IL SB1956

Amends the Illinois Income Tax Act to modify provisions regarding addition modifications for interest paid to related foreign persons or entities that would otherwise be part of a taxpayer's unitary business group but use different income apportionment methods under Section 304

For taxable years ending on or after December 31, 2025, eliminates the exception that previously allowed taxpayers to avoid the addition modification if interest was paid to a person subject to net income tax in a foreign country or state (other than mandatory unitary reporting states)

Establishes new allocation rules for taxpayers subject to IRC Section 163(j) business interest limitations, requiring that disallowed interest deductions be allocated first to non-foreign persons before being allocated to foreign related parties

Applies similar changes to intangible expenses and costs paid to related foreign persons, narrowing the exceptions available to taxpayers for taxable years ending on or after December 31, 2025

Effective immediately upon becoming law