Member of Russell Bedford International, a global network of independent professional service firms.
Member of Russell Bedford International, a global network of independent professional service firms.
MSA, MST | In-Charge Staff Accountant
On December 2, 2025, the Internal Revenue Service (IRS) released a draft of the new Form 4547, titled Trump Account Election(s). This form allows authorized individuals (typically parents or guardians) to elect to open a “Trump Account” for eligible minors. These accounts are part of a new federal initiative designed to help children build financial assets early in life. One of the most notable features of Form 4547 is the option to receive a $1,000 “Pilot Program Contribution” from the U.S. Treasury for children born between 2025 and 2028.
According to the IRS instructions, the the most efficient way to file Form 4547 is by submitting it with the authorized individual’s electronically filed current-year federal income tax return. For the initial rollout, this would likely coincide with the filing of the 2025 tax return.
If the form is not filed with the tax return, it may still be filed separately using paper filing.
The IRS has announced plans to launch an online portal at trumpaccounts.gov in mid-2026. This portal may eventually allow authorized individuals to make Trump Account elections online. However, it is important to note that contributions to Trump Accounts will not be allowed before July 4, 2026.
In early December, the Michael & Susan Dell Foundation announced a $6.25 billion philanthropic commitment to fund 25 million Trump Accounts. Through this initiative, the foundation plans to contribute $250 per account for children who:
This program is intended to support children who do not qualify for the $1,000 federal Pilot Program Contribution. Parents can assess potential eligibility by entering their zip code into Census Reporter which provides median income data from the U.S. Census Bureau. Additional details about the Dell Foundation contribution aren’t available yet but we will provide an update as soon as more substantive information becomes available.
To learn more about how Trump accounts, Form 4547 or related contribution programs may impact your family, please contact one of the trusted advisors at Cray Kaiser. We can help you navigate new developments and plan accordingly.
CPA | CK Principal
As it does every year, the Internal Revenue Service recently announced the inflation-adjusted 2026 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Additionally, tax professionals and their clients may use the optional standard mileage rate to calculate the deductible costs of operating vehicles for moving purposes for certain active-duty members of the Armed Forces, and now, under the One, Big, Beautiful Bill, certain members of the intelligence community.
Beginning on Jan. 1, 2026, the standard mileage rates for the use of a car (van, pickup or panel truck) are:
The business standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set (it can only be changed by Congressional action) and has been 14 cents per mile for over 15 years.
Taxpayers always have the option of calculating the actual costs of using their vehicle for business rather than using the standard mileage rates. Notice 2026-10 contains additional information.
If you have questions about the standard mileage rate or calculating the actual cost of using your vehicle for business, please contact Cray Kaiser.
CPA | Tax Manager
Beginning January 1, 2026, the rate for the Chicago Personal Property Lease Transaction rate increased from 11% to 15%. This change applies to invoices for all leases, including non-possessory leases for computers to manipulate data supplied by customers. The tax impacts businesses and individuals within the City of Chicago who are leasing personal property used in Chicago.
Understanding how this tax works and whether or not it applies to you is important to avoid compliance issues and unexpected costs.
This tax rate increase may impact you if:
Unless your customer qualifies as an exempt lessee, you must ensure the tax is calculated, charged and remitted at the new rate beginning January 1, 2026.
As part of its 2026 budget the City of Chicago approved additional tax changes, including:
These changes may affect both businesses and consumers.
The City of Chicago has published more details about all 2026 tax rate changes, including the Personal Property Lease Transaction Tax on its website.
Chicago tax rules, especially those involving leased property and software, can be complex. If you are concerned about these tax increases, unsure how they impact your business or how to properly calculate them, the tax team at Cray Kaiser is here to help. Contact us to ensure your business remains compliant and is prepared for the 2026 Chicago tax changes.
In this video, Matt Richardson and Damian Contreras, Tax Seniors at CK, walk you though how to use our secure client portal. From setting up your account and uploading documents to paying invoices, completing your tax organizer and receiving notifications, this overview will help to make managing your tax information simple and stress-free.
Topics Covered:
How to Access the Portal & Setting Up Your Account – 0:08
How to Upload Files – 1:40
How to Make a Payment – 3:45
How to Edit and Upload Your Tax Organizer – 5:42
Making Changes to Information on Your Tax Organizer – 11:37
Electronic Signatures – 12:05
Forgot Your Password – 13:07
Transcript:
I’m Matt Richardson. I’m a tax senior at Cray Kaiser. I’m Damian Contreras. I’m also a tax senior here at Cray Kaiser. And today we’re going to walk you through our portal that we use and started back in January of 2024. So Matt’s going to take you through the steps of how to set up the portal and how you initially get the invite to the portal.
Yeah, so I’ve just clicked on the link in the email, the notification email you get for setting up your new portal account. It takes you here, and then all you have to do is create a password. And once you’ve done that, you’re in. Once you load in, it brings you to our home landing page, which prompts you at the very top with if there’s any outstanding balances due, as well as right below that is. your to-do list and any recent files that are in your portal for you. If you have multiple accounts, for example, if you have an individual, if you have a trust, if you have a business, if you have children’s returns, you’re managing, to switch between the different accounts, you’ll go down here. There’s a name and there’s a personal. You can switch between a personal and then it’ll show any others that are connected. We just have a fake business client here connected. So anything that’s connected to you with Cray Kaiser, you’ll have a selection there to toggle between. So when you’re uploading documents, you can upload the documents to the specific portal for whatever the documents are for. That way we can kind of make sure everything’s staying nice and sorted.
And now let’s say you are getting your tax documents and you want to give them to us we don’t necessarily even have to request them from you all you have to do is simply go into your portal and upload them and we get notifications that you’re adding new files into your folder. So Matt will show you how to add a new file into your portal. So all you’ve got to do is go over here to files, add a file and then you can select. It’ll bring you over to your computer’s files that anything that you have downloaded to your computer and you can go in and access them and you can click on as many or as little files as you’d like to upload. So you can upload any file type that you would like. The only file type that we request you don’t upload is any JPEGs and pictures. We prefer Word documents, PDFs, Excels, anything of that nature is a great file to upload and our system can handle it. You can even upload zip files if that’s easier for you. If you’re adding in password-protected documents, when you are prompted to rename the file, maybe include the password with it, or else we’re going to have to reach out to you and ask, what’s the password to access this? It is a secure portal, so you are able to do that. Absolutely. And also, if you have a window open, you can just drag and drop as well. Very easy to add something.
Something we have people ask about is how to sort files in the portal. What happens is once you upload it, we’ll get a notification and it will prompt us to sort the files into whatever the relevant tax year or folder is within your portal. So the client doesn’t need to worry about dragging into a particular folder. You can just drop it in here in the file tray and we’ll take it from there. The only thing we ask is you put it in the respective client’s folder. So that’s the only indexing we need you to do is to index it in the proper client, not necessarily the right year and folder type.
So then we can also go down to the billing portion of it. So if you want to go there, let’s say you have a bill due. Any of your bills will be prompted right in the Canopy portal. And you can still, if you’d prefer to make a paper check, you can do that and mail it. But it will give you your invoice in here or you can very easily go and make a payment or view your payment history or what outstanding invoices you have. And to make a payment all you have to do is click the make a payment button. Even if you have no balance due just click on additional payment and you can type in what whatever amount you’re able to pay at that time and you just hit continue and you can pay with either a credit or debit card. There is a fee attached to that. Or you can do a direct bank account debit by putting in your account and routing number.
Whenever we upload documents for you, invoices for you, copies of your tax returns, payment vouchers, we will send you an email notification that’ll prompt you exactly with what we put in there, what’s it called, is it an invoice, is it a copy of your 2024 tax return. So all of that will be sent to you via email and then you can log into your portal, view it, download it, and see all of that within your portal. And it’ll come to you by entity as well. So if you have your personal and then your kids or your business, it will say, you know, uploaded in John Doe’s file or, you know, John Doe Inc’s file for you. So it’ll come to you for each portal you have access to.
Currently, you are not able to see the status of your tax return in the portal. That’s something you’d have to reach out to us for. And whoever’s on your team here at Cray Kaiser would respond to you promptly on where your tax return sits in the queue.
Also something that we’re going to be implementing for the 2025 tax year as it’s creeping up for your individual tax returns is you’re going to see your organizer as a to-do in your personal portal. So when you log in, Matt will show you right there. It says organizer 2025. All you have to do is open that up. We’ll have a PDF file attached. Open it up and there will be our letter and our questionnaire to fill out. And then there will also be your prior information for you to review and see what you need to send us this year. And you can fill this out in the PDF, attach it, re-upload it to us, and we can receive it that way. If you prefer to print it out and re-scan, that’s possible as well. Yeah, and when we send it over to you, you’re going to get an email notification telling you that there’s a new to-do in there for you. It’s going to be the 2025 organizer. And we just request that you review it and write any pertinent information on there. Did you switch jobs, open new accounts, have a kid, expand your family? Are the kids in college? And we have questions on the organizer’s first and second page that go over all major life changes that are very common, that can impact your tax return.
This step we’re going to show you how to download and fill out your organizer through the pdf file. And if you’re not as comfortable with the technology you can still print it out and re-scan it and upload to us but I think for a lot of people it’ll be easier just to do it in the PDF and re-upload it. So the first thing to make sure you have, you do need to have a PDF editing software. So Adobe is a common one that a lot of people have, but there are a lot of other softwares as well. You should be able to do it in any program that allows you to edit a PDF. So make sure you have that. Some of them are browser based. Some of them are desktop based. Again, pretty much anything will let you edit a PDF. So when you’re ready to fill out your organizer, you can just go to the portal. You’ll either have it in your files. There should also be a to-do list item for you as well once we upload them. And then the important thing here is we’ve had some people fill it out in the viewer here, through Canopy. It will let you sometimes edit or type things on here, but unfortunately it does not save back to the portal when you edit just through this viewer. So you do need to actually download it to your desktop computer and then edit it. So we’ll download. And so once you’re in and have it open, you can go through and add all the information you need to. Most of these editors will have comment tools so you can add a check mark, click for yes, no on all these questions. So that’s typically pretty simple. Doesn’t matter, check mark, X, whatever you like to use. If you need to add data or numbers, scroll down to one of these sections for more information. So if you need to add information, there are usually multiple ways you can add a text box. You can add that and tell us, I bought a new rental this year. I’m not sure what you need, but I included some documents. So you can add a note like that for us with a text box. Some of them also allow you to type text directly onto the document without a text box. You know, it looks a little different, but again, as long as you’re putting the information there, we’ll be able to handle it. Same goes for the fields that have number inputs. So if you’re putting in your charity contributions, you can just go in, edit, type the text on here, and then we’ll be good. So what you need to do then, you need to save this once you’re done filling it out. Save the file. And if you want to, just to help us track things, you could always rename it something like filled out, just so we can keep the original one straight from your filled in one. You don’t have to do that, but that would just be a little helpful if you can do it. And then go to files, add a file, and attach your organizer. And then we’ll have it in our portal. So it’ll be in our portal. If we open it up, we’ll see the changes you added to it, the check marks, the numbers, the other information you’ve added. That said, once you’re done, all you do is re-upload it to the portal, add any comments that you’d like, and mark it as complete. And then it’ll let us know that it’s ready for us to review and complete your tax return. If anything changes after you’ve uploaded the initial organizer at that point, it’s probably better just to email or give us a call. Whoever your contact here is and let us know what information has changed that’s definitely something that happens pretty frequently and I think once we’ve got the organizer and looked at it it’ll be much you know easier for us to track down the change and see what we need to do if you just call us and say oh hey I forgot to tell you about this new account I opened or whatever it is then we can kind of get right to it.
We do have a feature within the portal to send electronic signatures. Most of our electronic signatures will come through DocuSign and they’ll go directly to your email from our tax software or our personal DocuSign accounts for those those items. And sadly the IRS is slowly developing accepting electronic signatures so there are still some where we’ll publish documents in the portal that you’re going to have to print out and put a wet signature on. But if we can do things electronically, we definitely try to do those electronic signatures and make it very easy into your emails.
The portal has an automation system in it. So once we set up that to-do for you, we can choose whether it emails you daily, weekly, monthly with reminders until it’s completed. So we’ll probably turn it on to where every week or every other week it’s sending you a reminder to say, hey, this task is in there, this organizer is in there for you to complete. And then until it’s completed, you’re going to keep getting those emails.
What if you forgot your password to the portal? So to get into your portal, all you have to do is go to the Cray Kaiser website, craykaiser.com, and then in the left bar, it’s going to have a little option for portal. So you just click on portal, and it will immediately take you to the Cray Kaiser portal. Once you’re on that landing page, it’ll tell you to put in your email and your password, and there will be an option for forgot password, and it’ll walk you through the steps to reset it.
Thank you for listening to Matt and mine’s explanation and steps on how to use the portal. And if you have any questions, feel free to reach out to your team member here at Cray Kaiser, a member of our admin team, and we’ll further assist you with the portal.
Accounting & Advisory Services (CAAS) Manager
Understanding the difference between net income and retained earnings is essential for any business owner who wants to build long-term profitability. While these two accounting terms are closely related, they serve different purposes and offer valuable insights into your company’s financial health.
Retained earnings represent the leftover net income after dividends have been paid to owners or shareholders. Instead of being distributed these profits are reinvested, back into the business forming a fundamental part of equity. These funds can be leveraged for various productive uses, including financing new projects, investing in research and development, or upgrading infrastructure.
In other words, retained earnings reflect how much profit your business has chosen to retain for future growth rather than pay out. This healthy practice forms an important part of the shareholders’ equity section on your balance sheet and also strengthens a company’s financial position over time.
The formula for retained earnings is a simple formula:
Retained Earnings (RE) = Beginning RE + Net Income – Dividends.
For example:
If a business. begins the year with $300,000 in retained earnings, earns $100,000 in net income and pays out $20,000 in dividends, the ending retained earnings would be $380,000.
Net income measures how much money your company earns after all taxes, operating costs and expenses have been deducted. It’s a key indicator of the company’s profitability for a specific period. It’s important to note that while net income contributes directly to retained earnings, the two serve different purposes:.
It’s also important to note that net income is taxable, while retained earnings are not, since taxes have already been paid on those profits.
Dividends represent the portion of profits distributed to shareholders, typically paid in cash or as stock dividends. To maintain healthy dividends, a company must ensure they have sufficient retained earnings to support these payouts while also funding growth.
You can find retained earnings in the equity section of your balance sheet, typically on the right side, along with liabilities and shareholder equity. Some companies also prepare a separate statement to track retained earnings, showcasing the inflow and outflow of these critical funds.
Even simple calculations can go wrong if not handled carefully. When tracking retained earnings:
Accurate calculations ensure your financial statements reflect the true state of your company’s growth and performance.
Both net income and retained earnings are more than just numbers, they’re essential indicators of financial health and business growth strategy. By understanding these concepts:
A clear understanding of net income versus retained earnings helps business owners build smarter growth strategies and maintain financial resilience.
Ready to delve deeper? Our Client Accounting and Advisory Services can review your Retained Earnings and help you plan for sustainable business growth. Contact us today to schedule a consultation.
Accounting & Advisory Services (CAAS) Manager
In business, cash is king. For small to medium-sized companies, understanding where your money comes from and where it goes is not just a strategy; it’s essential for survival and growth.
Whether you’re a startup founder or a seasoned business owner, managing cash flow can be the difference between thriving and struggling. Here are 10 powerful reasons why tracking your cash flow should be a top financial priority and how it can help your business stay healthy, flexible and future-ready.
1. Get a Clear Picture of Your Spending
When you track your cash flow you see exactly how your money is allocated and spent. This helps you spot wasteful spending, control costs and understand your true financial position beyond what your profit and loss statement shows.
2. Measure Business Performance Accurately
Comparing your cash flow forecasts to actual results, shows how well your business is performing. If your projections don’t match reality, you’ll know where to adjust, making your future plans more reliable and achievable.
3. Always Know Your Cash Balance
Understanding your cash on hand and working capital helps determine what your business can do today. Tracking these helps you make smarter decisions about paying bills, investing excess funds or seeking external financing before cash gets tight.
4. Discover Ways to Boost Cash Flow
Analyzing cash flow data enables businesses to discover practical ways to bring in more money, such as optimizing inventory management or improving how quickly customers pay. These simple tweaks can significantly improve your liquidity.
5. Plan Ahead for Short-Term Needs
A cash flow statement acts like a financial dashboard. It shows you what funds you have available right now, helping you plan short-term goals, pay vendors on time and avoid last minute cash shortages.
6. Making More Informed Business Decisions
When you know your cash position, you can avoid poor financial decisions, like delaying purchases until customer payments arrive. Better insights lead to better financial judgment.
7. Protect Your Vendor and Supplier Relationships
Consistent, positive cash flow ensures you can pay vendors and suppliers promptly. This builds trust and strengthens vital business relationships.
8. Prepare for Financial Emergencies
Unexpected slow seasons or expenses can happen to any business. Regular cash flow reviews help you spot red flags early and create backup plans to handle challenges before they become crises.
9. Support Long-Term Growth Strategy
Detailed cash flow analysis is essential for long-term planning. It helps you prioritize key projects, manage investments and position the company for future success.
10. Create a Solid Foundation for Business Expansion
Strong cash flow management lays the groundwork for growth opportunities, like hiring more staff, opening new locations or launching new products, without falling into financial turmoil.
Tracking cash flow is not merely about monitoring money; it’s a strategic advantage. It keeps your operations running smoothly, supports better decision-making, and positions your business for growth.
If you’re unsure where to start, please reach out to Cray Kaiser’s CAAS Department. We can help you set up practical systems to monitor and manage your cash flow effectively. Contact us today to schedule a consultation meeting and learn how to strengthen your business’ financial foundation.
CPA | CK Principal
The “One Big Beautiful Bill” signed into law over the July 4th weekend introduces major updates to estate and gift tax rules that could significantly affect your estate planning strategy. Prior to the Act, the gift and estate tax exemptions were slated to scale back to about $7 million per taxpayer in 2026.
The following are the highlights involving the estate and gift tax:
Beginning January 1, 2026, the federal estate and gift tax exemption will increase to:
This increased from $13.99 million per individual exemption available in 2025. This new amount will also be adjusted annually for inflation after 2026. This exemption is made “permanent” by the Act, but as history reminds us, a future change in control of the government means nothing is ever truly permanent.
The annual gift exclusion remains at $19,000 per recipient for 2025. This means you can give up to $19,000 per individual without reducing your lifetime estate tax exemption. The annual exclusion will continue to adjust for inflation each year.
This portability feature remains a powerful estate planning tool for married couples aiming to preserve wealth and minimize estate taxes.
Prior to OBBBA, the federal exemption was expected to drop to about $7 million per taxpayer in 2026. This pending “sunset” led many individuals to accelerate estate planning strategies before the deadline.
With the new, higher $15 million exemption, that state of urgency has eased. But strategic estate planning is still essential, especially for individuals or couples with estates near or above the new thresholds.
For taxpayers residing in Illinois, the federal exemption is not the only number that matters. Illinois imposes its own estate tax on estates over $4 million.
We recommend speaking to your advisors to make sure your trusts are structured to maximize federal and state tax benefits.
Even though OBBBA extends and expands the federal exemptions, estate planning remain crucial for individuals and families of all wealth levels. Laws can change, so the best way to protect your legacy is to keep your estate plan current, flexible and aligned with your goals.
If you have questions about the OBBBA affects your estate, gift or trust planning, contact the team at Cray Kaiser to help you evaluate your options and ensure your plan is up to dat
In part 2 of our video series about college foundations, Dan Swanson, an assurance manager at CK, shares his expertise in supporting college foundations. With more than a decade of experience, Dan breaks down the complexities behind managing scholarship funds, maintaining accurate financial reporting and leveraging financial systems to ensure transparency and donor confidence. He explains how thoughtful accounting practices directly translate into real opportunities for students. He highlights why strong financial oversight isn’t just important, but essential to fulfilling a foundation’s mission.
Transcript:
Welcome everybody. I’m very excited to be here today. My name is Dan Swanson. I am an assurance manager here at Cray Kaiser. I’ve been with the firm for about 12, 13 years now. And I wanted to talk about a subject matter that I’m very passionate about. And that is college foundations and some of the important factors that we need to be considering, some of their hot topic issues.
I wanted to kind of talk about foundations and how we here at CK have helped foundations on a number of different areas. So when you think of college foundations, what do you think about? What are some of their big struggles? What are they, what’s their mission, what’s their vision, what are their values. So with college foundations, they get funds, they get dollars, they get money, they get to invest, and hopefully those earnings, it earns, returns, which then turn into scholarships, turns into real dollars for real students to pay for real education. So sounds simple, but when you have, if you only had like two or three scholarship funds, not a big deal, but some of our clients that we serve have over a hundred different individual unique scholarship funds or program funds, and they have millions of dollars of investments. So how do we ensure that everybody’s getting their fair share of these investment earnings? How do we ensure that the financial statements are telling an accurate story to the board, to the executive director, to the finance committee, to all those involved to make sure the end of the day, the maximum amount of dollars are going out to students to serve the mission. So that’s where we here at Cray Kaiser can come in and use all of our knowledge and experience to really help these foundations and a number of different factors.
You know, personally, I’ve helped just with the system setup. You know, what financial system are they using? Is there any setup issues we need to update, adjust, add to it, what type of modules does their system have? Timeliness of financial reporting, are they getting accurate financial statements monthly?
So some shared experience I have while working with foundations, some of the things that keep them up at night. I kind of touched upon this as individual scholarship funds or individual program funds. Your more sophisticated donors are going to ask, how’s my fund doing? How’s my scholarship doing? How much do I have left in that fund? How much did you spend in scholarship funds this year? What did it earn? Can we do better? You know, if my balance is running low, do I need to write another check to get my scholarship funds back up there? So in order to answer all those questions, what do you think we need to do? What’s super important? What’s super important is, you know, accurate financial reporting, both on an overall basis and by an individual scholarship and or project fund.
So the way I tell people is if you’re like a for-profit company, you have kind of one set of books that you need to monitor and track. With these nonprofit foundations, you could have 200 different trial balances or general ledgers that you have to track. Because each individual scholarship fund is its own kind of entity. So you can see where it’s not super simple and straightforward. You really got to be very careful and very meticulous about tracking this activity.
So how do we do that? How do we make sure it’s over cumbersome? Because we the goal is we want to give these donors financial reporting accurately and timely because that’s going to drive them to open up their checkbooks and bring in more funds and more opportunities to these to the students. Again what’s the goal? We want to give out scholarships to help educate young students.
So kind of where I come in, where I get passion is about, is we can see, you know, by accurate financial reporting, by accurate accounting, where it has a direct impact, you know, on America’s youth. So it’s pretty cool. So from that standpoint, it’s very cool. Accounting is cool, right? Accounting is cool, guys, you know, because it translates to real dollars to real students. You know, how do we pay it forward? Well, have good solid accounting records will pay it forward and increase scholarship funds.
Other issues I’m seeing, a lot of these foundations use the same type of software package. And over the years, I’ve gotten pretty good at learning the system and its full capabilities. So what I’m always trying to do is, I understand that this is the financial package that has always gone to the board each month, but what else can we do? What are they looking at? You know, I’ll sit in the board meetings or sit in the trenches. You know, what is it that you hone in on? What is it that you’re looking at? What’s important to you? And then I’ll try to see if the system can generate a better, more improved report to help them do what they need to do to keep the foundation on the straight and arrow. Again, transparency is your best friend. So how do I utilize that system to its fullest potential? Because it’s a powerful system, so let’s utilize it. So what is it that you need? What is it that you want? And then let’s work towards that. So that’s kind of fun. It’s fun to kind of see what, hear what they want, what they need, and then going back to the system and seeing if we can generate a new report and make it part of that standard monthly financial package. So that’s a lot of fun.
Some of the other issues I see is there’s different, like there’s like a dual-based system where one tracks all the donor information and all the contribution information. And then there’s a different system, which is your standard kind of general ledger accounting software. and they talk to each other and they’re integrated to each other. So making sure that both systems talk appropriately is super key. You know, if we have a bunch of donor information, a bunch of contributions in one system and it’s not being linked correctly to the other system, you can see how financial reporting can become out of whack and then you can see how come year-end. When it comes to audit time, it’s going to create a lot of headaches. So how do we get in front of that? How do we make sure the system is set up initially? So both systems are talking to each other and are integrated. So again, over the years, I’ve kind of learned both systems and we know how to make them work. Or at least know who to contact to help us when we notice issues.
If you have any questions that you would want to ask me, you know, please feel free to reach out. You can go to the Cray Kaiser website and you can find me. Again, I’m Dan Swanson. I’m an assurance manager here.
CPA | Tax Manager
In June 2025, Illinois enacted major tax reforms as part of the 2026 Illinois Budget bill. The changes have a direct impact on how businesses, particularly multi-state and privately-held companies, calculate, report, and allocate taxes.
If your company is operating in Illinois or conducting business remotely within the state, it’s essential to understand these updates and adjust your tax strategy now. The new legislation includes the following key provisions:
Effective for tax years ending on or after December 31, 2025, Illinois will replace the Joyce apportionment rule with the Finnigan rule for unitary combined reporting.
What This Means:
Why It Matters:
This is a major shift from the old Joyce rule, which only included sales from group members with an Illinois nexus. The result? Many multi-state businesses will see a higher Illinois apportionment percentage and, consequently, potentially higher Illinois tax liability.
Starting with tax years ending on or after December 31, 2025, corporate taxpayers can only deduct 50% of the amount of global intangible low-taxed income (GILTI) under IRC Section 951A from taxable income.
Previously, businesses could deduct 100% of GILTI. This change effectively increases Illinois’ taxable income for corporations with foreign operations or subsidiaries.
Effective for tax years ending on or after June 16, 2025, Illinois will change how capital gains and losses from the sale or exchange of S corporation shares or partnership interests are sourced.
How It Works:
What Changed:
Previously, capital gains and losses from selling or exchanging an interest in a pass-through entity generally were sourced based on the taxpayer’s state of residence. Now, non-residents selling Illinois-based business interests may owe Illinois tax and should confirm whether their home state allows a credit for taxes paid to Illinois.
The new Advancing Innovative Manufacturing (AIM) for Illinois Tax Credit aims to encourage investment in domestic manufacturing facilities.
Key Details:
Remote Retailer Transaction Threshold Eliminated
Starting January 1, 2026, Illinois will remove the 200- transaction threshold used to determine nexus for sales and use tax.
From now on, remote retailers, marketplace facilitators, and marketplace sellers will need to collect and remit Illinois sales tax if their Illinois sales exceed $100,000 annually, regardless of transaction count.
Service Occupation and Service Use Tax Expansion
Also beginning January 1, 2026, the Leveling the Playing Field for Illinois Retail Act will expand to cover service providers. Service businesses with nexus in the state will be responsible for collecting both state and local sales taxes when a service is provided from outside the state to an Illinois customer. The applicable tax rate is calculated based on the customer’s location (destination basis). Prior to this change, out of state service businesses collected only the state 6.25% tax rate.
The 2026 Illinois Budget Bill introduces some of the most significant tax law changes in recent years. From combined apportionment rules to GILTI limitations and new manufacturing credits, these updates will reshape how businesses plan and report taxes in Illinois.
At Cray Kaiser, we specialize in helping business owners navigate these complex changes. Our team can help you update your strategy and ensure compliance while optimizing your Illinois tax position. Contact Cray Kaiser to discuss how the 2026 Illinois tax changes may affect your business and how to prepare effectively.
Taxes are a fact of life, but thoughtful and timely planning can help to reduce their impact. By estimating your liability, exploring potential savings and making timely decisions, you can better manage your tax burden. That’s why we are excited to offer our 2025-2026 Tax Planning Guide to assist you.
