article is focused on foreign corporations (those domestically registered outside of Illinois, e.g., Delaware).
When is the Illinois franchise tax due?
Franchise taxes are due with your Illinois annual report. Under 805 ILCS 5/14.10, the report must be delivered to the Secretary of State within the 60 days immediately preceding the first day of the anniversary month. In practice, that means filing by the end of the month prior to your anniversary month.
Foreign corporations also owe an initial franchise tax at the time of filing the Application for Authority, per 805 ILCS 5/15.65. For more on registering in Illinois, see our guide to Illinois foreign registration nexus rules.
The Illinois annual report
An Illinois annual report has a few components.
The annual report itself (form BCA 14.05)
The franchise tax calculation
In some cases, additional forms must be attached, namely form BCA 14.30, when you have unreported changes in paid-in capital during the year
The annual report itself includes standard questions found on many Secretary of State annual reports: basic business information, officer and director information, and so on. The last part of the form, and the most complex part, focuses on paid-in capital, apportionment, and the franchise tax calculation.
Paid-in capital
The annual report asks about your issued shares and your paid-in capital, including the amounts already on record with the Secretary of State. If either has changed since you last reported it, file BCA 14.30 with your annual report.
805 ILCS 5/1.80(j) defines paid-in capital as the cash and other consideration received for share issuances (less expenses), plus contributions from shareholders, plus amounts added by board or shareholder action through a share dividend or share split, minus reductions allowed under the Act. The Act consolidated the older "Stated Capital" and "Total Paid-in Capital" concepts into this single term, as noted on form BCA 14.01.
Calculating franchise tax for Illinois
Illinois franchise tax is calculated by multiplying 0.001 by an estimate of the portion of your business that takes place in Illinois, multiplying that by paid-in capital, then adding penalties and interest (if applicable) and a filing fee. The rate of 1/10 of 1% is set by 805 ILCS 5/15.45 for domestic corporations and 805 ILCS 5/15.75 for foreign corporations. The annual report form has a worksheet to calculate what you owe.
Calculate an allocation factor
This is Illinois' calculation of what portion of your business takes place in Illinois
Sum the total of your "Gross Amount of Business Transacted" plus "Value of Property" in Illinois, and divide it by that same sum for everywhere
Carry it to six decimal places, per the official SOS annual report guide
Calculate Illinois capital
Multiply your total paid-in capital by the allocation factor
Paid-in capital is measured as of the last day of the third month preceding the anniversary month
Calculate your franchise tax
Multiply Illinois capital by .001; the minimum is $25
Apply the exemption, covered below: as of Jan. 1, 2025, if your total franchise tax liability is $10,000 or less, you pay $0 in franchise tax. You will still owe filing fees, however
The maximum annual franchise tax is $2,000,000 under 805 ILCS 5/15.75 for foreign corporations
Add penalties and interest under 805 ILCS 5/16.05. If late to file, calculate two numbers and add them together:
Penalty: multiply franchise tax by 10% (§16.05(a))
Interest: multiply franchise tax by 2% for each month late or part thereof, minimum $1 (§16.05(f))
Add a filing fee, which is $75 under 805 ILCS 5/15.10(o)
Total due for the annual report is franchise tax plus penalties and interest plus the $75 fee, and online filings also carry a payment processor fee.
Filing BCA 14.30 when issued shares or paid-in capital change
If your paid-in capital or issued shares have changed since you last reported them to the Illinois Secretary of State, you must file BCA 14.30 with your annual report, submitted on paper in the same envelope. Sometimes this form is called the Cumulative Report of Changes in Issued Shares or Paid-in Capital, or the "Cumulative Report."
You report contributions to and reductions in paid-in capital that you have not previously reported, then run three calculations to determine any additional tax.
Calculate the cumulative change
This is the change in paid-in capital since it was last reported to the Secretary of State
If it's a net reduction, this can't reduce the basis for the annual franchise tax until the subsequent year, per 805 ILCS 5/14.30(f)
Calculate taxable Illinois capital
Multiply the cumulative change by the applicable Illinois allocation factor; Note 3 on the form specifies which factor to use
Calculate additional franchise tax
Multiply the taxable Illinois capital by .0015, rounded to the nearest cent. This is a distinct, higher rate than the 0.001 annual franchise tax rate, and is correct as written
Add penalties and interest if BCA 14.30 is late: a 10% penalty on the franchise tax (§16.05(a)), plus interest of 2% for each month late or part thereof, minimum $1 (§16.05(c))
Add a filing fee, which is $5
Total due for BCA 14.30 is franchise tax plus penalties and interest plus the $5 fee.
Exemptions from franchise tax
Illinois exempts an initial amount of franchise tax liability each year: $1,000 for 2021 through 2023, $5,000 for 2024, and $10,000 from January 1, 2025 under P.A. 103-592, signed June 7, 2024. Subsection (d) of 805 ILCS 5/15.35 and 5/15.65 states that on and after January 1, 2025, the first $10,000 in liability is exempt from the tax imposed under that section.
Repeal proposals exist but are not law. HB 5526 would raise the exemption to $100,000 for 2027 and repeal the tax effective January 1, 2028; SB 3441 would repeal it effective January 1, 2029. As of August 2026, neither bill has been enacted, and the tax remains in effect.
The Secretary of State ran a franchise tax amnesty for penalties and interest from October 1 to November 15, 2025. The FY2026 budget bill signed June 16, 2026 also includes a franchise tax and license fee amnesty program; no additional window beyond the 2025 program has been announced as of this writing.
Other forms you may need to file with your Illinois annual report
Two attachment requirements apply to certain corporations. Companies subject to EEO-1 filing requirements must attach the Workforce Demographic Data portion of their EEO-1 to their annual reports, per 805 ILCS 5/14.05(m). The EEOC voted on July 21, 2026 to propose rescinding the federal EEO-1 obligation, but the Illinois attachment requirement still applies.
Public companies listed on a major US exchange that have their principal executive office in Illinois must also file BCA 8.12, the Female and Minority Directors Report, which carries a $25 filing fee.
Franchise taxes on initial foreign registration
Foreign corporations owe an initial franchise tax when they register in Illinois on form BCA 13.15. Under 805 ILCS 5/15.65, that initial tax is due at the time of filing the Application for Authority, computed at 15/100 of 1% with a $25 minimum. The application itself carries a $150 filing fee per the SOS fee schedule.
Simplify your Illinois franchise tax compliance with Discern
Illinois franchise tax runs through paid-in capital, apportionment, and two coordinated forms. Discern tracks your Illinois anniversary month and sends deadline notifications before the annual report comes due. Delaware franchise tax is calculated and filed automatically; every other state, including Illinois, gets deadline tracking and notifications rather than filing automation. Discern also provides registered agent services in Illinois.
Fund and holding-company teams carrying dozens of corporations juggle a separate Illinois anniversary month for every entity plus a different report deadline in each additional state where those entities are registered. Discern keeps those deadlines, paid-in capital histories, and registered agent coverage in one place, jurisdiction by jurisdiction.
Book a demo with Discern to see deadline tracking across your full entity portfolio.
Frequently asked questions about Illinois franchise tax
Here are quick answers to the questions corporations ask most often about Illinois franchise tax filings.
Is the Illinois franchise tax being repealed?
No. HB 5526 and SB 3441 remain pending in the 104th General Assembly and have not been enacted as of August 2026.
Do LLCs pay the Illinois franchise tax?
No. Illinois LLCs file a separate annual report with no franchise tax component, per the SOS LLC filing instructions.
What happens if I file my Illinois annual report late?
Under 805 ILCS 5/16.05, you owe a 10% penalty on the delinquent franchise tax plus interest of 2% for each month (or part of a month) late, with a $1 minimum.
Updated on
2026-08-14
