IL HB4937

Repeals provisions in the Illinois Income Tax Act that required taxpayers to add back certain business interest deductions limited under Internal Revenue Code Section 163(j) when calculating Illinois taxable income.

Removes special allocation rules for taxable years ending on or after December 31, 2025, that treated interest deduction limitations as allocable first to non-foreign persons before foreign persons.

Eliminates separate safe harbor exceptions for interest payments that were scheduled to take effect for taxable years ending on or after December 31, 2025.

Maintains existing exceptions allowing interest deductions for payments to foreign entities that are subject to foreign income tax, made at arm's-length terms without tax avoidance purposes, or deemed unreasonable by the taxpayer with clear and convincing evidence.

Takes effect immediately upon becoming law.