ILLINOIS ENTERPRISE ZONE PROGRAM
TAX QUESTIONS AND ANSWERS

DIVIDEND DEDUCTION

What is the dividend deduction? - The Illinois Income Tax Act 35 ILCS 5/203 provides that taxpayers may deduct from their taxable income an amount equal to those dividends which were paid to them by a corporation which conducts substantially all of its operations in an enterprise zone or zones.

Can dividends from companies like Commonwealth Edison be deducted? - No. The firm must conduct substantially all of its operations within a zone or zones, and firms with locations throughout the state (such as Commonwealth Edison, GTE, Pioneer, AT&T, Sears, Occidental Petroleum, etc.) do not fit this definition.

Who is an eligible taxpayer? - Individuals, corporations, partnerships, trusts and estates are eligible to take the dividend deduction on their Illinois income tax returns.

Which dividends may be subtracted? - Only dividends paid on or after the date of the zone certification or before the last day of your taxable year may be deducted.

Is there a list of companies doing substantially all of their business in enterprise zones? - No. Corporations must be contacted directly to verify their eligibility.

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