Full Text of HB4700 103rd General Assembly
HB4700 103RD GENERAL ASSEMBLY | | | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 HB4700 Introduced 2/6/2024, by Rep. Tim Ozinga SYNOPSIS AS INTRODUCED: | | | Amends the Illinois Income Tax Act. Increases the maximum amount of the education expense credit from $750 to $1,000. Effective immediately. |
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| | A BILL FOR |
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| 1 | | AN ACT concerning revenue. | 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly: | 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Section 201 as follows: | 6 | | (35 ILCS 5/201) | 7 | | Sec. 201. Tax imposed. | 8 | | (a) In general. A tax measured by net income is hereby | 9 | | imposed on every individual, corporation, trust and estate for | 10 | | each taxable year ending after July 31, 1969 on the privilege | 11 | | of earning or receiving income in or as a resident of this | 12 | | State. Such tax shall be in addition to all other occupation or | 13 | | privilege taxes imposed by this State or by any municipal | 14 | | corporation or political subdivision thereof. | 15 | | (b) Rates. The tax imposed by subsection (a) of this | 16 | | Section shall be determined as follows, except as adjusted by | 17 | | subsection (d-1): | 18 | | (1) In the case of an individual, trust or estate, for | 19 | | taxable years ending prior to July 1, 1989, an amount | 20 | | equal to 2 1/2% of the taxpayer's net income for the | 21 | | taxable year. | 22 | | (2) In the case of an individual, trust or estate, for | 23 | | taxable years beginning prior to July 1, 1989 and ending |
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| 1 | | after June 30, 1989, an amount equal to the sum of (i) 2 | 2 | | 1/2% of the taxpayer's net income for the period prior to | 3 | | July 1, 1989, as calculated under Section 202.3, and (ii) | 4 | | 3% of the taxpayer's net income for the period after June | 5 | | 30, 1989, as calculated under Section 202.3. | 6 | | (3) In the case of an individual, trust or estate, for | 7 | | taxable years beginning after June 30, 1989, and ending | 8 | | prior to January 1, 2011, an amount equal to 3% of the | 9 | | taxpayer's net income for the taxable year. | 10 | | (4) In the case of an individual, trust, or estate, | 11 | | for taxable years beginning prior to January 1, 2011, and | 12 | | ending after December 31, 2010, an amount equal to the sum | 13 | | of (i) 3% of the taxpayer's net income for the period prior | 14 | | to January 1, 2011, as calculated under Section 202.5, and | 15 | | (ii) 5% of the taxpayer's net income for the period after | 16 | | December 31, 2010, as calculated under Section 202.5. | 17 | | (5) In the case of an individual, trust, or estate, | 18 | | for taxable years beginning on or after January 1, 2011, | 19 | | and ending prior to January 1, 2015, an amount equal to 5% | 20 | | of the taxpayer's net income for the taxable year. | 21 | | (5.1) In the case of an individual, trust, or estate, | 22 | | for taxable years beginning prior to January 1, 2015, and | 23 | | ending after December 31, 2014, an amount equal to the sum | 24 | | of (i) 5% of the taxpayer's net income for the period prior | 25 | | to January 1, 2015, as calculated under Section 202.5, and | 26 | | (ii) 3.75% of the taxpayer's net income for the period |
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| 1 | | after December 31, 2014, as calculated under Section | 2 | | 202.5. | 3 | | (5.2) In the case of an individual, trust, or estate, | 4 | | for taxable years beginning on or after January 1, 2015, | 5 | | and ending prior to July 1, 2017, an amount equal to 3.75% | 6 | | of the taxpayer's net income for the taxable year. | 7 | | (5.3) In the case of an individual, trust, or estate, | 8 | | for taxable years beginning prior to July 1, 2017, and | 9 | | ending after June 30, 2017, an amount equal to the sum of | 10 | | (i) 3.75% of the taxpayer's net income for the period | 11 | | prior to July 1, 2017, as calculated under Section 202.5, | 12 | | and (ii) 4.95% of the taxpayer's net income for the period | 13 | | after June 30, 2017, as calculated under Section 202.5. | 14 | | (5.4) In the case of an individual, trust, or estate, | 15 | | for taxable years beginning on or after July 1, 2017, an | 16 | | amount equal to 4.95% of the taxpayer's net income for the | 17 | | taxable year. | 18 | | (6) In the case of a corporation, for taxable years | 19 | | ending prior to July 1, 1989, an amount equal to 4% of the | 20 | | taxpayer's net income for the taxable year. | 21 | | (7) In the case of a corporation, for taxable years | 22 | | beginning prior to July 1, 1989 and ending after June 30, | 23 | | 1989, an amount equal to the sum of (i) 4% of the | 24 | | taxpayer's net income for the period prior to July 1, | 25 | | 1989, as calculated under Section 202.3, and (ii) 4.8% of | 26 | | the taxpayer's net income for the period after June 30, |
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| 1 | | 1989, as calculated under Section 202.3. | 2 | | (8) In the case of a corporation, for taxable years | 3 | | beginning after June 30, 1989, and ending prior to January | 4 | | 1, 2011, an amount equal to 4.8% of the taxpayer's net | 5 | | income for the taxable year. | 6 | | (9) In the case of a corporation, for taxable years | 7 | | beginning prior to January 1, 2011, and ending after | 8 | | December 31, 2010, an amount equal to the sum of (i) 4.8% | 9 | | of the taxpayer's net income for the period prior to | 10 | | January 1, 2011, as calculated under Section 202.5, and | 11 | | (ii) 7% of the taxpayer's net income for the period after | 12 | | December 31, 2010, as calculated under Section 202.5. | 13 | | (10) In the case of a corporation, for taxable years | 14 | | beginning on or after January 1, 2011, and ending prior to | 15 | | January 1, 2015, an amount equal to 7% of the taxpayer's | 16 | | net income for the taxable year. | 17 | | (11) In the case of a corporation, for taxable years | 18 | | beginning prior to January 1, 2015, and ending after | 19 | | December 31, 2014, an amount equal to the sum of (i) 7% of | 20 | | the taxpayer's net income for the period prior to January | 21 | | 1, 2015, as calculated under Section 202.5, and (ii) 5.25% | 22 | | of the taxpayer's net income for the period after December | 23 | | 31, 2014, as calculated under Section 202.5. | 24 | | (12) In the case of a corporation, for taxable years | 25 | | beginning on or after January 1, 2015, and ending prior to | 26 | | July 1, 2017, an amount equal to 5.25% of the taxpayer's |
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| 1 | | net income for the taxable year. | 2 | | (13) In the case of a corporation, for taxable years | 3 | | beginning prior to July 1, 2017, and ending after June 30, | 4 | | 2017, an amount equal to the sum of (i) 5.25% of the | 5 | | taxpayer's net income for the period prior to July 1, | 6 | | 2017, as calculated under Section 202.5, and (ii) 7% of | 7 | | the taxpayer's net income for the period after June 30, | 8 | | 2017, as calculated under Section 202.5. | 9 | | (14) In the case of a corporation, for taxable years | 10 | | beginning on or after July 1, 2017, an amount equal to 7% | 11 | | of the taxpayer's net income for the taxable year. | 12 | | The rates under this subsection (b) are subject to the | 13 | | provisions of Section 201.5. | 14 | | (b-5) Surcharge; sale or exchange of assets, properties, | 15 | | and intangibles of organization gaming licensees. For each of | 16 | | taxable years 2019 through 2027, a surcharge is imposed on all | 17 | | taxpayers on income arising from the sale or exchange of | 18 | | capital assets, depreciable business property, real property | 19 | | used in the trade or business, and Section 197 intangibles (i) | 20 | | of an organization licensee under the Illinois Horse Racing | 21 | | Act of 1975 and (ii) of an organization gaming licensee under | 22 | | the Illinois Gambling Act. The amount of the surcharge is | 23 | | equal to the amount of federal income tax liability for the | 24 | | taxable year attributable to those sales and exchanges. The | 25 | | surcharge imposed shall not apply if: | 26 | | (1) the organization gaming license, organization |
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| 1 | | license, or racetrack property is transferred as a result | 2 | | of any of the following: | 3 | | (A) bankruptcy, a receivership, or a debt | 4 | | adjustment initiated by or against the initial | 5 | | licensee or the substantial owners of the initial | 6 | | licensee; | 7 | | (B) cancellation, revocation, or termination of | 8 | | any such license by the Illinois Gaming Board or the | 9 | | Illinois Racing Board; | 10 | | (C) a determination by the Illinois Gaming Board | 11 | | that transfer of the license is in the best interests | 12 | | of Illinois gaming; | 13 | | (D) the death of an owner of the equity interest in | 14 | | a licensee; | 15 | | (E) the acquisition of a controlling interest in | 16 | | the stock or substantially all of the assets of a | 17 | | publicly traded company; | 18 | | (F) a transfer by a parent company to a wholly | 19 | | owned subsidiary; or | 20 | | (G) the transfer or sale to or by one person to | 21 | | another person where both persons were initial owners | 22 | | of the license when the license was issued; or | 23 | | (2) the controlling interest in the organization | 24 | | gaming license, organization license, or racetrack | 25 | | property is transferred in a transaction to lineal | 26 | | descendants in which no gain or loss is recognized or as a |
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| 1 | | result of a transaction in accordance with Section 351 of | 2 | | the Internal Revenue Code in which no gain or loss is | 3 | | recognized; or | 4 | | (3) live horse racing was not conducted in 2010 at a | 5 | | racetrack located within 3 miles of the Mississippi River | 6 | | under a license issued pursuant to the Illinois Horse | 7 | | Racing Act of 1975. | 8 | | The transfer of an organization gaming license, | 9 | | organization license, or racetrack property by a person other | 10 | | than the initial licensee to receive the organization gaming | 11 | | license is not subject to a surcharge. The Department shall | 12 | | adopt rules necessary to implement and administer this | 13 | | subsection. | 14 | | (c) Personal Property Tax Replacement Income Tax. | 15 | | Beginning on July 1, 1979 and thereafter, in addition to such | 16 | | income tax, there is also hereby imposed the Personal Property | 17 | | Tax Replacement Income Tax measured by net income on every | 18 | | corporation (including Subchapter S corporations), partnership | 19 | | and trust, for each taxable year ending after June 30, 1979. | 20 | | Such taxes are imposed on the privilege of earning or | 21 | | receiving income in or as a resident of this State. The | 22 | | Personal Property Tax Replacement Income Tax shall be in | 23 | | addition to the income tax imposed by subsections (a) and (b) | 24 | | of this Section and in addition to all other occupation or | 25 | | privilege taxes imposed by this State or by any municipal | 26 | | corporation or political subdivision thereof. |
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| 1 | | (d) Additional Personal Property Tax Replacement Income | 2 | | Tax Rates. The personal property tax replacement income tax | 3 | | imposed by this subsection and subsection (c) of this Section | 4 | | in the case of a corporation, other than a Subchapter S | 5 | | corporation and except as adjusted by subsection (d-1), shall | 6 | | be an additional amount equal to 2.85% of such taxpayer's net | 7 | | income for the taxable year, except that beginning on January | 8 | | 1, 1981, and thereafter, the rate of 2.85% specified in this | 9 | | subsection shall be reduced to 2.5%, and in the case of a | 10 | | partnership, trust or a Subchapter S corporation shall be an | 11 | | additional amount equal to 1.5% of such taxpayer's net income | 12 | | for the taxable year. | 13 | | (d-1) Rate reduction for certain foreign insurers. In the | 14 | | case of a foreign insurer, as defined by Section 35A-5 of the | 15 | | Illinois Insurance Code, whose state or country of domicile | 16 | | imposes on insurers domiciled in Illinois a retaliatory tax | 17 | | (excluding any insurer whose premiums from reinsurance assumed | 18 | | are 50% or more of its total insurance premiums as determined | 19 | | under paragraph (2) of subsection (b) of Section 304, except | 20 | | that for purposes of this determination premiums from | 21 | | reinsurance do not include premiums from inter-affiliate | 22 | | reinsurance arrangements), beginning with taxable years ending | 23 | | on or after December 31, 1999, the sum of the rates of tax | 24 | | imposed by subsections (b) and (d) shall be reduced (but not | 25 | | increased) to the rate at which the total amount of tax imposed | 26 | | under this Act, net of all credits allowed under this Act, |
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| 1 | | shall equal (i) the total amount of tax that would be imposed | 2 | | on the foreign insurer's net income allocable to Illinois for | 3 | | the taxable year by such foreign insurer's state or country of | 4 | | domicile if that net income were subject to all income taxes | 5 | | and taxes measured by net income imposed by such foreign | 6 | | insurer's state or country of domicile, net of all credits | 7 | | allowed or (ii) a rate of zero if no such tax is imposed on | 8 | | such income by the foreign insurer's state of domicile. For | 9 | | the purposes of this subsection (d-1), an inter-affiliate | 10 | | includes a mutual insurer under common management. | 11 | | (1) For the purposes of subsection (d-1), in no event | 12 | | shall the sum of the rates of tax imposed by subsections | 13 | | (b) and (d) be reduced below the rate at which the sum of: | 14 | | (A) the total amount of tax imposed on such | 15 | | foreign insurer under this Act for a taxable year, net | 16 | | of all credits allowed under this Act, plus | 17 | | (B) the privilege tax imposed by Section 409 of | 18 | | the Illinois Insurance Code, the fire insurance | 19 | | company tax imposed by Section 12 of the Fire | 20 | | Investigation Act, and the fire department taxes | 21 | | imposed under Section 11-10-1 of the Illinois | 22 | | Municipal Code, | 23 | | equals 1.25% for taxable years ending prior to December | 24 | | 31, 2003, or 1.75% for taxable years ending on or after | 25 | | December 31, 2003, of the net taxable premiums written for | 26 | | the taxable year, as described by subsection (1) of |
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| 1 | | Section 409 of the Illinois Insurance Code. This paragraph | 2 | | will in no event increase the rates imposed under | 3 | | subsections (b) and (d). | 4 | | (2) Any reduction in the rates of tax imposed by this | 5 | | subsection shall be applied first against the rates | 6 | | imposed by subsection (b) and only after the tax imposed | 7 | | by subsection (a) net of all credits allowed under this | 8 | | Section other than the credit allowed under subsection (i) | 9 | | has been reduced to zero, against the rates imposed by | 10 | | subsection (d). | 11 | | This subsection (d-1) is exempt from the provisions of | 12 | | Section 250. | 13 | | (e) Investment credit. A taxpayer shall be allowed a | 14 | | credit against the Personal Property Tax Replacement Income | 15 | | Tax for investment in qualified property. | 16 | | (1) A taxpayer shall be allowed a credit equal to .5% | 17 | | of the basis of qualified property placed in service | 18 | | during the taxable year, provided such property is placed | 19 | | in service on or after July 1, 1984. There shall be allowed | 20 | | an additional credit equal to .5% of the basis of | 21 | | qualified property placed in service during the taxable | 22 | | year, provided such property is placed in service on or | 23 | | after July 1, 1986, and the taxpayer's base employment | 24 | | within Illinois has increased by 1% or more over the | 25 | | preceding year as determined by the taxpayer's employment | 26 | | records filed with the Illinois Department of Employment |
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| 1 | | Security. Taxpayers who are new to Illinois shall be | 2 | | deemed to have met the 1% growth in base employment for the | 3 | | first year in which they file employment records with the | 4 | | Illinois Department of Employment Security. The provisions | 5 | | added to this Section by Public Act 85-1200 (and restored | 6 | | by Public Act 87-895) shall be construed as declaratory of | 7 | | existing law and not as a new enactment. If, in any year, | 8 | | the increase in base employment within Illinois over the | 9 | | preceding year is less than 1%, the additional credit | 10 | | shall be limited to that percentage times a fraction, the | 11 | | numerator of which is .5% and the denominator of which is | 12 | | 1%, but shall not exceed .5%. The investment credit shall | 13 | | not be allowed to the extent that it would reduce a | 14 | | taxpayer's liability in any tax year below zero, nor may | 15 | | any credit for qualified property be allowed for any year | 16 | | other than the year in which the property was placed in | 17 | | service in Illinois. For tax years ending on or after | 18 | | December 31, 1987, and on or before December 31, 1988, the | 19 | | credit shall be allowed for the tax year in which the | 20 | | property is placed in service, or, if the amount of the | 21 | | credit exceeds the tax liability for that year, whether it | 22 | | exceeds the original liability or the liability as later | 23 | | amended, such excess may be carried forward and applied to | 24 | | the tax liability of the 5 taxable years following the | 25 | | excess credit years if the taxpayer (i) makes investments | 26 | | which cause the creation of a minimum of 2,000 full-time |
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| 1 | | equivalent jobs in Illinois, (ii) is located in an | 2 | | enterprise zone established pursuant to the Illinois | 3 | | Enterprise Zone Act and (iii) is certified by the | 4 | | Department of Commerce and Community Affairs (now | 5 | | Department of Commerce and Economic Opportunity) as | 6 | | complying with the requirements specified in clause (i) | 7 | | and (ii) by July 1, 1986. The Department of Commerce and | 8 | | Community Affairs (now Department of Commerce and Economic | 9 | | Opportunity) shall notify the Department of Revenue of all | 10 | | such certifications immediately. For tax years ending | 11 | | after December 31, 1988, the credit shall be allowed for | 12 | | the tax year in which the property is placed in service, | 13 | | or, if the amount of the credit exceeds the tax liability | 14 | | for that year, whether it exceeds the original liability | 15 | | or the liability as later amended, such excess may be | 16 | | carried forward and applied to the tax liability of the 5 | 17 | | taxable years following the excess credit years. The | 18 | | credit shall be applied to the earliest year for which | 19 | | there is a liability. If there is credit from more than one | 20 | | tax year that is available to offset a liability, earlier | 21 | | credit shall be applied first. | 22 | | (2) The term "qualified property" means property | 23 | | which: | 24 | | (A) is tangible, whether new or used, including | 25 | | buildings and structural components of buildings and | 26 | | signs that are real property, but not including land |
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| 1 | | or improvements to real property that are not a | 2 | | structural component of a building such as | 3 | | landscaping, sewer lines, local access roads, fencing, | 4 | | parking lots, and other appurtenances; | 5 | | (B) is depreciable pursuant to Section 167 of the | 6 | | Internal Revenue Code, except that "3-year property" | 7 | | as defined in Section 168(c)(2)(A) of that Code is not | 8 | | eligible for the credit provided by this subsection | 9 | | (e); | 10 | | (C) is acquired by purchase as defined in Section | 11 | | 179(d) of the Internal Revenue Code; | 12 | | (D) is used in Illinois by a taxpayer who is | 13 | | primarily engaged in manufacturing, or in mining coal | 14 | | or fluorite, or in retailing, or was placed in service | 15 | | on or after July 1, 2006 in a River Edge Redevelopment | 16 | | Zone established pursuant to the River Edge | 17 | | Redevelopment Zone Act; and | 18 | | (E) has not previously been used in Illinois in | 19 | | such a manner and by such a person as would qualify for | 20 | | the credit provided by this subsection (e) or | 21 | | subsection (f). | 22 | | (3) For purposes of this subsection (e), | 23 | | "manufacturing" means the material staging and production | 24 | | of tangible personal property by procedures commonly | 25 | | regarded as manufacturing, processing, fabrication, or | 26 | | assembling which changes some existing material into new |
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| 1 | | shapes, new qualities, or new combinations. For purposes | 2 | | of this subsection (e) the term "mining" shall have the | 3 | | same meaning as the term "mining" in Section 613(c) of the | 4 | | Internal Revenue Code. For purposes of this subsection | 5 | | (e), the term "retailing" means the sale of tangible | 6 | | personal property for use or consumption and not for | 7 | | resale, or services rendered in conjunction with the sale | 8 | | of tangible personal property for use or consumption and | 9 | | not for resale. For purposes of this subsection (e), | 10 | | "tangible personal property" has the same meaning as when | 11 | | that term is used in the Retailers' Occupation Tax Act, | 12 | | and, for taxable years ending after December 31, 2008, | 13 | | does not include the generation, transmission, or | 14 | | distribution of electricity. | 15 | | (4) The basis of qualified property shall be the basis | 16 | | used to compute the depreciation deduction for federal | 17 | | income tax purposes. | 18 | | (5) If the basis of the property for federal income | 19 | | tax depreciation purposes is increased after it has been | 20 | | placed in service in Illinois by the taxpayer, the amount | 21 | | of such increase shall be deemed property placed in | 22 | | service on the date of such increase in basis. | 23 | | (6) The term "placed in service" shall have the same | 24 | | meaning as under Section 46 of the Internal Revenue Code. | 25 | | (7) If during any taxable year, any property ceases to | 26 | | be qualified property in the hands of the taxpayer within |
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| 1 | | 48 months after being placed in service, or the situs of | 2 | | any qualified property is moved outside Illinois within 48 | 3 | | months after being placed in service, the Personal | 4 | | Property Tax Replacement Income Tax for such taxable year | 5 | | shall be increased. Such increase shall be determined by | 6 | | (i) recomputing the investment credit which would have | 7 | | been allowed for the year in which credit for such | 8 | | property was originally allowed by eliminating such | 9 | | property from such computation and, (ii) subtracting such | 10 | | recomputed credit from the amount of credit previously | 11 | | allowed. For the purposes of this paragraph (7), a | 12 | | reduction of the basis of qualified property resulting | 13 | | from a redetermination of the purchase price shall be | 14 | | deemed a disposition of qualified property to the extent | 15 | | of such reduction. | 16 | | (8) Unless the investment credit is extended by law, | 17 | | the basis of qualified property shall not include costs | 18 | | incurred after December 31, 2018, except for costs | 19 | | incurred pursuant to a binding contract entered into on or | 20 | | before December 31, 2018. | 21 | | (9) Each taxable year ending before December 31, 2000, | 22 | | a partnership may elect to pass through to its partners | 23 | | the credits to which the partnership is entitled under | 24 | | this subsection (e) for the taxable year. A partner may | 25 | | use the credit allocated to him or her under this | 26 | | paragraph only against the tax imposed in subsections (c) |
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| 1 | | and (d) of this Section. If the partnership makes that | 2 | | election, those credits shall be allocated among the | 3 | | partners in the partnership in accordance with the rules | 4 | | set forth in Section 704(b) of the Internal Revenue Code, | 5 | | and the rules promulgated under that Section, and the | 6 | | allocated amount of the credits shall be allowed to the | 7 | | partners for that taxable year. The partnership shall make | 8 | | this election on its Personal Property Tax Replacement | 9 | | Income Tax return for that taxable year. The election to | 10 | | pass through the credits shall be irrevocable. | 11 | | For taxable years ending on or after December 31, | 12 | | 2000, a partner that qualifies its partnership for a | 13 | | subtraction under subparagraph (I) of paragraph (2) of | 14 | | subsection (d) of Section 203 or a shareholder that | 15 | | qualifies a Subchapter S corporation for a subtraction | 16 | | under subparagraph (S) of paragraph (2) of subsection (b) | 17 | | of Section 203 shall be allowed a credit under this | 18 | | subsection (e) equal to its share of the credit earned | 19 | | under this subsection (e) during the taxable year by the | 20 | | partnership or Subchapter S corporation, determined in | 21 | | accordance with the determination of income and | 22 | | distributive share of income under Sections 702 and 704 | 23 | | and Subchapter S of the Internal Revenue Code. This | 24 | | paragraph is exempt from the provisions of Section 250. | 25 | | (f) Investment credit; Enterprise Zone; River Edge | 26 | | Redevelopment Zone. |
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| 1 | | (1) A taxpayer shall be allowed a credit against the | 2 | | tax imposed by subsections (a) and (b) of this Section for | 3 | | investment in qualified property which is placed in | 4 | | service in an Enterprise Zone created pursuant to the | 5 | | Illinois Enterprise Zone Act or, for property placed in | 6 | | service on or after July 1, 2006, a River Edge | 7 | | Redevelopment Zone established pursuant to the River Edge | 8 | | Redevelopment Zone Act. For partners, shareholders of | 9 | | Subchapter S corporations, and owners of limited liability | 10 | | companies, if the liability company is treated as a | 11 | | partnership for purposes of federal and State income | 12 | | taxation, for taxable years ending before December 31, | 13 | | 2023, there shall be allowed a credit under this | 14 | | subsection (f) to be determined in accordance with the | 15 | | determination of income and distributive share of income | 16 | | under Sections 702 and 704 and Subchapter S of the | 17 | | Internal Revenue Code. For taxable years ending on or | 18 | | after December 31, 2023, for partners and shareholders of | 19 | | Subchapter S corporations, the provisions of Section 251 | 20 | | shall apply with respect to the credit under this | 21 | | subsection. The credit shall be .5% of the basis for such | 22 | | property. The credit shall be available only in the | 23 | | taxable year in which the property is placed in service in | 24 | | the Enterprise Zone or River Edge Redevelopment Zone and | 25 | | shall not be allowed to the extent that it would reduce a | 26 | | taxpayer's liability for the tax imposed by subsections |
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| 1 | | (a) and (b) of this Section to below zero. For tax years | 2 | | ending on or after December 31, 1985, the credit shall be | 3 | | allowed for the tax year in which the property is placed in | 4 | | service, or, if the amount of the credit exceeds the tax | 5 | | liability for that year, whether it exceeds the original | 6 | | liability or the liability as later amended, such excess | 7 | | may be carried forward and applied to the tax liability of | 8 | | the 5 taxable years following the excess credit year. The | 9 | | credit shall be applied to the earliest year for which | 10 | | there is a liability. If there is credit from more than one | 11 | | tax year that is available to offset a liability, the | 12 | | credit accruing first in time shall be applied first. | 13 | | (2) The term qualified property means property which: | 14 | | (A) is tangible, whether new or used, including | 15 | | buildings and structural components of buildings; | 16 | | (B) is depreciable pursuant to Section 167 of the | 17 | | Internal Revenue Code, except that "3-year property" | 18 | | as defined in Section 168(c)(2)(A) of that Code is not | 19 | | eligible for the credit provided by this subsection | 20 | | (f); | 21 | | (C) is acquired by purchase as defined in Section | 22 | | 179(d) of the Internal Revenue Code; | 23 | | (D) is used in the Enterprise Zone or River Edge | 24 | | Redevelopment Zone by the taxpayer; and | 25 | | (E) has not been previously used in Illinois in | 26 | | such a manner and by such a person as would qualify for |
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| 1 | | the credit provided by this subsection (f) or | 2 | | subsection (e). | 3 | | (3) The basis of qualified property shall be the basis | 4 | | used to compute the depreciation deduction for federal | 5 | | income tax purposes. | 6 | | (4) If the basis of the property for federal income | 7 | | tax depreciation purposes is increased after it has been | 8 | | placed in service in the Enterprise Zone or River Edge | 9 | | Redevelopment Zone by the taxpayer, the amount of such | 10 | | increase shall be deemed property placed in service on the | 11 | | date of such increase in basis. | 12 | | (5) The term "placed in service" shall have the same | 13 | | meaning as under Section 46 of the Internal Revenue Code. | 14 | | (6) If during any taxable year, any property ceases to | 15 | | be qualified property in the hands of the taxpayer within | 16 | | 48 months after being placed in service, or the situs of | 17 | | any qualified property is moved outside the Enterprise | 18 | | Zone or River Edge Redevelopment Zone within 48 months | 19 | | after being placed in service, the tax imposed under | 20 | | subsections (a) and (b) of this Section for such taxable | 21 | | year shall be increased. Such increase shall be determined | 22 | | by (i) recomputing the investment credit which would have | 23 | | been allowed for the year in which credit for such | 24 | | property was originally allowed by eliminating such | 25 | | property from such computation, and (ii) subtracting such | 26 | | recomputed credit from the amount of credit previously |
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| 1 | | allowed. For the purposes of this paragraph (6), a | 2 | | reduction of the basis of qualified property resulting | 3 | | from a redetermination of the purchase price shall be | 4 | | deemed a disposition of qualified property to the extent | 5 | | of such reduction. | 6 | | (7) There shall be allowed an additional credit equal | 7 | | to 0.5% of the basis of qualified property placed in | 8 | | service during the taxable year in a River Edge | 9 | | Redevelopment Zone, provided such property is placed in | 10 | | service on or after July 1, 2006, and the taxpayer's base | 11 | | employment within Illinois has increased by 1% or more | 12 | | over the preceding year as determined by the taxpayer's | 13 | | employment records filed with the Illinois Department of | 14 | | Employment Security. Taxpayers who are new to Illinois | 15 | | shall be deemed to have met the 1% growth in base | 16 | | employment for the first year in which they file | 17 | | employment records with the Illinois Department of | 18 | | Employment Security. If, in any year, the increase in base | 19 | | employment within Illinois over the preceding year is less | 20 | | than 1%, the additional credit shall be limited to that | 21 | | percentage times a fraction, the numerator of which is | 22 | | 0.5% and the denominator of which is 1%, but shall not | 23 | | exceed 0.5%. | 24 | | (8) For taxable years beginning on or after January 1, | 25 | | 2021, there shall be allowed an Enterprise Zone | 26 | | construction jobs credit against the taxes imposed under |
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| 1 | | subsections (a) and (b) of this Section as provided in | 2 | | Section 13 of the Illinois Enterprise Zone Act. | 3 | | The credit or credits may not reduce the taxpayer's | 4 | | liability to less than zero. If the amount of the credit or | 5 | | credits exceeds the taxpayer's liability, the excess may | 6 | | be carried forward and applied against the taxpayer's | 7 | | liability in succeeding calendar years in the same manner | 8 | | provided under paragraph (4) of Section 211 of this Act. | 9 | | The credit or credits shall be applied to the earliest | 10 | | year for which there is a tax liability. If there are | 11 | | credits from more than one taxable year that are available | 12 | | to offset a liability, the earlier credit shall be applied | 13 | | first. | 14 | | For partners, shareholders of Subchapter S | 15 | | corporations, and owners of limited liability companies, | 16 | | if the liability company is treated as a partnership for | 17 | | the purposes of federal and State income taxation, for | 18 | | taxable years ending before December 31, 2023, there shall | 19 | | be allowed a credit under this Section to be determined in | 20 | | accordance with the determination of income and | 21 | | distributive share of income under Sections 702 and 704 | 22 | | and Subchapter S of the Internal Revenue Code. For taxable | 23 | | years ending on or after December 31, 2023, for partners | 24 | | and shareholders of Subchapter S corporations, the | 25 | | provisions of Section 251 shall apply with respect to the | 26 | | credit under this subsection. |
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| 1 | | The total aggregate amount of credits awarded under | 2 | | the Blue Collar Jobs Act (Article 20 of Public Act 101-9) | 3 | | shall not exceed $20,000,000 in any State fiscal year. | 4 | | This paragraph (8) is exempt from the provisions of | 5 | | Section 250. | 6 | | (g) (Blank). | 7 | | (h) Investment credit; High Impact Business. | 8 | | (1) Subject to subsections (b) and (b-5) of Section | 9 | | 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall | 10 | | be allowed a credit against the tax imposed by subsections | 11 | | (a) and (b) of this Section for investment in qualified | 12 | | property which is placed in service by a Department of | 13 | | Commerce and Economic Opportunity designated High Impact | 14 | | Business. The credit shall be .5% of the basis for such | 15 | | property. The credit shall not be available (i) until the | 16 | | minimum investments in qualified property set forth in | 17 | | subdivision (a)(3)(A) of Section 5.5 of the Illinois | 18 | | Enterprise Zone Act have been satisfied or (ii) until the | 19 | | time authorized in subsection (b-5) of the Illinois | 20 | | Enterprise Zone Act for entities designated as High Impact | 21 | | Businesses under subdivisions (a)(3)(B), (a)(3)(C), and | 22 | | (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone | 23 | | Act, and shall not be allowed to the extent that it would | 24 | | reduce a taxpayer's liability for the tax imposed by | 25 | | subsections (a) and (b) of this Section to below zero. The | 26 | | credit applicable to such investments shall be taken in |
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| 1 | | the taxable year in which such investments have been | 2 | | completed. The credit for additional investments beyond | 3 | | the minimum investment by a designated high impact | 4 | | business authorized under subdivision (a)(3)(A) of Section | 5 | | 5.5 of the Illinois Enterprise Zone Act shall be available | 6 | | only in the taxable year in which the property is placed in | 7 | | service and shall not be allowed to the extent that it | 8 | | would reduce a taxpayer's liability for the tax imposed by | 9 | | subsections (a) and (b) of this Section to below zero. For | 10 | | tax years ending on or after December 31, 1987, the credit | 11 | | shall be allowed for the tax year in which the property is | 12 | | placed in service, or, if the amount of the credit exceeds | 13 | | the tax liability for that year, whether it exceeds the | 14 | | original liability or the liability as later amended, such | 15 | | excess may be carried forward and applied to the tax | 16 | | liability of the 5 taxable years following the excess | 17 | | credit year. The credit shall be applied to the earliest | 18 | | year for which there is a liability. If there is credit | 19 | | from more than one tax year that is available to offset a | 20 | | liability, the credit accruing first in time shall be | 21 | | applied first. | 22 | | Changes made in this subdivision (h)(1) by Public Act | 23 | | 88-670 restore changes made by Public Act 85-1182 and | 24 | | reflect existing law. | 25 | | (2) The term qualified property means property which: | 26 | | (A) is tangible, whether new or used, including |
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| 1 | | buildings and structural components of buildings; | 2 | | (B) is depreciable pursuant to Section 167 of the | 3 | | Internal Revenue Code, except that "3-year property" | 4 | | as defined in Section 168(c)(2)(A) of that Code is not | 5 | | eligible for the credit provided by this subsection | 6 | | (h); | 7 | | (C) is acquired by purchase as defined in Section | 8 | | 179(d) of the Internal Revenue Code; and | 9 | | (D) is not eligible for the Enterprise Zone | 10 | | Investment Credit provided by subsection (f) of this | 11 | | Section. | 12 | | (3) The basis of qualified property shall be the basis | 13 | | used to compute the depreciation deduction for federal | 14 | | income tax purposes. | 15 | | (4) If the basis of the property for federal income | 16 | | tax depreciation purposes is increased after it has been | 17 | | placed in service in a federally designated Foreign Trade | 18 | | Zone or Sub-Zone located in Illinois by the taxpayer, the | 19 | | amount of such increase shall be deemed property placed in | 20 | | service on the date of such increase in basis. | 21 | | (5) The term "placed in service" shall have the same | 22 | | meaning as under Section 46 of the Internal Revenue Code. | 23 | | (6) If during any taxable year ending on or before | 24 | | December 31, 1996, any property ceases to be qualified | 25 | | property in the hands of the taxpayer within 48 months | 26 | | after being placed in service, or the situs of any |
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| 1 | | qualified property is moved outside Illinois within 48 | 2 | | months after being placed in service, the tax imposed | 3 | | under subsections (a) and (b) of this Section for such | 4 | | taxable year shall be increased. Such increase shall be | 5 | | determined by (i) recomputing the investment credit which | 6 | | would have been allowed for the year in which credit for | 7 | | such property was originally allowed by eliminating such | 8 | | property from such computation, and (ii) subtracting such | 9 | | recomputed credit from the amount of credit previously | 10 | | allowed. For the purposes of this paragraph (6), a | 11 | | reduction of the basis of qualified property resulting | 12 | | from a redetermination of the purchase price shall be | 13 | | deemed a disposition of qualified property to the extent | 14 | | of such reduction. | 15 | | (7) Beginning with tax years ending after December 31, | 16 | | 1996, if a taxpayer qualifies for the credit under this | 17 | | subsection (h) and thereby is granted a tax abatement and | 18 | | the taxpayer relocates its entire facility in violation of | 19 | | the explicit terms and length of the contract under | 20 | | Section 18-183 of the Property Tax Code, the tax imposed | 21 | | under subsections (a) and (b) of this Section shall be | 22 | | increased for the taxable year in which the taxpayer | 23 | | relocated its facility by an amount equal to the amount of | 24 | | credit received by the taxpayer under this subsection (h). | 25 | | (h-5) High Impact Business construction jobs credit. For | 26 | | taxable years beginning on or after January 1, 2021, there |
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| 1 | | shall also be allowed a High Impact Business construction jobs | 2 | | credit against the tax imposed under subsections (a) and (b) | 3 | | of this Section as provided in subsections (i) and (j) of | 4 | | Section 5.5 of the Illinois Enterprise Zone Act. | 5 | | The credit or credits may not reduce the taxpayer's | 6 | | liability to less than zero. If the amount of the credit or | 7 | | credits exceeds the taxpayer's liability, the excess may be | 8 | | carried forward and applied against the taxpayer's liability | 9 | | in succeeding calendar years in the manner provided under | 10 | | paragraph (4) of Section 211 of this Act. The credit or credits | 11 | | shall be applied to the earliest year for which there is a tax | 12 | | liability. If there are credits from more than one taxable | 13 | | year that are available to offset a liability, the earlier | 14 | | credit shall be applied first. | 15 | | For partners, shareholders of Subchapter S corporations, | 16 | | and owners of limited liability companies, for taxable years | 17 | | ending before December 31, 2023, if the liability company is | 18 | | treated as a partnership for the purposes of federal and State | 19 | | income taxation, there shall be allowed a credit under this | 20 | | Section to be determined in accordance with the determination | 21 | | of income and distributive share of income under Sections 702 | 22 | | and 704 and Subchapter S of the Internal Revenue Code. For | 23 | | taxable years ending on or after December 31, 2023, for | 24 | | partners and shareholders of Subchapter S corporations, the | 25 | | provisions of Section 251 shall apply with respect to the | 26 | | credit under this subsection. |
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| 1 | | The total aggregate amount of credits awarded under the | 2 | | Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not | 3 | | exceed $20,000,000 in any State fiscal year. | 4 | | This subsection (h-5) is exempt from the provisions of | 5 | | Section 250. | 6 | | (i) Credit for Personal Property Tax Replacement Income | 7 | | Tax. For tax years ending prior to December 31, 2003, a credit | 8 | | shall be allowed against the tax imposed by subsections (a) | 9 | | and (b) of this Section for the tax imposed by subsections (c) | 10 | | and (d) of this Section. This credit shall be computed by | 11 | | multiplying the tax imposed by subsections (c) and (d) of this | 12 | | Section by a fraction, the numerator of which is base income | 13 | | allocable to Illinois and the denominator of which is Illinois | 14 | | base income, and further multiplying the product by the tax | 15 | | rate imposed by subsections (a) and (b) of this Section. | 16 | | Any credit earned on or after December 31, 1986 under this | 17 | | subsection which is unused in the year the credit is computed | 18 | | because it exceeds the tax liability imposed by subsections | 19 | | (a) and (b) for that year (whether it exceeds the original | 20 | | liability or the liability as later amended) may be carried | 21 | | forward and applied to the tax liability imposed by | 22 | | subsections (a) and (b) of the 5 taxable years following the | 23 | | excess credit year, provided that no credit may be carried | 24 | | forward to any year ending on or after December 31, 2003. This | 25 | | credit shall be applied first to the earliest year for which | 26 | | there is a liability. If there is a credit under this |
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| 1 | | subsection from more than one tax year that is available to | 2 | | offset a liability the earliest credit arising under this | 3 | | subsection shall be applied first. | 4 | | If, during any taxable year ending on or after December | 5 | | 31, 1986, the tax imposed by subsections (c) and (d) of this | 6 | | Section for which a taxpayer has claimed a credit under this | 7 | | subsection (i) is reduced, the amount of credit for such tax | 8 | | shall also be reduced. Such reduction shall be determined by | 9 | | recomputing the credit to take into account the reduced tax | 10 | | imposed by subsections (c) and (d). If any portion of the | 11 | | reduced amount of credit has been carried to a different | 12 | | taxable year, an amended return shall be filed for such | 13 | | taxable year to reduce the amount of credit claimed. | 14 | | (j) Training expense credit. Beginning with tax years | 15 | | ending on or after December 31, 1986 and prior to December 31, | 16 | | 2003, a taxpayer shall be allowed a credit against the tax | 17 | | imposed by subsections (a) and (b) under this Section for all | 18 | | amounts paid or accrued, on behalf of all persons employed by | 19 | | the taxpayer in Illinois or Illinois residents employed | 20 | | outside of Illinois by a taxpayer, for educational or | 21 | | vocational training in semi-technical or technical fields or | 22 | | semi-skilled or skilled fields, which were deducted from gross | 23 | | income in the computation of taxable income. The credit | 24 | | against the tax imposed by subsections (a) and (b) shall be | 25 | | 1.6% of such training expenses. For partners, shareholders of | 26 | | subchapter S corporations, and owners of limited liability |
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| 1 | | companies, if the liability company is treated as a | 2 | | partnership for purposes of federal and State income taxation, | 3 | | for taxable years ending before December 31, 2023, there shall | 4 | | be allowed a credit under this subsection (j) to be determined | 5 | | in accordance with the determination of income and | 6 | | distributive share of income under Sections 702 and 704 and | 7 | | subchapter S of the Internal Revenue Code. For taxable years | 8 | | ending on or after December 31, 2023, for partners and | 9 | | shareholders of Subchapter S corporations, the provisions of | 10 | | Section 251 shall apply with respect to the credit under this | 11 | | subsection. | 12 | | Any credit allowed under this subsection which is unused | 13 | | in the year the credit is earned may be carried forward to each | 14 | | of the 5 taxable years following the year for which the credit | 15 | | is first computed until it is used. This credit shall be | 16 | | applied first to the earliest year for which there is a | 17 | | liability. If there is a credit under this subsection from | 18 | | more than one tax year that is available to offset a liability, | 19 | | the earliest credit arising under this subsection shall be | 20 | | applied first. No carryforward credit may be claimed in any | 21 | | tax year ending on or after December 31, 2003. | 22 | | (k) Research and development credit. For tax years ending | 23 | | after July 1, 1990 and prior to December 31, 2003, and | 24 | | beginning again for tax years ending on or after December 31, | 25 | | 2004, and ending prior to January 1, 2027, a taxpayer shall be | 26 | | allowed a credit against the tax imposed by subsections (a) |
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| 1 | | and (b) of this Section for increasing research activities in | 2 | | this State. The credit allowed against the tax imposed by | 3 | | subsections (a) and (b) shall be equal to 6 1/2% of the | 4 | | qualifying expenditures for increasing research activities in | 5 | | this State. For partners, shareholders of subchapter S | 6 | | corporations, and owners of limited liability companies, if | 7 | | the liability company is treated as a partnership for purposes | 8 | | of federal and State income taxation, for taxable years ending | 9 | | before December 31, 2023, there shall be allowed a credit | 10 | | under this subsection to be determined in accordance with the | 11 | | determination of income and distributive share of income under | 12 | | Sections 702 and 704 and subchapter S of the Internal Revenue | 13 | | Code. For taxable years ending on or after December 31, 2023, | 14 | | for partners and shareholders of Subchapter S corporations, | 15 | | the provisions of Section 251 shall apply with respect to the | 16 | | credit under this subsection. | 17 | | For purposes of this subsection, "qualifying expenditures" | 18 | | means the qualifying expenditures as defined for the federal | 19 | | credit for increasing research activities which would be | 20 | | allowable under Section 41 of the Internal Revenue Code and | 21 | | which are conducted in this State, "qualifying expenditures | 22 | | for increasing research activities in this State" means the | 23 | | excess of qualifying expenditures for the taxable year in | 24 | | which incurred over qualifying expenditures for the base | 25 | | period, "qualifying expenditures for the base period" means | 26 | | the average of the qualifying expenditures for each year in |
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| 1 | | the base period, and "base period" means the 3 taxable years | 2 | | immediately preceding the taxable year for which the | 3 | | determination is being made. | 4 | | Any credit in excess of the tax liability for the taxable | 5 | | year may be carried forward. A taxpayer may elect to have the | 6 | | unused credit shown on its final completed return carried over | 7 | | as a credit against the tax liability for the following 5 | 8 | | taxable years or until it has been fully used, whichever | 9 | | occurs first; provided that no credit earned in a tax year | 10 | | ending prior to December 31, 2003 may be carried forward to any | 11 | | year ending on or after December 31, 2003. | 12 | | If an unused credit is carried forward to a given year from | 13 | | 2 or more earlier years, that credit arising in the earliest | 14 | | year will be applied first against the tax liability for the | 15 | | given year. If a tax liability for the given year still | 16 | | remains, the credit from the next earliest year will then be | 17 | | applied, and so on, until all credits have been used or no tax | 18 | | liability for the given year remains. Any remaining unused | 19 | | credit or credits then will be carried forward to the next | 20 | | following year in which a tax liability is incurred, except | 21 | | that no credit can be carried forward to a year which is more | 22 | | than 5 years after the year in which the expense for which the | 23 | | credit is given was incurred. | 24 | | No inference shall be drawn from Public Act 91-644 in | 25 | | construing this Section for taxable years beginning before | 26 | | January 1, 1999. |
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| 1 | | It is the intent of the General Assembly that the research | 2 | | and development credit under this subsection (k) shall apply | 3 | | continuously for all tax years ending on or after December 31, | 4 | | 2004 and ending prior to January 1, 2027, including, but not | 5 | | limited to, the period beginning on January 1, 2016 and ending | 6 | | on July 6, 2017 (the effective date of Public Act 100-22). All | 7 | | actions taken in reliance on the continuation of the credit | 8 | | under this subsection (k) by any taxpayer are hereby | 9 | | validated. | 10 | | (l) Environmental Remediation Tax Credit. | 11 | | (i) For tax years ending after December 31, 1997 and | 12 | | on or before December 31, 2001, a taxpayer shall be | 13 | | allowed a credit against the tax imposed by subsections | 14 | | (a) and (b) of this Section for certain amounts paid for | 15 | | unreimbursed eligible remediation costs, as specified in | 16 | | this subsection. For purposes of this Section, | 17 | | "unreimbursed eligible remediation costs" means costs | 18 | | approved by the Illinois Environmental Protection Agency | 19 | | ("Agency") under Section 58.14 of the Environmental | 20 | | Protection Act that were paid in performing environmental | 21 | | remediation at a site for which a No Further Remediation | 22 | | Letter was issued by the Agency and recorded under Section | 23 | | 58.10 of the Environmental Protection Act. The credit must | 24 | | be claimed for the taxable year in which Agency approval | 25 | | of the eligible remediation costs is granted. The credit | 26 | | is not available to any taxpayer if the taxpayer or any |
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| 1 | | related party caused or contributed to, in any material | 2 | | respect, a release of regulated substances on, in, or | 3 | | under the site that was identified and addressed by the | 4 | | remedial action pursuant to the Site Remediation Program | 5 | | of the Environmental Protection Act. After the Pollution | 6 | | Control Board rules are adopted pursuant to the Illinois | 7 | | Administrative Procedure Act for the administration and | 8 | | enforcement of Section 58.9 of the Environmental | 9 | | Protection Act, determinations as to credit availability | 10 | | for purposes of this Section shall be made consistent with | 11 | | those rules. For purposes of this Section, "taxpayer" | 12 | | includes a person whose tax attributes the taxpayer has | 13 | | succeeded to under Section 381 of the Internal Revenue | 14 | | Code and "related party" includes the persons disallowed a | 15 | | deduction for losses by paragraphs (b), (c), and (f)(1) of | 16 | | Section 267 of the Internal Revenue Code by virtue of | 17 | | being a related taxpayer, as well as any of its partners. | 18 | | The credit allowed against the tax imposed by subsections | 19 | | (a) and (b) shall be equal to 25% of the unreimbursed | 20 | | eligible remediation costs in excess of $100,000 per site, | 21 | | except that the $100,000 threshold shall not apply to any | 22 | | site contained in an enterprise zone as determined by the | 23 | | Department of Commerce and Community Affairs (now | 24 | | Department of Commerce and Economic Opportunity). The | 25 | | total credit allowed shall not exceed $40,000 per year | 26 | | with a maximum total of $150,000 per site. For partners |
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| 1 | | and shareholders of subchapter S corporations, there shall | 2 | | be allowed a credit under this subsection to be determined | 3 | | in accordance with the determination of income and | 4 | | distributive share of income under Sections 702 and 704 | 5 | | and subchapter S of the Internal Revenue Code. | 6 | | (ii) A credit allowed under this subsection that is | 7 | | unused in the year the credit is earned may be carried | 8 | | forward to each of the 5 taxable years following the year | 9 | | for which the credit is first earned until it is used. The | 10 | | term "unused credit" does not include any amounts of | 11 | | unreimbursed eligible remediation costs in excess of the | 12 | | maximum credit per site authorized under paragraph (i). | 13 | | This credit shall be applied first to the earliest year | 14 | | for which there is a liability. If there is a credit under | 15 | | this subsection from more than one tax year that is | 16 | | available to offset a liability, the earliest credit | 17 | | arising under this subsection shall be applied first. A | 18 | | credit allowed under this subsection may be sold to a | 19 | | buyer as part of a sale of all or part of the remediation | 20 | | site for which the credit was granted. The purchaser of a | 21 | | remediation site and the tax credit shall succeed to the | 22 | | unused credit and remaining carry-forward period of the | 23 | | seller. To perfect the transfer, the assignor shall record | 24 | | the transfer in the chain of title for the site and provide | 25 | | written notice to the Director of the Illinois Department | 26 | | of Revenue of the assignor's intent to sell the |
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| 1 | | remediation site and the amount of the tax credit to be | 2 | | transferred as a portion of the sale. In no event may a | 3 | | credit be transferred to any taxpayer if the taxpayer or a | 4 | | related party would not be eligible under the provisions | 5 | | of subsection (i). | 6 | | (iii) For purposes of this Section, the term "site" | 7 | | shall have the same meaning as under Section 58.2 of the | 8 | | Environmental Protection Act. | 9 | | (m) Education expense credit. Beginning with tax years | 10 | | ending after December 31, 1999, a taxpayer who is the | 11 | | custodian of one or more qualifying pupils shall be allowed a | 12 | | credit against the tax imposed by subsections (a) and (b) of | 13 | | this Section for qualified education expenses incurred on | 14 | | behalf of the qualifying pupils. The credit shall be equal to | 15 | | 25% of qualified education expenses, but in no event may the | 16 | | total credit under this subsection claimed by a family that is | 17 | | the custodian of qualifying pupils exceed (i) $500 for tax | 18 | | years ending prior to December 31, 2017, and (ii) $750 for tax | 19 | | years ending on or after December 31, 2017 and ending before | 20 | | December 31, 2024, and (iii) $1,000 for tax years ending on or | 21 | | after December 31, 2024 . In no event shall a credit under this | 22 | | subsection reduce the taxpayer's liability under this Act to | 23 | | less than zero. Notwithstanding any other provision of law, | 24 | | for taxable years beginning on or after January 1, 2017, no | 25 | | taxpayer may claim a credit under this subsection (m) if the | 26 | | taxpayer's adjusted gross income for the taxable year exceeds |
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| 1 | | (i) $500,000, in the case of spouses filing a joint federal tax | 2 | | return or (ii) $250,000, in the case of all other taxpayers. | 3 | | This subsection is exempt from the provisions of Section 250 | 4 | | of this Act. | 5 | | For purposes of this subsection: | 6 | | "Qualifying pupils" means individuals who (i) are | 7 | | residents of the State of Illinois, (ii) are under the age of | 8 | | 21 at the close of the school year for which a credit is | 9 | | sought, and (iii) during the school year for which a credit is | 10 | | sought were full-time pupils enrolled in a kindergarten | 11 | | through twelfth grade education program at any school, as | 12 | | defined in this subsection. | 13 | | "Qualified education expense" means the amount incurred on | 14 | | behalf of a qualifying pupil in excess of $250 for tuition, | 15 | | book fees, and lab fees at the school in which the pupil is | 16 | | enrolled during the regular school year. | 17 | | "School" means any public or nonpublic elementary or | 18 | | secondary school in Illinois that is in compliance with Title | 19 | | VI of the Civil Rights Act of 1964 and attendance at which | 20 | | satisfies the requirements of Section 26-1 of the School Code, | 21 | | except that nothing shall be construed to require a child to | 22 | | attend any particular public or nonpublic school to qualify | 23 | | for the credit under this Section. | 24 | | "Custodian" means, with respect to qualifying pupils, an | 25 | | Illinois resident who is a parent, the parents, a legal | 26 | | guardian, or the legal guardians of the qualifying pupils. |
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| 1 | | (n) River Edge Redevelopment Zone site remediation tax | 2 | | credit. | 3 | | (i) For tax years ending on or after December 31, | 4 | | 2006, a taxpayer shall be allowed a credit against the tax | 5 | | imposed by subsections (a) and (b) of this Section for | 6 | | certain amounts paid for unreimbursed eligible remediation | 7 | | costs, as specified in this subsection. For purposes of | 8 | | this Section, "unreimbursed eligible remediation costs" | 9 | | means costs approved by the Illinois Environmental | 10 | | Protection Agency ("Agency") under Section 58.14a of the | 11 | | Environmental Protection Act that were paid in performing | 12 | | environmental remediation at a site within a River Edge | 13 | | Redevelopment Zone for which a No Further Remediation | 14 | | Letter was issued by the Agency and recorded under Section | 15 | | 58.10 of the Environmental Protection Act. The credit must | 16 | | be claimed for the taxable year in which Agency approval | 17 | | of the eligible remediation costs is granted. The credit | 18 | | is not available to any taxpayer if the taxpayer or any | 19 | | related party caused or contributed to, in any material | 20 | | respect, a release of regulated substances on, in, or | 21 | | under the site that was identified and addressed by the | 22 | | remedial action pursuant to the Site Remediation Program | 23 | | of the Environmental Protection Act. Determinations as to | 24 | | credit availability for purposes of this Section shall be | 25 | | made consistent with rules adopted by the Pollution | 26 | | Control Board pursuant to the Illinois Administrative |
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| 1 | | Procedure Act for the administration and enforcement of | 2 | | Section 58.9 of the Environmental Protection Act. For | 3 | | purposes of this Section, "taxpayer" includes a person | 4 | | whose tax attributes the taxpayer has succeeded to under | 5 | | Section 381 of the Internal Revenue Code and "related | 6 | | party" includes the persons disallowed a deduction for | 7 | | losses by paragraphs (b), (c), and (f)(1) of Section 267 | 8 | | of the Internal Revenue Code by virtue of being a related | 9 | | taxpayer, as well as any of its partners. The credit | 10 | | allowed against the tax imposed by subsections (a) and (b) | 11 | | shall be equal to 25% of the unreimbursed eligible | 12 | | remediation costs in excess of $100,000 per site. | 13 | | (ii) A credit allowed under this subsection that is | 14 | | unused in the year the credit is earned may be carried | 15 | | forward to each of the 5 taxable years following the year | 16 | | for which the credit is first earned until it is used. This | 17 | | credit shall be applied first to the earliest year for | 18 | | which there is a liability. If there is a credit under this | 19 | | subsection from more than one tax year that is available | 20 | | to offset a liability, the earliest credit arising under | 21 | | this subsection shall be applied first. A credit allowed | 22 | | under this subsection may be sold to a buyer as part of a | 23 | | sale of all or part of the remediation site for which the | 24 | | credit was granted. The purchaser of a remediation site | 25 | | and the tax credit shall succeed to the unused credit and | 26 | | remaining carry-forward period of the seller. To perfect |
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| 1 | | the transfer, the assignor shall record the transfer in | 2 | | the chain of title for the site and provide written notice | 3 | | to the Director of the Illinois Department of Revenue of | 4 | | the assignor's intent to sell the remediation site and the | 5 | | amount of the tax credit to be transferred as a portion of | 6 | | the sale. In no event may a credit be transferred to any | 7 | | taxpayer if the taxpayer or a related party would not be | 8 | | eligible under the provisions of subsection (i). | 9 | | (iii) For purposes of this Section, the term "site" | 10 | | shall have the same meaning as under Section 58.2 of the | 11 | | Environmental Protection Act. | 12 | | (o) For each of taxable years during the Compassionate Use | 13 | | of Medical Cannabis Program, a surcharge is imposed on all | 14 | | taxpayers on income arising from the sale or exchange of | 15 | | capital assets, depreciable business property, real property | 16 | | used in the trade or business, and Section 197 intangibles of | 17 | | an organization registrant under the Compassionate Use of | 18 | | Medical Cannabis Program Act. The amount of the surcharge is | 19 | | equal to the amount of federal income tax liability for the | 20 | | taxable year attributable to those sales and exchanges. The | 21 | | surcharge imposed does not apply if: | 22 | | (1) the medical cannabis cultivation center | 23 | | registration, medical cannabis dispensary registration, or | 24 | | the property of a registration is transferred as a result | 25 | | of any of the following: | 26 | | (A) bankruptcy, a receivership, or a debt |
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| 1 | | adjustment initiated by or against the initial | 2 | | registration or the substantial owners of the initial | 3 | | registration; | 4 | | (B) cancellation, revocation, or termination of | 5 | | any registration by the Illinois Department of Public | 6 | | Health; | 7 | | (C) a determination by the Illinois Department of | 8 | | Public Health that transfer of the registration is in | 9 | | the best interests of Illinois qualifying patients as | 10 | | defined by the Compassionate Use of Medical Cannabis | 11 | | Program Act; | 12 | | (D) the death of an owner of the equity interest in | 13 | | a registrant; | 14 | | (E) the acquisition of a controlling interest in | 15 | | the stock or substantially all of the assets of a | 16 | | publicly traded company; | 17 | | (F) a transfer by a parent company to a wholly | 18 | | owned subsidiary; or | 19 | | (G) the transfer or sale to or by one person to | 20 | | another person where both persons were initial owners | 21 | | of the registration when the registration was issued; | 22 | | or | 23 | | (2) the cannabis cultivation center registration, | 24 | | medical cannabis dispensary registration, or the | 25 | | controlling interest in a registrant's property is | 26 | | transferred in a transaction to lineal descendants in |
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| 1 | | which no gain or loss is recognized or as a result of a | 2 | | transaction in accordance with Section 351 of the Internal | 3 | | Revenue Code in which no gain or loss is recognized. | 4 | | (p) Pass-through entity tax. | 5 | | (1) For taxable years ending on or after December 31, | 6 | | 2021 and beginning prior to January 1, 2026, a partnership | 7 | | (other than a publicly traded partnership under Section | 8 | | 7704 of the Internal Revenue Code) or Subchapter S | 9 | | corporation may elect to apply the provisions of this | 10 | | subsection. A separate election shall be made for each | 11 | | taxable year. Such election shall be made at such time, | 12 | | and in such form and manner as prescribed by the | 13 | | Department, and, once made, is irrevocable. | 14 | | (2) Entity-level tax. A partnership or Subchapter S | 15 | | corporation electing to apply the provisions of this | 16 | | subsection shall be subject to a tax for the privilege of | 17 | | earning or receiving income in this State in an amount | 18 | | equal to 4.95% of the taxpayer's net income for the | 19 | | taxable year. | 20 | | (3) Net income defined. | 21 | | (A) In general. For purposes of paragraph (2), the | 22 | | term net income has the same meaning as defined in | 23 | | Section 202 of this Act, except that, for tax years | 24 | | ending on or after December 31, 2023, a deduction | 25 | | shall be allowed in computing base income for | 26 | | distributions to a retired partner to the extent that |
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| 1 | | the partner's distributions are exempt from tax under | 2 | | Section 203(a)(2)(F) of this Act. In addition, the | 3 | | following modifications shall not apply: | 4 | | (i) the standard exemption allowed under | 5 | | Section 204; | 6 | | (ii) the deduction for net losses allowed | 7 | | under Section 207; | 8 | | (iii) in the case of an S corporation, the | 9 | | modification under Section 203(b)(2)(S); and | 10 | | (iv) in the case of a partnership, the | 11 | | modifications under Section 203(d)(2)(H) and | 12 | | Section 203(d)(2)(I). | 13 | | (B) Special rule for tiered partnerships. If a | 14 | | taxpayer making the election under paragraph (1) is a | 15 | | partner of another taxpayer making the election under | 16 | | paragraph (1), net income shall be computed as | 17 | | provided in subparagraph (A), except that the taxpayer | 18 | | shall subtract its distributive share of the net | 19 | | income of the electing partnership (including its | 20 | | distributive share of the net income of the electing | 21 | | partnership derived as a distributive share from | 22 | | electing partnerships in which it is a partner). | 23 | | (4) Credit for entity level tax. Each partner or | 24 | | shareholder of a taxpayer making the election under this | 25 | | Section shall be allowed a credit against the tax imposed | 26 | | under subsections (a) and (b) of Section 201 of this Act |
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| 1 | | for the taxable year of the partnership or Subchapter S | 2 | | corporation for which an election is in effect ending | 3 | | within or with the taxable year of the partner or | 4 | | shareholder in an amount equal to 4.95% times the partner | 5 | | or shareholder's distributive share of the net income of | 6 | | the electing partnership or Subchapter S corporation, but | 7 | | not to exceed the partner's or shareholder's share of the | 8 | | tax imposed under paragraph (1) which is actually paid by | 9 | | the partnership or Subchapter S corporation. If the | 10 | | taxpayer is a partnership or Subchapter S corporation that | 11 | | is itself a partner of a partnership making the election | 12 | | under paragraph (1), the credit under this paragraph shall | 13 | | be allowed to the taxpayer's partners or shareholders (or | 14 | | if the partner is a partnership or Subchapter S | 15 | | corporation then its partners or shareholders) in | 16 | | accordance with the determination of income and | 17 | | distributive share of income under Sections 702 and 704 | 18 | | and Subchapter S of the Internal Revenue Code. If the | 19 | | amount of the credit allowed under this paragraph exceeds | 20 | | the partner's or shareholder's liability for tax imposed | 21 | | under subsections (a) and (b) of Section 201 of this Act | 22 | | for the taxable year, such excess shall be treated as an | 23 | | overpayment for purposes of Section 909 of this Act. | 24 | | (5) Nonresidents. A nonresident individual who is a | 25 | | partner or shareholder of a partnership or Subchapter S | 26 | | corporation for a taxable year for which an election is in |
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| 1 | | effect under paragraph (1) shall not be required to file | 2 | | an income tax return under this Act for such taxable year | 3 | | if the only source of net income of the individual (or the | 4 | | individual and the individual's spouse in the case of a | 5 | | joint return) is from an entity making the election under | 6 | | paragraph (1) and the credit allowed to the partner or | 7 | | shareholder under paragraph (4) equals or exceeds the | 8 | | individual's liability for the tax imposed under | 9 | | subsections (a) and (b) of Section 201 of this Act for the | 10 | | taxable year. | 11 | | (6) Liability for tax. Except as provided in this | 12 | | paragraph, a partnership or Subchapter S making the | 13 | | election under paragraph (1) is liable for the | 14 | | entity-level tax imposed under paragraph (2). If the | 15 | | electing partnership or corporation fails to pay the full | 16 | | amount of tax deemed assessed under paragraph (2), the | 17 | | partners or shareholders shall be liable to pay the tax | 18 | | assessed (including penalties and interest). Each partner | 19 | | or shareholder shall be liable for the unpaid assessment | 20 | | based on the ratio of the partner's or shareholder's share | 21 | | of the net income of the partnership over the total net | 22 | | income of the partnership. If the partnership or | 23 | | Subchapter S corporation fails to pay the tax assessed | 24 | | (including penalties and interest) and thereafter an | 25 | | amount of such tax is paid by the partners or | 26 | | shareholders, such amount shall not be collected from the |
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| 1 | | partnership or corporation. | 2 | | (7) Foreign tax. For purposes of the credit allowed | 3 | | under Section 601(b)(3) of this Act, tax paid by a | 4 | | partnership or Subchapter S corporation to another state | 5 | | which, as determined by the Department, is substantially | 6 | | similar to the tax imposed under this subsection, shall be | 7 | | considered tax paid by the partner or shareholder to the | 8 | | extent that the partner's or shareholder's share of the | 9 | | income of the partnership or Subchapter S corporation | 10 | | allocated and apportioned to such other state bears to the | 11 | | total income of the partnership or Subchapter S | 12 | | corporation allocated or apportioned to such other state. | 13 | | (8) Suspension of withholding. The provisions of | 14 | | Section 709.5 of this Act shall not apply to a partnership | 15 | | or Subchapter S corporation for the taxable year for which | 16 | | an election under paragraph (1) is in effect. | 17 | | (9) Requirement to pay estimated tax. For each taxable | 18 | | year for which an election under paragraph (1) is in | 19 | | effect, a partnership or Subchapter S corporation is | 20 | | required to pay estimated tax for such taxable year under | 21 | | Sections 803 and 804 of this Act if the amount payable as | 22 | | estimated tax can reasonably be expected to exceed $500. | 23 | | (10) The provisions of this subsection shall apply | 24 | | only with respect to taxable years for which the | 25 | | limitation on individual deductions applies under Section | 26 | | 164(b)(6) of the Internal Revenue Code. |
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| 1 | | (Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21; | 2 | | 103-9, eff. 6-7-23; 103-396, eff. 1-1-24; revised 12-12-23.) | 3 | | Section 99. Effective date. This Act takes effect upon | 4 | | becoming law. |
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