R&D Binder

Short answer. Complete the research and development worksheet in Schedule 1299-I, then enter the credit under credit code 5340 on the Schedule 1299 that matches your return: 1299-D for corporations filing IL-1120, 1299-A for partnerships and S corporations filing IL-1065 or IL-1120-ST, and 1299-C for individuals filing IL-1040. The schedule is filed with the return. There is no separate application or certificate.

Key facts

Credit code5340
WorksheetSchedule 1299-I, research and development worksheet
CorporationsSchedule 1299-D with Form IL-1120
Partnerships and S corporationsSchedule 1299-A with IL-1065 or IL-1120-ST
IndividualsSchedule 1299-C with IL-1040
Separate applicationNone; filed with the return

Which schedule you file

The credit and its code are the same for everyone. The schedule follows the return.

FilerReturnSchedule for the credit
C corporationForm IL-1120Schedule 1299-D
Trust or estateForm IL-1041Schedule 1299-D
Partnership or LLC taxed as oneForm IL-1065Schedule 1299-A
S corporationForm IL-1120-STSchedule 1299-A
Individual, including a pass-through ownerForm IL-1040Schedule 1299-C

Step by step

The same five steps apply to every filer, whatever the schedule.

  1. Work out your Illinois qualifying expenses on Schedule 1299-I. The research and development worksheet asks for Illinois wages for qualified services, supplies, computer rental, 65 percent of contract research, and basic research payments (corporations only). Column A is the average for the three prior years; Column B is this year. Only research done in Illinois counts.
  2. Count missing base years as zero. If you weren't doing business in Illinois in a base-period year, that year goes into the average as zero, which lifts the credit for a company that is new to the state.
  3. Carry the totals to your schedule and apply 6.5 percent. Corporations enter them in Step 1 of Schedule 1299-D; partnerships, S corporations, and individuals in Step 2 of Schedule 1299-A or 1299-C. The credit is 6.5 percent of the amount this year exceeds the base.
  4. List the credit under code 5340. In Step 3 of the schedule, enter the credit on the line with credit code 5340. When you hold several Illinois credits, they are used in order of the earliest expiration date first.
  5. File the schedule even if you can't use the credit yet. IDOR requires the schedule for any year you earn a credit, whether or not it offsets tax that year. That is how the five-year carryforward gets on the record.

Partnerships and S corporations

The entity computes the credit, and the owners use it.

A partnership or S corporation computes the credit on Schedule 1299-A and reports each owner's share on Schedule K-1-P, line 52h, with a breakdown by owner attached. Each owner then enters that amount in the distributive-share column of their own Schedule 1299 and attaches the K-1-P.

For tax years ending on or after December 31, 2023, 35 ILCS 5/251 allocates the credit by each owner's distributive share, unless the partners or shareholders agree to a different split in a written agreement executed before the return's due date.

Deadlines and limits

There is no separate filing window to track.

The schedule goes in with the return and is due when the return is due, including extensions. Illinois has no application or certificate for this credit: the statute sets no approval step, and IDOR's lists of credits that need a certificate from another agency don't include it.

The credit is nonrefundable and offsets Illinois income tax only, not the personal property replacement tax. Unused credit carries forward five years. The credit is authorized for tax years ending before January 1, 2037, after Public Act 104-468 extended it in June 2026. Some IDOR materials, including the 2025 Schedule 1299-I, still show earlier end dates.

What to keep

Illinois asks for little at filing time, but the Department of Revenue can ask for more later.

IDOR tells filers to keep their worksheets, calculations, and Schedule 1299-I, and warns that it may ask for more. The 2025 schedules and instructions don't list federal Form 6765 as an attachment, but Illinois uses the Section 41 definition of qualified research, so the federal documentation is what backs the Illinois number, limited to research done in Illinois.

R&D Binder produces the federal Section 41 binder and, as a $995 add-on, an Illinois workpaper with the Illinois-only expense breakdown, the three-year base, and the values for your Schedule 1299. We don't file the schedule or sign the return. Whether your facts qualify is for your CPA to decide.

The full state overview, the federal Section 41 work it builds on, and related state guides:

Sources

Every claim on this page traces to a primary authority. Each source below is independent and verifiable.

Get documentation built to survive an exam

R&D Binder produces the federal Section 41 binder and the Illinois state workpaper from one engagement, both built to survive an exam.

Estimate your credit See the sample binder