103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3738

 

Introduced 2/9/2024, by Sen. Robert Peters

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/216

    Amends the Illinois Income Tax Act. Provides that the credit for ex-felons is renamed the credit for returning citizens. Provides that, for taxable years beginning on or after January 1, 2025, if the qualified returning citizen is employed by the taxpayer primarily at a job site in an underserved area, the amount of the credit for the returning citizen is equal to 25% (currently, 5%) of the qualified wages paid by the taxpayer. Provides that the total credit allowed with respect to each qualified returning citizen may not exceed $5,000 (currently, $1,500), except that, if the qualified returning citizen is employed by the taxpayer primarily at a job site in an underserved area, the credit may not exceed $10,000. Makes other changes. Effective immediately.


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A BILL FOR

 

SB3738LRB103 36899 HLH 67012 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 216 as follows:
 
6    (35 ILCS 5/216)
7    Sec. 216. Credit for wages paid to returning citizens
8ex-felons.
9    (a) For each taxable year beginning on or after January 1,
102007, each taxpayer is entitled to a credit against the tax
11imposed by subsections (a) and (b) of Section 201 of this Act
12in an amount equal to 5% of qualified wages paid by the
13taxpayer during the taxable year to one or more Illinois
14residents who are qualified returning citizens ex-offenders.
15However, for taxable years beginning on or after January 1,
162025, if the taxpayer employs the qualified returning citizen
17primarily at a job site in an underserved area, then the credit
18under this Section is in an amount equal to 25% of the
19qualified wages paid by the taxpayer during the taxable year
20to that qualified returning citizen. For taxable years
21beginning before January 1, 2025, the The total credit allowed
22to a taxpayer with respect to each qualified returning citizen
23ex-offender may not exceed $1,500 for all taxable years. For

 

 

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1taxable years beginning on or after January 1, 2025, the total
2credit allowed to a taxpayer with respect to each qualified
3returning citizen may not exceed $5,000 for all taxable years,
4except that the total credit allowed with respect to a
5qualified returning citizen who is employed by the taxpayer
6primarily at a job site in an underserved area may not exceed
7$10,000 for all taxable years. For the purposes of this
8Section, a qualified returning citizen is employed primarily
9at a job site in an underserved area if at least 50% of the
10taxpayer's working hours during the taxable year occur at a
11job site in an underserved area. For taxable years ending
12before December 31, 2023, for partners, shareholders of
13Subchapter S corporations, and owners of limited liability
14companies, if the liability company is treated as a
15partnership for purposes of federal and State income taxation,
16there shall be allowed a credit under this Section to be
17determined in accordance with the determination of income and
18distributive share of income under Sections 702 and 704 and
19Subchapter S of the Internal Revenue Code. For taxable years
20ending on or after December 31, 2023, partners and
21shareholders of subchapter S corporations are entitled to a
22credit under this Section as provided in Section 251.
23    (b) For purposes of this Section, "qualified wages":
24        (1) includes only wages that are subject to federal
25    unemployment tax under Section 3306 of the Internal
26    Revenue Code, without regard to any dollar limitation

 

 

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1    contained in that Section;
2        (2) does not include any amounts paid or incurred by
3    an employer for any period to any qualified returning
4    citizen ex-offender for whom the employer receives
5    federally funded payments for on-the-job training of that
6    qualified returning citizen ex-offender for that period;
7    and
8        (3) includes only wages attributable to service
9    rendered during the one-year period beginning with the day
10    the qualified returning citizen ex-offender begins work
11    for the employer.
12    If the taxpayer has received any payment from a program
13established under Section 482(e)(1) of the federal Social
14Security Act with respect to a qualified returning citizen
15ex-offender, then, for purposes of calculating the credit
16under this Section, the amount of the qualified wages paid to
17that qualified returning citizen ex-offender must be reduced
18by the amount of the payment.
19    (c) As used in For purposes of this Section: ,
20    "Qualified returning citizen" "qualified ex-offender"
21means any person who:
22        (1) has been convicted of a crime in this State or of
23    an offense in any other jurisdiction, not including any
24    offense or attempted offense that would subject a person
25    to registration under the Sex Offender Registration Act;
26        (2) was sentenced to a period of incarceration in an

 

 

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1    Illinois adult correctional center; and
2        (3) was hired by the taxpayer within 3 years after
3    being released from an Illinois adult correctional center
4    if the credit is claimed for a taxable year beginning
5    before January 1, 2025 or was hired by the taxpayer within
6    10 years after being released from an Illinois adult
7    correctional center if the credit is claimed for a taxable
8    year beginning on or after January 1, 2025.
9    "Underserved area" means a census tract in the State that
10meets one or more of the following conditions:
11        (1) the census tract has a poverty rate of at least 20%
12    according to the latest American Community Survey;
13        (2) 35% or more of the families with children in the
14    census tract are living below 130% of the poverty line
15    according to the latest American Community Survey;
16        (3) at least 20% of the households in the census tract
17    receive assistance under the Supplemental Nutrition
18    Assistance Program (SNAP); or
19        (4) the area has an average unemployment rate, as
20    determined by the Illinois Department of Employment
21    Security, that is more than 120% of the national
22    unemployment average, as determined by the U.S. Department
23    of Labor, for a period of at least 2 consecutive calendar
24    years preceding the first day of the taxable year.
25    (d) In no event shall a credit under this Section reduce
26the taxpayer's liability to less than zero. If the amount of

 

 

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1the credit exceeds the tax liability for the year, the excess
2may be carried forward and applied to the tax liability of the
35 taxable years following the excess credit year. The tax
4credit shall be applied to the earliest year for which there is
5a tax liability. If there are credits for more than one year
6that are available to offset a liability, the earlier credit
7shall be applied first.
8    (e) This Section is exempt from the provisions of Section
9250.
10(Source: P.A. 103-396, eff. 1-1-24.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.