As you begin to gather your tax documents, you may want to look closer at your dividends for the year. If you are an Illinois resident, you may be permitted to subtract certain dividends from specific Illinois companies. Under Illinois law, dividends you receive from a corporation that conducts business in a foreign trade zone and is designated a “High Impact Business” are eligible for the subtraction modification from Illinois base income.

Over the past few years, I have worked with a number of clients who received dividends from companies that qualify for dividend subtraction in Illinois.  Depending on the total dividend distribution, this subtraction can be a sizable reduction in Illinois State Income Taxes, especially for shareholders who may have received stock through their employment with the companies.

Currently, the following 4 companies have published letters in the past to their shareholders notifying them of the potential dividend subtraction for Illinois in the past. Below are the most current letters online.

Abbott Laboratories (Tax year 2022 letter)

AbbVie Inc. (Tax year 2022 letter)

Caterpillar Inc (Tax year 2021 letter)

Walgreens Boots Alliance, Inc. (Tax year 2020 letter)

There may be other qualifying companies in Illinois although it is best to receive a letter from the company if you decide to utilize the dividend subtraction on your income tax return.  If you believe you have received dividends from a qualifying company in the past 3 years, you may want to determine if filing an amended Illinois Income Tax Return is worthwhile.

If you have any questions about tax and estate planning, please feel free to contact Trostin, Kantor & Esposito, LLC at (224) 529-0500.

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