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Synopsis As Introduced Amends the Illinois Income Tax Act. Increases the amount of the earned income tax credit from 5% of the federal credit to: (i) 10% of the federal tax credit for taxable years beginning on or after January 1, 2005; (ii) 15% of the federal tax credit for taxable years beginning on or after January 1, 2007; and (iii) 20% of the federal tax credit for taxable years beginning on or after January 1, 2009. Effective immediately.
Fiscal Note (Department of Revenue)
In tax year 2003, the earned income credit was worth a total of approximately $66 million, of which approximately $13 million was paid by the Department of Human Services from Temporary Assistance for Needy Families Block Grant Moneys (TANF Block Grant Moneys) and approximately $53 million was from reduced taxes. Assuming a continuation of the historic 4% annual growth in the amount of the credit, the amount of credit in future years as amended by House Bill 470 would be as follows:
(1) In Tax Year 2004 the total State Earned Income Credit would be worth approximately $69 million, of which approximately $14 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $55 million would result from reduced taxes.
(2) In Tax Year 2005 the total State Earned Income Credit would be worth approximately $143 million, of which approximately $56 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $87 million would result from reduced taxes.
(3) In Tax Year 2006 the total State Earned Income Credit would be worth approximately $148 million, of which approximately $58 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $90 million would result from reduced taxes.
(4) In Tax Year 2007 the total State Earned Income Credit would be worth approximately $229 million, of which approximately $114 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $115 million would result from reduced taxes.
(5) In Tax Year 2008 the total State Earned Income Credit would be worth approximately $238 million, of which approximately $119 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $119 million would result from reduced taxes.
(6) In Tax Year 2009 the total State Earned Income Credit would be worth approximately $326 million, of which approximately $186 million would be paid by the Department of Human Services from TANF Block Grant Moneys and approximately $140 million would result from reduced taxes.
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