How to Transfer or Move a LLC from Illinois to Texas

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Redomestication, also known as redomesticating, refers to the lesser-known legal process of transferring or moving the "home state" of an existing corporation, partnership, or LLC to a new state. It means keeping your existing company name, credit, and federal employer identification number (FEIN) without wasting time and money creating a new business entity, applying for foreign registration, or moving assets between companies.
— Prof. Chad D. Cummings, CPA, Esq., M.S.T., LL.M., CMA, CFE, CIA, CRMA, CISA, CITP, FCPA, PFS, CFP

Texas destination-state requirements

A redomestication into Texas is governed by Chapter 10, Subchapters C and D, of the Texas Business Organizations Code together with the law of Illinois. The transaction requires a written Plan of Conversion, the approvals required by the governing documents and applicable law, a Certificate of Conversion, and, for a Texas filing entity, a Certificate of Formation. The Texas filing must be coordinated with the Illinois outbound instrument so the same LLC continues without interruption.

Tax considerations when moving a LLC from Illinois to Texas

Illinois imposes a 4.95 percent individual income tax. For a C corporation, the regular Illinois income tax is 7.00 percent, and the personal property replacement tax adds 2.50 percent, producing a combined 9.50 percent rate before credits and other adjustments. An LLC follows its tax classification: a partnership or S corporation generally passes income through to its owners, but Illinois separately imposes a 1.50 percent replacement tax on most partnerships and S corporations. Eligible entities can also elect the 4.95 percent pass-through entity tax, with corresponding owner credits. Owner taxation ordinarily follows the distributive share of taxable income, whether or not cash is distributed. The Illinois Department of Revenue's income tax rates and partnership guidance explain the separate returns and replacement-tax exceptions.

Illinois generally imposes a 6.25 percent state sales tax on general merchandise, with additional local taxes varying by delivery or selling location and transaction type. A significant change took effect January 1, 2026: Illinois eliminated its 1 percent state grocery tax, while authorizing municipalities and counties to impose a separate 1 percent grocery tax. Grocery purchases therefore did not become uniformly tax-free, and applicable transit-district taxes can remain. Retailers moving a LLC from Illinois to Texas should update their location-specific tax tables instead of applying an old statewide average. The 2026 grocery-tax bulletin provides the implementation rules. Illinois also retains an estate tax with a $4 million exclusion; the owner's estate exposure depends on personal domicile and property situs, not simply the entity's formation state.

A corporate move also requires a separate review of the Secretary of State's franchise tax. Illinois did not repeal that tax: 805 ILCS 5/15.35 exempts the first $10,000 of applicable liability beginning in 2025. Redomestication does not erase taxes for earlier periods. Continued Illinois operations, employees, or taxable sales may preserve filing obligations after the governing-law change, so the expected savings should be calculated using the business's actual post-move activity and each owner's residence.

For example, $100,000 of taxable replacement-tax income produces $1,500 of tax for a nonexempt partnership before credits, independently of any elective PTE payment. The PTE credit should be modeled separately from replacement tax. Retailers can confirm location-based rates through the official sales-tax filing guidance, including multiple-site reporting when operations remain in more than one location.

Texas imposes no individual income tax and prohibits a tax on individuals' net income under Texas Constitution article VIII, section 24-a. Texas also has no conventional corporate net income tax. Its franchise tax, however, applies to many corporations, LLCs, and other taxable entities, including businesses treated as pass-through entities for federal income-tax purposes. A federal S corporation election or partnership classification does not, by itself, exempt the business from Texas franchise-tax law.

For 2026 and 2027 report years, the franchise-tax no-tax-due threshold is $2.65 million in annualized total revenue. The general rates are 0.375 percent for qualifying retail or wholesale businesses and 0.75 percent for other businesses, applied to the taxable margin apportioned to Texas. Eligible businesses with no more than $20 million in annualized revenue can use the EZ computation at 0.331 percent, subject to its separate rules. The Texas Comptroller's franchise-tax guidance provides the current thresholds and methods. The threshold is not a deduction from taxable margin and does not establish that all income above it is taxed at the general rate. The compensation deduction limit is $480,000 per person for these report years. Compare the available margin methods using the business's actual revenue, eligible costs, compensation, and Texas apportionment before choosing a computation method.

Businesses at or below the revenue threshold generally no longer file a No Tax Due Report for report years 2024 and later, but an applicable Public Information Report or Ownership Information Report remains required. The ordinary annual deadline is May 15. Texas's state sales tax is 6.25 percent, with local taxes bringing the combined rate as high as 8.25 percent. Sales-tax, unemployment, property-tax, and licensing obligations may continue even when no franchise tax is payable. Texas has no current separate estate or inheritance tax.

Redomesticating a LLC from Illinois to Texas changes its governing jurisdiction. Actual tax savings depend on the owners' residence, the company's classification, and the location of its operations and receipts. Continuing employees, property, inventory, or qualifying sales in Illinois can preserve that state's filing and payment obligations. Do not close an account merely because the Texas conversion documents have been accepted.

South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), permits sales-tax nexus without the former physical-presence prerequisite. 15 U.S.C. § 381 instead provides limited net-income-tax protection for specified solicitation of tangible-goods orders. Wisconsin Department of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214 (1992), interprets that protection. These authorities address different taxes and activities. Review nexus separately for each state, including remote sales and post-move operations, before projecting that redomestication will eliminate a former state's tax burden.

Specific legal requirements to transfer a LLC to Texas from Illinois

Illinois has state-specific statutory, approval, filing, fee, and sequencing requirements that must be coordinated with Texas law. The requirements below are the origin-state requirements applicable to this transaction.

1. Illinois permits an LLC or corporation to redomesticate directly to another state. The governing framework is the Illinois Entity Omnibus Act, 805 ILCS 415, Article 3, rather than an LLC-only procedure. Under 805 ILCS 415/301, an Illinois entity can become a foreign entity of the same type if the law of Texas authorizes the transaction. An Illinois LLC remaining an LLC, or an Illinois corporation remaining a corporation, therefore uses domestication. A simultaneous change from LLC to corporation is a different transaction and requires the conversion provisions and a separate tax analysis. The first step for a LLC leaving Illinois is to confirm that the proposed destination accepts that specific entity and transaction.
2. The internal Plan of Domestication must be substantive. 805 ILCS 415/302 requires the current entity's name and type, the resulting entity's name and jurisdiction, and the manner in which ownership interests will be converted. The plan must also contain the proposed public formation document and the full text of private governing rules that will be in a record, such as the destination operating agreement or bylaws. Identify each ownership class and describe whether its economic rights remain unchanged. This matters even when the owners, business name, and ownership percentages will be identical after the move: the destination governing documents still need affirmative approval.
3. Approval depends on the entity's governing rules and the statutory fallback. 805 ILCS 415/303 first looks to applicable domestication approval requirements. Where none exist, it uses the specified merger approval rules; for a corporation, that means a merger procedure requiring shareholder approval. A noncorporate entity without an applicable approval rule generally needs all interest holders to approve. Separately examine any owner's consent rights if the transaction would create personal liability for future entity obligations. The written consent or meeting minutes should identify the applicable voting provision and the votes obtained. A manager's signature on the state form is not a substitute for the required owner approval.
4. Illinois requires a Statement of Domestication filed with the Secretary of State. 805 ILCS 415/305 specifies the names and jurisdictions before and after the move, the entity type, and the approval recital. For a resulting foreign entity that is not registered in Illinois, include the mailing address used to forward legal process. The formation-document attachment requirement in that statute concerns a resulting Illinois filing entity. An outbound filing should therefore be prepared for its actual direction, using the destination's separate formation or domestication requirements. Retain the complete approved plan internally unless the chosen statutory filing method requires or deliberately includes it in the public record.
5. Use the current EOA 305 form and its accepted payment methods. The official Statement of Domestication, revised March 2026, calls for submission in duplicate and identifies a $100 base filing fee. Its paper-payment instructions accept a cashier's check, certified check, money order, or an Illinois attorney's or CPA's check; an ordinary personal check is not listed as acceptable. The Secretary of State's fee schedule lists an additional $200 for expedited domestication service. Destination filing fees and any professional charges are separate. Budget the destination filing and any required certificates separately so that the total reflects the actual closing package.
6. Coordinate effectiveness using the statute, particularly when using a delayed closing. Section 305 permits a later effective date and time no more than 30 days after filing. The March 2026 EOA 305 form refers to a 90-day limit, creating a material inconsistency with the statutory text. A closing should stay within the statutory 30-day window and resolve any filing-office instruction before submission. Give both filing agents the same intended effective time, including the time zone, and specify how acceptance in Texas will be confirmed. The plan should also identify who may authorize corrections or abandonment; a rejected destination filing should not be addressed by informally changing already approved ownership terms.
7. Corporate franchise tax remains relevant in 2026. Under 805 ILCS 5/15.35, the first $10,000 of applicable corporate franchise-tax liability is exempt beginning in 2025. That exemption is not a general repeal, and it does not erase older liabilities. Review the Illinois corporate record and any franchise-tax assessment before fixing the closing budget. An LLC should not be assigned a corporate paid-in-capital tax merely because it is a limited liability entity. Its Illinois income-tax classification, replacement-tax obligations, and Secretary of State filing duties are separate questions. Reconcile outstanding annual reports and any administrative-status problems early enough to obtain accurate filing information.
8. A certificate of good standing and good standing itself are different matters. Section 305 does not list an Illinois certificate of good standing as a universal attachment for every outbound domestication. Nevertheless, Texas, a lender, or a regulated-business licensing authority may require current status evidence. Order certificates for the recipients and age limits actually involved, and confirm the entity's legal name against the Illinois record. A certificate showing active status does not prove that every tax return has been filed or every contractual consent has been obtained. Avoid describing a certificate as categorically unnecessary where the destination statute or a financing condition makes it part of the closing requirements.
9. The domesticated business continues as the same legal entity. 805 ILCS 415/306 preserves uninterrupted entity identity and continues property without a transfer, reversion, or impairment. Existing debts and other liabilities remain, and pending proceedings continue under the statute. Domestication does not require a separate liquidation of an operating company simply to change its governing jurisdiction. It also does not discharge an owner's existing personal obligation or a company guaranty. The closing record should identify the continuing entity's original formation date and new governing jurisdiction so that counterparties can connect the accepted Illinois and destination documents to the same business.
10. Statutory continuity should be matched with transaction-specific contract review. Examine financing documents and important customer agreements for express language addressing domestication, conversion, a change of domicile, or a change in governing organizational law. A clause triggered by the jurisdictional change can matter even when the transaction is not an asset assignment. Determine whether insurance policies and professional licenses require an address update, notice, or separate approval, and obtain any required consent before effectiveness. Use the same legal name and effective date in the bank's records and the company resolutions. Federal tax classification and EIN treatment require their own analysis; the Illinois continuity statute does not guarantee every federal tax result.
11. Continuing Illinois operations can require foreign qualification after the move. A Texas entity that keeps conducting business in Illinois should evaluate registration as a foreign entity and continued registered-agent coverage. The Secretary of State's statutory authority to receive process for certain prior obligations is not a substitute for an ordinary registered agent where ongoing foreign qualification is required. Distinguish the Illinois domestic record from the foreign registration needed after the transaction. If business operations actually leave Illinois, use accepted closing evidence to support appropriate account changes. Do not cancel an Illinois registration, payroll account, or sales-tax account merely because the domestication form has been mailed.
12. Complete the tax and records work against the effective closing, not an assumed departure date. Partnerships may need Form IL-1065 and S corporations Form IL-1120-ST, including Illinois replacement tax and any elected PTE tax, as explained in the Department of Revenue's partnership guidance. Mark returns final only when the corresponding filing obligation ends; retained Illinois income or operations can require continued returns. The permanent company file should contain the signed plan and approvals, accepted documents from both states, and evidence of required notices or consents. Assign responsibility for the first destination annual filing and any continuing Illinois foreign-entity filing so that the new domicile is reflected consistently after closing.

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