IL HB5318

Eliminates the "80% foreign activity" exclusion that allows multinational corporations to exclude foreign subsidiaries from Illinois combined tax reporting, effective for taxable years ending on or after January 1, 2027.

Requires foreign entities with 80% or more business activity outside the United States to be included in a taxpayer's unitary business group for combined reporting purposes starting in 2027.

Establishes joint and several liability for all members of a combined reporting group for tax obligations.

Modifies deduction rules for interest and intangible expenses paid to foreign affiliates previously excluded from unitary groups, with certain exceptions for arm's-length transactions.

Expands the definition of "United States" for tax purposes to include the 50 states, District of Columbia, U.S. territories and possessions, and areas where the U.S. has jurisdiction over natural resource exploration.