Illinois Compiled Statutes
35 ILCS 5/ - Illinois Income Tax Act.
Article 3 - Allocation And Apportionment Of Base Income

(35 ILCS 5/Art. 3 heading)

(35 ILCS 5/301) (from Ch. 120, par. 3-301)
Sec. 301.
General Rule.
(a) Residents. All items of income or deduction which
were taken into account in the computation of base income for the taxable year
by a resident shall be allocated to this State.
(b) Part-year residents. All items of income or deduction which were
taken into account in the computation of base income for the taxable year
by a part-year resident shall, for that part of the year the part-year
resident was a resident of this State, be allocated to this State and, for
the remaining part of the year, be allocated to this State only to the
extent provided by Section 302, 303 or 304 (relating to compensation,
nonbusiness income and business income, respectively).
(c) Other persons.
(Source: P.A. 90-491, eff. 1-1-98; 90-562, eff. 12-16-97.)

(35 ILCS 5/302) (from Ch. 120, par. 3-302)
Sec. 302.
Compensation paid to nonresidents.
(a) In general. All items of compensation paid in this State (as
determined under Section 304(a)(2)(B)) to an individual who is a
nonresident at the time of such payment and all items of deduction directly
allocable thereto, shall be allocated to this State.
(b) Reciprocal exemption. The Director may enter into an agreement with
the taxing authorities of any state which imposes a tax on or measured by
income to provide that compensation paid in such state to residents of this
State shall be exempt from such tax; in such case, any compensation paid in
this State to residents of such state shall not be allocated to this State.
All reciprocal agreements shall be subject to the requirements of Section
2505-575 of the Department of Revenue Law (20 ILCS
2505/2505-575).
(c) Cross references.
(Source: P.A. 90-491, eff. 1-1-98; 91-239, eff. 1-1-00.)

(35 ILCS 5/303) (from Ch. 120, par. 3-303)
Sec. 303. (a) In general. Any item of capital gain or loss, and any
item of income from rents or royalties from real or tangible personal
property, interest, dividends, and patent or copyright royalties, and prizes
awarded under the Illinois Lottery Law, and, for taxable years ending on or after December 31, 2019, wagering and gambling winnings from Illinois sources as set forth in subsection (e-1) of this Section, and, for taxable years ending on or after December 31, 2021, sports wagering and winnings from Illinois sources as set forth in subsection (e-2) of this Section, to the extent such item constitutes
nonbusiness income, together with any item of deduction directly allocable
thereto, shall be allocated by any person other than a resident as provided
in this Section.
(b) Capital gains and losses.
(c) Rents and royalties.
(d) Patent and copyright royalties.
(e) Illinois lottery prizes. Prizes awarded under the Illinois Lottery Law are allocable to this State. Payments received in taxable years ending on or after December 31, 2013, from the assignment of a prize under Section 13.1 of the Illinois Lottery Law are allocable to this State.
(e-1) Wagering and gambling winnings. Payments received in taxable years ending on or after December 31, 2019 of winnings from pari-mutuel wagering conducted at a wagering facility licensed under the Illinois Horse Racing Act of 1975 and from gambling games conducted on a riverboat or in a casino or organization gaming facility licensed under the Illinois Gambling Act are allocable to this State.
(e-2) Sports wagering and winnings. Payments received in taxable years ending on or after December 31, 2021 of winnings from sports wagering conducted in accordance with the Sports Wagering Act are allocable to this State.
(e-5) Unemployment benefits. Unemployment benefits paid by the Illinois Department of Employment Security are allocable to this State.
(f) Taxability in other state. For purposes of allocation of income
pursuant to this Section, a taxpayer is taxable in another state if:
(g) Cross references.
(Source: P.A. 101-31, eff. 6-28-19; 102-40, eff. 6-25-21.)

(35 ILCS 5/304) (from Ch. 120, par. 3-304)
Sec. 304. Business income of persons other than residents.
(a) In general. The business income of a person other than a
resident shall be allocated to this State if such person's business
income is derived solely from this State. If a person other than a
resident derives business income from this State and one or more other
states, then, for tax years ending on or before December 30, 1998, and
except as otherwise provided by this Section, such
person's business income shall be apportioned to this State by
multiplying the income by a fraction, the numerator of which is the sum
of the property factor (if any), the payroll factor (if any) and 200% of the
sales factor (if any), and the denominator of which is 4 reduced by the
number of factors other than the sales factor which have a denominator
of zero and by an additional 2 if the sales factor has a denominator of zero.
For tax years ending on or after December 31, 1998, and except as otherwise
provided by this Section, persons other than
residents who derive business income from this State and one or more other
states shall compute their apportionment factor by weighting their property,
payroll, and sales factors as provided in
subsection (h) of this Section.
(1) Property factor.
(2) Payroll factor.
(3) Sales factor.
(b) Insurance companies.
(c) Financial organizations.
(c-1) Federally regulated exchanges. For taxable years ending on or after December 31, 2012, business income of a federally regulated exchange shall, at the option of the federally regulated exchange, be apportioned to this State by multiplying such income by a fraction, the numerator of which is its business income from sources within this State, and the denominator of which is its business income from all sources. For purposes of this subsection, the business income within this State of a federally regulated exchange is the sum of the following:
"Federally regulated exchange" means (i) a "registered entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B), or (C), (ii) an "exchange" or "clearing agency" within the meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such entities regulated under any successor regulatory structure to the foregoing, and (iv) all taxpayers who are members of the same unitary business group as a federally regulated exchange, determined without regard to the prohibition in Section 1501(a)(27) of this Act against including in a unitary business group taxpayers who are ordinarily required to apportion business income under different subsections of this Section; provided that this subparagraph (iv) shall apply only if 50% or more of the business receipts of the unitary business group determined by application of this subparagraph (iv) for the taxable year are attributable to the matching, execution, or clearing of transactions conducted by an entity described in subparagraph (i), (ii), or (iii) of this paragraph.
In no event shall the Illinois apportionment percentage computed in accordance with this subsection (c-1) for any taxpayer for any tax year be less than the Illinois apportionment percentage computed under this subsection (c-1) for that taxpayer for the first full tax year ending on or after December 31, 2013 for which this subsection (c-1) applied to the taxpayer.
(d) Transportation services. For taxable years ending before December 31, 2008, business income derived from furnishing
transportation services shall be apportioned to this State in accordance
with paragraphs (1) and (2):
(e) Combined apportionment. Where 2 or more persons are engaged in
a unitary business as described in subsection (a)(27) of
Section 1501,
a part of which is conducted in this State by one or more members of the
group, the business income attributable to this State by any such member
or members shall be apportioned by means of the combined apportionment method.
(f) Alternative allocation. If the allocation and apportionment
provisions of subsections (a) through (e) and of subsection (h) do not, for taxable years ending before December 31, 2008, fairly represent the
extent of a person's business activity in this State, or, for taxable years ending on or after December 31, 2008, fairly represent the market for the person's goods, services, or other sources of business income, the person may
petition for, or the Director may, without a petition, permit or require, in respect of all or any part
of the person's business activity, if reasonable:
(g) Cross reference. For allocation of business income by residents,
see Section 301(a).
(h) For tax years ending on or after December 31, 1998, the apportionment
factor of persons who apportion their business income to this State under
subsection (a) shall be equal to:
(Source: P.A. 101-31, eff. 6-28-19; 101-585, eff. 8-26-19; 102-40, eff. 6-25-21; 102-558, eff. 8-20-21.)

(35 ILCS 5/305) (from Ch. 120, par. 3-305)
Sec. 305. Allocation of Partnership Income by partnerships and
partners other than residents.
(a) Allocation of partnership business income by partners other
than residents. The respective shares of partners other than
residents in so much of the business income of the partnership as is
allocated or apportioned to this State in the possession of the partnership
shall be taken into account by such partners pro rata in accordance with
their respective distributive shares of such partnership income for the
partnership's taxable year and allocated to this State.
(b) Allocation of partnership nonbusiness income by partners other
than residents. The respective shares of partners other than
residents in the items of partnership income and deduction not taken
into account in computing the business income of a partnership shall be
taken into account by such partners pro rata in accordance with their
respective distributive shares of such partnership income for the
partnership's taxable year, and allocated as if such items had been
paid, incurred or accrued directly to such partners in their separate
capacities.
(c) Allocation or apportionment of base income by partnership.
Base income of a partnership shall be allocated or apportioned to
this State pursuant to Article 3, in the same manner as it is allocated
or apportioned for any other nonresident.
(c-5) Taxable income of an investment partnership, as defined in Section 1501(a)(11.5) of this Act, that is distributable to a nonresident partner shall be treated as nonbusiness income and shall be allocated to the partner's state of residence (in the case of an individual) or commercial domicile (in the case of any other person). However, any income distributable to a nonresident partner shall be treated as business income and apportioned as if such income had been received directly by the partner if the partner has made an election under Section 1501(a)(1) of this Act to treat all income as business income or if such income is from investment activity:
(d) Cross reference. For allocation of partnership income or
deductions by residents, see Section 301(a).

(Source: P.A. 93-840, eff. 7-30-04.)

(35 ILCS 5/306) (from Ch. 120, par. 3-306)
Sec. 306.
Allocation or apportionment of income by estates and trusts.
The items of income and deduction taken into account by an estate or
trust in computing its base income for a taxable year shall be allocated or
apportioned to this State to the extent provided by Sections 301 through
304 and, to the extent properly paid, credited or required to be
distributed to beneficiaries for such taxable year, shall be deemed to have
been so paid, credited or distributed pro rata.

(Source: P.A. 76-2402.)

(35 ILCS 5/307) (from Ch. 120, par. 3-307)
Sec. 307.
Allocation of income by estate or trust beneficiaries other than residents.
(a) Allocation of business income by beneficiaries other than
residents. To the extent the business income of an estate or trust
allocated or apportioned to this State in the possession of
the estate or trust
is deemed to have been paid, credited or distributed by the estate or trust
under Section 306, the respective shares of beneficiaries of the estate
or trust, other than residents, in such business income shall be taken into
account by such beneficiaries in proportion to their respective shares of
the distributable net income of the estate or trust for its taxable year
and allocated to this State.
(b) Allocation of nonbusiness income by beneficiaries other than
residents. To the extent items of estate or trust income and deduction
not taken into account in computing the business income of an estate or
trust are deemed to have been paid, credited or distributed by the estate
or trust under Section 306, the respective shares of beneficiaries of the
estate or trust, other than residents, in such items shall be taken into
account by such beneficiaries in proportion to their respective shares of
the distributable net income of the estate or trust for its taxable year,
and allocated as if such items had been paid, incurred or accrued directly
to such beneficiaries in their separate capacities.
(c) Accumulation and capital gain distributions. In the event that,
in any taxable year of a trust, the trust makes an accumulation
distribution or a capital gain distribution (both as defined in Section 665
of the Internal Revenue Code), the total of the amounts which are
included in the income of each beneficiary of such trust, other than a
resident, under Sections 668 and 669 of the Internal Revenue Code shall
be allocated to this State to the extent that the items of income included
in such distribution were allocated or apportioned to this State in the
hands of the trust.
(d) Cross references. (1) For allocation of amounts received by
nonresidents from certain employee trusts, see Section 301 (b) (2).
(2) For allocation of estate or trust income or deductions by residents,
see Section 301 (a).

(Source: P.A. 84-550.)

(35 ILCS 5/308) (from Ch. 120, par. 3-308)
Sec. 308.

Allocation of Subchapter S Corporation Income by Subchapter
S Corporations and Shareholders Other Than Residents. (a) Allocation of
Subchapter S corporation business income by shareholders other than residents.
The respective shares of shareholders other than residents in so much of
the business income of the Subchapter S corporation as is allocated or
apportioned to this State in the hands of the Subchapter S corporation
shall be taken into account by such shareholder pro rata in accordance with
the requirements of Section 1366 of the Internal Revenue Code for the
Subchapter S corporation's taxable year and allocated to this State.
(b) Allocation of Subchapter S corporation nonbusiness income by
shareholders other than residents. The respective share of shareholders
other than residents in the items of Subchapter S corporation income and
deduction not taken into account in computing the business income of the
Subchapter S corporation shall be taken into account by such shareholders
pro rata in accordance with the requirements of Section 1366 of the
Internal Revenue Code for the corporation's taxable year, and allocated as
if such items had been paid, incurred or accrued directly to such
shareholders in their separate capacities.
(c) Allocation or apportionment of base income by the Subchapter S
corporation. Base income of a Subchapter S corporation shall be allocated
or apportioned to this State pursuant to this Article 3 in the same manner
as it is allocated or apportioned for any other nonresident.
(d) This Section shall not apply to any corporation for which there is
in effect a federal election to opt out of the provisions of the Subchapter
S Revision Act of 1982 and have applied instead the prior federal Subchapter
S rules as in effect on July 1, 1982.

(Source: P.A. 83-1352.)