Public Act 101-0207
 
SB1591 EnrolledLRB101 08762 HLH 53849 b

    AN ACT concerning revenue.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Income Tax Act is amended by adding
Sections 201 and 229 as follows:
 
    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
    Sec. 201. Tax imposed.
    (a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate for
each taxable year ending after July 31, 1969 on the privilege
of earning or receiving income in or as a resident of this
State. Such tax shall be in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
    (b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
        (1) In the case of an individual, trust or estate, for
    taxable years ending prior to July 1, 1989, an amount equal
    to 2 1/2% of the taxpayer's net income for the taxable
    year.
        (2) In the case of an individual, trust or estate, for
    taxable years beginning prior to July 1, 1989 and ending
    after June 30, 1989, an amount equal to the sum of (i) 2
    1/2% of the taxpayer's net income for the period prior to
    July 1, 1989, as calculated under Section 202.3, and (ii)
    3% of the taxpayer's net income for the period after June
    30, 1989, as calculated under Section 202.3.
        (3) In the case of an individual, trust or estate, for
    taxable years beginning after June 30, 1989, and ending
    prior to January 1, 2011, an amount equal to 3% of the
    taxpayer's net income for the taxable year.
        (4) In the case of an individual, trust, or estate, for
    taxable years beginning prior to January 1, 2011, and
    ending after December 31, 2010, an amount equal to the sum
    of (i) 3% of the taxpayer's net income for the period prior
    to January 1, 2011, as calculated under Section 202.5, and
    (ii) 5% of the taxpayer's net income for the period after
    December 31, 2010, as calculated under Section 202.5.
        (5) In the case of an individual, trust, or estate, for
    taxable years beginning on or after January 1, 2011, and
    ending prior to January 1, 2015, an amount equal to 5% of
    the taxpayer's net income for the taxable year.
        (5.1) In the case of an individual, trust, or estate,
    for taxable years beginning prior to January 1, 2015, and
    ending after December 31, 2014, an amount equal to the sum
    of (i) 5% of the taxpayer's net income for the period prior
    to January 1, 2015, as calculated under Section 202.5, and
    (ii) 3.75% of the taxpayer's net income for the period
    after December 31, 2014, as calculated under Section 202.5.
        (5.2) In the case of an individual, trust, or estate,
    for taxable years beginning on or after January 1, 2015,
    and ending prior to July 1, 2017, an amount equal to 3.75%
    of the taxpayer's net income for the taxable year.
        (5.3) In the case of an individual, trust, or estate,
    for taxable years beginning prior to July 1, 2017, and
    ending after June 30, 2017, an amount equal to the sum of
    (i) 3.75% of the taxpayer's net income for the period prior
    to July 1, 2017, as calculated under Section 202.5, and
    (ii) 4.95% of the taxpayer's net income for the period
    after June 30, 2017, as calculated under Section 202.5.
        (5.4) In the case of an individual, trust, or estate,
    for taxable years beginning on or after July 1, 2017, an
    amount equal to 4.95% of the taxpayer's net income for the
    taxable year.
        (6) In the case of a corporation, for taxable years
    ending prior to July 1, 1989, an amount equal to 4% of the
    taxpayer's net income for the taxable year.
        (7) In the case of a corporation, for taxable years
    beginning prior to July 1, 1989 and ending after June 30,
    1989, an amount equal to the sum of (i) 4% of the
    taxpayer's net income for the period prior to July 1, 1989,
    as calculated under Section 202.3, and (ii) 4.8% of the
    taxpayer's net income for the period after June 30, 1989,
    as calculated under Section 202.3.
        (8) In the case of a corporation, for taxable years
    beginning after June 30, 1989, and ending prior to January
    1, 2011, an amount equal to 4.8% of the taxpayer's net
    income for the taxable year.
        (9) In the case of a corporation, for taxable years
    beginning prior to January 1, 2011, and ending after
    December 31, 2010, an amount equal to the sum of (i) 4.8%
    of the taxpayer's net income for the period prior to
    January 1, 2011, as calculated under Section 202.5, and
    (ii) 7% of the taxpayer's net income for the period after
    December 31, 2010, as calculated under Section 202.5.
        (10) In the case of a corporation, for taxable years
    beginning on or after January 1, 2011, and ending prior to
    January 1, 2015, an amount equal to 7% of the taxpayer's
    net income for the taxable year.
        (11) In the case of a corporation, for taxable years
    beginning prior to January 1, 2015, and ending after
    December 31, 2014, an amount equal to the sum of (i) 7% of
    the taxpayer's net income for the period prior to January
    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
    of the taxpayer's net income for the period after December
    31, 2014, as calculated under Section 202.5.
        (12) In the case of a corporation, for taxable years
    beginning on or after January 1, 2015, and ending prior to
    July 1, 2017, an amount equal to 5.25% of the taxpayer's
    net income for the taxable year.
        (13) In the case of a corporation, for taxable years
    beginning prior to July 1, 2017, and ending after June 30,
    2017, an amount equal to the sum of (i) 5.25% of the
    taxpayer's net income for the period prior to July 1, 2017,
    as calculated under Section 202.5, and (ii) 7% of the
    taxpayer's net income for the period after June 30, 2017,
    as calculated under Section 202.5.
        (14) In the case of a corporation, for taxable years
    beginning on or after July 1, 2017, an amount equal to 7%
    of the taxpayer's net income for the taxable year.
    The rates under this subsection (b) are subject to the
provisions of Section 201.5.
    (c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal Property
Tax Replacement Income Tax measured by net income on every
corporation (including Subchapter S corporations), partnership
and trust, for each taxable year ending after June 30, 1979.
Such taxes are imposed on the privilege of earning or receiving
income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income
tax imposed by subsections (a) and (b) of this Section and in
addition to all other occupation or privilege taxes imposed by
this State or by any municipal corporation or political
subdivision thereof.
    (d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S
corporation and except as adjusted by subsection (d-1), shall
be an additional amount equal to 2.85% of such taxpayer's net
income for the taxable year, except that beginning on January
1, 1981, and thereafter, the rate of 2.85% specified in this
subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an
additional amount equal to 1.5% of such taxpayer's net income
for the taxable year.
    (d-1) Rate reduction for certain foreign insurers. In the
case of a foreign insurer, as defined by Section 35A-5 of the
Illinois Insurance Code, whose state or country of domicile
imposes on insurers domiciled in Illinois a retaliatory tax
(excluding any insurer whose premiums from reinsurance assumed
are 50% or more of its total insurance premiums as determined
under paragraph (2) of subsection (b) of Section 304, except
that for purposes of this determination premiums from
reinsurance do not include premiums from inter-affiliate
reinsurance arrangements), beginning with taxable years ending
on or after December 31, 1999, the sum of the rates of tax
imposed by subsections (b) and (d) shall be reduced (but not
increased) to the rate at which the total amount of tax imposed
under this Act, net of all credits allowed under this Act,
shall equal (i) the total amount of tax that would be imposed
on the foreign insurer's net income allocable to Illinois for
the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes
and taxes measured by net income imposed by such foreign
insurer's state or country of domicile, net of all credits
allowed or (ii) a rate of zero if no such tax is imposed on such
income by the foreign insurer's state of domicile. For the
purposes of this subsection (d-1), an inter-affiliate includes
a mutual insurer under common management.
        (1) For the purposes of subsection (d-1), in no event
    shall the sum of the rates of tax imposed by subsections
    (b) and (d) be reduced below the rate at which the sum of:
            (A) the total amount of tax imposed on such foreign
        insurer under this Act for a taxable year, net of all
        credits allowed under this Act, plus
            (B) the privilege tax imposed by Section 409 of the
        Illinois Insurance Code, the fire insurance company
        tax imposed by Section 12 of the Fire Investigation
        Act, and the fire department taxes imposed under
        Section 11-10-1 of the Illinois Municipal Code,
    equals 1.25% for taxable years ending prior to December 31,
    2003, or 1.75% for taxable years ending on or after
    December 31, 2003, of the net taxable premiums written for
    the taxable year, as described by subsection (1) of Section
    409 of the Illinois Insurance Code. This paragraph will in
    no event increase the rates imposed under subsections (b)
    and (d).
        (2) Any reduction in the rates of tax imposed by this
    subsection shall be applied first against the rates imposed
    by subsection (b) and only after the tax imposed by
    subsection (a) net of all credits allowed under this
    Section other than the credit allowed under subsection (i)
    has been reduced to zero, against the rates imposed by
    subsection (d).
    This subsection (d-1) is exempt from the provisions of
Section 250.
    (e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
        (1) A taxpayer shall be allowed a credit equal to .5%
    of the basis of qualified property placed in service during
    the taxable year, provided such property is placed in
    service on or after July 1, 1984. There shall be allowed an
    additional credit equal to .5% of the basis of qualified
    property placed in service during the taxable year,
    provided such property is placed in service on or after
    July 1, 1986, and the taxpayer's base employment within
    Illinois has increased by 1% or more over the preceding
    year as determined by the taxpayer's employment records
    filed with the Illinois Department of Employment Security.
    Taxpayers who are new to Illinois shall be deemed to have
    met the 1% growth in base employment for the first year in
    which they file employment records with the Illinois
    Department of Employment Security. The provisions added to
    this Section by Public Act 85-1200 (and restored by Public
    Act 87-895) shall be construed as declaratory of existing
    law and not as a new enactment. If, in any year, the
    increase in base employment within Illinois over the
    preceding year is less than 1%, the additional credit shall
    be limited to that percentage times a fraction, the
    numerator of which is .5% and the denominator of which is
    1%, but shall not exceed .5%. The investment credit shall
    not be allowed to the extent that it would reduce a
    taxpayer's liability in any tax year below zero, nor may
    any credit for qualified property be allowed for any year
    other than the year in which the property was placed in
    service in Illinois. For tax years ending on or after
    December 31, 1987, and on or before December 31, 1988, the
    credit shall be allowed for the tax year in which the
    property is placed in service, or, if the amount of the
    credit exceeds the tax liability for that year, whether it
    exceeds the original liability or the liability as later
    amended, such excess may be carried forward and applied to
    the tax liability of the 5 taxable years following the
    excess credit years if the taxpayer (i) makes investments
    which cause the creation of a minimum of 2,000 full-time
    equivalent jobs in Illinois, (ii) is located in an
    enterprise zone established pursuant to the Illinois
    Enterprise Zone Act and (iii) is certified by the
    Department of Commerce and Community Affairs (now
    Department of Commerce and Economic Opportunity) as
    complying with the requirements specified in clause (i) and
    (ii) by July 1, 1986. The Department of Commerce and
    Community Affairs (now Department of Commerce and Economic
    Opportunity) shall notify the Department of Revenue of all
    such certifications immediately. For tax years ending
    after December 31, 1988, the credit shall be allowed for
    the tax year in which the property is placed in service,
    or, if the amount of the credit exceeds the tax liability
    for that year, whether it exceeds the original liability or
    the liability as later amended, such excess may be carried
    forward and applied to the tax liability of the 5 taxable
    years following the excess credit years. The credit shall
    be applied to the earliest year for which there is a
    liability. If there is credit from more than one tax year
    that is available to offset a liability, earlier credit
    shall be applied first.
        (2) The term "qualified property" means property
    which:
            (A) is tangible, whether new or used, including
        buildings and structural components of buildings and
        signs that are real property, but not including land or
        improvements to real property that are not a structural
        component of a building such as landscaping, sewer
        lines, local access roads, fencing, parking lots, and
        other appurtenances;
            (B) is depreciable pursuant to Section 167 of the
        Internal Revenue Code, except that "3-year property"
        as defined in Section 168(c)(2)(A) of that Code is not
        eligible for the credit provided by this subsection
        (e);
            (C) is acquired by purchase as defined in Section
        179(d) of the Internal Revenue Code;
            (D) is used in Illinois by a taxpayer who is
        primarily engaged in manufacturing, or in mining coal
        or fluorite, or in retailing, or was placed in service
        on or after July 1, 2006 in a River Edge Redevelopment
        Zone established pursuant to the River Edge
        Redevelopment Zone Act; and
            (E) has not previously been used in Illinois in
        such a manner and by such a person as would qualify for
        the credit provided by this subsection (e) or
        subsection (f).
        (3) For purposes of this subsection (e),
    "manufacturing" means the material staging and production
    of tangible personal property by procedures commonly
    regarded as manufacturing, processing, fabrication, or
    assembling which changes some existing material into new
    shapes, new qualities, or new combinations. For purposes of
    this subsection (e) the term "mining" shall have the same
    meaning as the term "mining" in Section 613(c) of the
    Internal Revenue Code. For purposes of this subsection (e),
    the term "retailing" means the sale of tangible personal
    property for use or consumption and not for resale, or
    services rendered in conjunction with the sale of tangible
    personal property for use or consumption and not for
    resale. For purposes of this subsection (e), "tangible
    personal property" has the same meaning as when that term
    is used in the Retailers' Occupation Tax Act, and, for
    taxable years ending after December 31, 2008, does not
    include the generation, transmission, or distribution of
    electricity.
        (4) The basis of qualified property shall be the basis
    used to compute the depreciation deduction for federal
    income tax purposes.
        (5) If the basis of the property for federal income tax
    depreciation purposes is increased after it has been placed
    in service in Illinois by the taxpayer, the amount of such
    increase shall be deemed property placed in service on the
    date of such increase in basis.
        (6) The term "placed in service" shall have the same
    meaning as under Section 46 of the Internal Revenue Code.
        (7) If during any taxable year, any property ceases to
    be qualified property in the hands of the taxpayer within
    48 months after being placed in service, or the situs of
    any qualified property is moved outside Illinois within 48
    months after being placed in service, the Personal Property
    Tax Replacement Income Tax for such taxable year shall be
    increased. Such increase shall be determined by (i)
    recomputing the investment credit which would have been
    allowed for the year in which credit for such property was
    originally allowed by eliminating such property from such
    computation and, (ii) subtracting such recomputed credit
    from the amount of credit previously allowed. For the
    purposes of this paragraph (7), a reduction of the basis of
    qualified property resulting from a redetermination of the
    purchase price shall be deemed a disposition of qualified
    property to the extent of such reduction.
        (8) Unless the investment credit is extended by law,
    the basis of qualified property shall not include costs
    incurred after December 31, 2018, except for costs incurred
    pursuant to a binding contract entered into on or before
    December 31, 2018.
        (9) Each taxable year ending before December 31, 2000,
    a partnership may elect to pass through to its partners the
    credits to which the partnership is entitled under this
    subsection (e) for the taxable year. A partner may use the
    credit allocated to him or her under this paragraph only
    against the tax imposed in subsections (c) and (d) of this
    Section. If the partnership makes that election, those
    credits shall be allocated among the partners in the
    partnership in accordance with the rules set forth in
    Section 704(b) of the Internal Revenue Code, and the rules
    promulgated under that Section, and the allocated amount of
    the credits shall be allowed to the partners for that
    taxable year. The partnership shall make this election on
    its Personal Property Tax Replacement Income Tax return for
    that taxable year. The election to pass through the credits
    shall be irrevocable.
        For taxable years ending on or after December 31, 2000,
    a partner that qualifies its partnership for a subtraction
    under subparagraph (I) of paragraph (2) of subsection (d)
    of Section 203 or a shareholder that qualifies a Subchapter
    S corporation for a subtraction under subparagraph (S) of
    paragraph (2) of subsection (b) of Section 203 shall be
    allowed a credit under this subsection (e) equal to its
    share of the credit earned under this subsection (e) during
    the taxable year by the partnership or Subchapter S
    corporation, determined in accordance with the
    determination of income and distributive share of income
    under Sections 702 and 704 and Subchapter S of the Internal
    Revenue Code. This paragraph is exempt from the provisions
    of Section 250.
    (f) Investment credit; Enterprise Zone; River Edge
Redevelopment Zone.
        (1) A taxpayer shall be allowed a credit against the
    tax imposed by subsections (a) and (b) of this Section for
    investment in qualified property which is placed in service
    in an Enterprise Zone created pursuant to the Illinois
    Enterprise Zone Act or, for property placed in service on
    or after July 1, 2006, a River Edge Redevelopment Zone
    established pursuant to the River Edge Redevelopment Zone
    Act. For partners, shareholders of Subchapter S
    corporations, and owners of limited liability companies,
    if the liability company is treated as a partnership for
    purposes of federal and State income taxation, there shall
    be allowed a credit under this subsection (f) to be
    determined in accordance with the determination of income
    and distributive share of income under Sections 702 and 704
    and Subchapter S of the Internal Revenue Code. The credit
    shall be .5% of the basis for such property. The credit
    shall be available only in the taxable year in which the
    property is placed in service in the Enterprise Zone or
    River Edge Redevelopment Zone and shall not be allowed to
    the extent that it would reduce a taxpayer's liability for
    the tax imposed by subsections (a) and (b) of this Section
    to below zero. For tax years ending on or after December
    31, 1985, the credit shall be allowed for the tax year in
    which the property is placed in service, or, if the amount
    of the credit exceeds the tax liability for that year,
    whether it exceeds the original liability or the liability
    as later amended, such excess may be carried forward and
    applied to the tax liability of the 5 taxable years
    following the excess credit year. The credit shall be
    applied to the earliest year for which there is a
    liability. If there is credit from more than one tax year
    that is available to offset a liability, the credit
    accruing first in time shall be applied first.
        (2) The term qualified property means property which:
            (A) is tangible, whether new or used, including
        buildings and structural components of buildings;
            (B) is depreciable pursuant to Section 167 of the
        Internal Revenue Code, except that "3-year property"
        as defined in Section 168(c)(2)(A) of that Code is not
        eligible for the credit provided by this subsection
        (f);
            (C) is acquired by purchase as defined in Section
        179(d) of the Internal Revenue Code;
            (D) is used in the Enterprise Zone or River Edge
        Redevelopment Zone by the taxpayer; and
            (E) has not been previously used in Illinois in
        such a manner and by such a person as would qualify for
        the credit provided by this subsection (f) or
        subsection (e).
        (3) The basis of qualified property shall be the basis
    used to compute the depreciation deduction for federal
    income tax purposes.
        (4) If the basis of the property for federal income tax
    depreciation purposes is increased after it has been placed
    in service in the Enterprise Zone or River Edge
    Redevelopment Zone by the taxpayer, the amount of such
    increase shall be deemed property placed in service on the
    date of such increase in basis.
        (5) The term "placed in service" shall have the same
    meaning as under Section 46 of the Internal Revenue Code.
        (6) If during any taxable year, any property ceases to
    be qualified property in the hands of the taxpayer within
    48 months after being placed in service, or the situs of
    any qualified property is moved outside the Enterprise Zone
    or River Edge Redevelopment Zone within 48 months after
    being placed in service, the tax imposed under subsections
    (a) and (b) of this Section for such taxable year shall be
    increased. Such increase shall be determined by (i)
    recomputing the investment credit which would have been
    allowed for the year in which credit for such property was
    originally allowed by eliminating such property from such
    computation, and (ii) subtracting such recomputed credit
    from the amount of credit previously allowed. For the
    purposes of this paragraph (6), a reduction of the basis of
    qualified property resulting from a redetermination of the
    purchase price shall be deemed a disposition of qualified
    property to the extent of such reduction.
        (7) There shall be allowed an additional credit equal
    to 0.5% of the basis of qualified property placed in
    service during the taxable year in a River Edge
    Redevelopment Zone, provided such property is placed in
    service on or after July 1, 2006, and the taxpayer's base
    employment within Illinois has increased by 1% or more over
    the preceding year as determined by the taxpayer's
    employment records filed with the Illinois Department of
    Employment Security. Taxpayers who are new to Illinois
    shall be deemed to have met the 1% growth in base
    employment for the first year in which they file employment
    records with the Illinois Department of Employment
    Security. If, in any year, the increase in base employment
    within Illinois over the preceding year is less than 1%,
    the additional credit shall be limited to that percentage
    times a fraction, the numerator of which is 0.5% and the
    denominator of which is 1%, but shall not exceed 0.5%.
    (g) (Blank).
    (h) Investment credit; High Impact Business.
        (1) Subject to subsections (b) and (b-5) of Section 5.5
    of the Illinois Enterprise Zone Act, a taxpayer shall be
    allowed a credit against the tax imposed by subsections (a)
    and (b) of this Section for investment in qualified
    property which is placed in service by a Department of
    Commerce and Economic Opportunity designated High Impact
    Business. The credit shall be .5% of the basis for such
    property. The credit shall not be available (i) until the
    minimum investments in qualified property set forth in
    subdivision (a)(3)(A) of Section 5.5 of the Illinois
    Enterprise Zone Act have been satisfied or (ii) until the
    time authorized in subsection (b-5) of the Illinois
    Enterprise Zone Act for entities designated as High Impact
    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
    Act, and shall not be allowed to the extent that it would
    reduce a taxpayer's liability for the tax imposed by
    subsections (a) and (b) of this Section to below zero. The
    credit applicable to such investments shall be taken in the
    taxable year in which such investments have been completed.
    The credit for additional investments beyond the minimum
    investment by a designated high impact business authorized
    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
    Enterprise Zone Act shall be available only in the taxable
    year in which the property is placed in service and shall
    not be allowed to the extent that it would reduce a
    taxpayer's liability for the tax imposed by subsections (a)
    and (b) of this Section to below zero. For tax years ending
    on or after December 31, 1987, the credit shall be allowed
    for the tax year in which the property is placed in
    service, or, if the amount of the credit exceeds the tax
    liability for that year, whether it exceeds the original
    liability or the liability as later amended, such excess
    may be carried forward and applied to the tax liability of
    the 5 taxable years following the excess credit year. The
    credit shall be applied to the earliest year for which
    there is a liability. If there is credit from more than one
    tax year that is available to offset a liability, the
    credit accruing first in time shall be applied first.
        Changes made in this subdivision (h)(1) by Public Act
    88-670 restore changes made by Public Act 85-1182 and
    reflect existing law.
        (2) The term qualified property means property which:
            (A) is tangible, whether new or used, including
        buildings and structural components of buildings;
            (B) is depreciable pursuant to Section 167 of the
        Internal Revenue Code, except that "3-year property"
        as defined in Section 168(c)(2)(A) of that Code is not
        eligible for the credit provided by this subsection
        (h);
            (C) is acquired by purchase as defined in Section
        179(d) of the Internal Revenue Code; and
            (D) is not eligible for the Enterprise Zone
        Investment Credit provided by subsection (f) of this
        Section.
        (3) The basis of qualified property shall be the basis
    used to compute the depreciation deduction for federal
    income tax purposes.
        (4) If the basis of the property for federal income tax
    depreciation purposes is increased after it has been placed
    in service in a federally designated Foreign Trade Zone or
    Sub-Zone located in Illinois by the taxpayer, the amount of
    such increase shall be deemed property placed in service on
    the date of such increase in basis.
        (5) The term "placed in service" shall have the same
    meaning as under Section 46 of the Internal Revenue Code.
        (6) If during any taxable year ending on or before
    December 31, 1996, any property ceases to be qualified
    property in the hands of the taxpayer within 48 months
    after being placed in service, or the situs of any
    qualified property is moved outside Illinois within 48
    months after being placed in service, the tax imposed under
    subsections (a) and (b) of this Section for such taxable
    year shall be increased. Such increase shall be determined
    by (i) recomputing the investment credit which would have
    been allowed for the year in which credit for such property
    was originally allowed by eliminating such property from
    such computation, and (ii) subtracting such recomputed
    credit from the amount of credit previously allowed. For
    the purposes of this paragraph (6), a reduction of the
    basis of qualified property resulting from a
    redetermination of the purchase price shall be deemed a
    disposition of qualified property to the extent of such
    reduction.
        (7) Beginning with tax years ending after December 31,
    1996, if a taxpayer qualifies for the credit under this
    subsection (h) and thereby is granted a tax abatement and
    the taxpayer relocates its entire facility in violation of
    the explicit terms and length of the contract under Section
    18-183 of the Property Tax Code, the tax imposed under
    subsections (a) and (b) of this Section shall be increased
    for the taxable year in which the taxpayer relocated its
    facility by an amount equal to the amount of credit
    received by the taxpayer under this subsection (h).
    (i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, a credit
shall be allowed against the tax imposed by subsections (a) and
(b) of this Section for the tax imposed by subsections (c) and
(d) of this Section. This credit shall be computed by
multiplying the tax imposed by subsections (c) and (d) of this
Section by a fraction, the numerator of which is base income
allocable to Illinois and the denominator of which is Illinois
base income, and further multiplying the product by the tax
rate imposed by subsections (a) and (b) of this Section.
    Any credit earned on or after December 31, 1986 under this
subsection which is unused in the year the credit is computed
because it exceeds the tax liability imposed by subsections (a)
and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried
forward and applied to the tax liability imposed by subsections
(a) and (b) of the 5 taxable years following the excess credit
year, provided that no credit may be carried forward to any
year ending on or after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the
earliest credit arising under this subsection shall be applied
first.
    If, during any taxable year ending on or after December 31,
1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such taxable
year to reduce the amount of credit claimed.
    (j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) under this Section for all
amounts paid or accrued, on behalf of all persons employed by
the taxpayer in Illinois or Illinois residents employed outside
of Illinois by a taxpayer, for educational or vocational
training in semi-technical or technical fields or semi-skilled
or skilled fields, which were deducted from gross income in the
computation of taxable income. The credit against the tax
imposed by subsections (a) and (b) shall be 1.6% of such
training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection (j) to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
    Any credit allowed under this subsection which is unused in
the year the credit is earned may be carried forward to each of
the 5 taxable years following the year for which the credit is
first computed until it is used. This credit shall be applied
first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax
year that is available to offset a liability the earliest
credit arising under this subsection shall be applied first. No
carryforward credit may be claimed in any tax year ending on or
after December 31, 2003.
    (k) Research and development credit. For tax years ending
after July 1, 1990 and prior to December 31, 2003, and
beginning again for tax years ending on or after December 31,
2004, and ending prior to January 1, 2027 January 1, 2022, a
taxpayer shall be allowed a credit against the tax imposed by
subsections (a) and (b) of this Section for increasing research
activities in this State. The credit allowed against the tax
imposed by subsections (a) and (b) shall be equal to 6 1/2% of
the qualifying expenditures for increasing research activities
in this State. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
    For purposes of this subsection, "qualifying expenditures"
means the qualifying expenditures as defined for the federal
credit for increasing research activities which would be
allowable under Section 41 of the Internal Revenue Code and
which are conducted in this State, "qualifying expenditures for
increasing research activities in this State" means the excess
of qualifying expenditures for the taxable year in which
incurred over qualifying expenditures for the base period,
"qualifying expenditures for the base period" means the average
of the qualifying expenditures for each year in the base
period, and "base period" means the 3 taxable years immediately
preceding the taxable year for which the determination is being
made.
    Any credit in excess of the tax liability for the taxable
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over
as a credit against the tax liability for the following 5
taxable years or until it has been fully used, whichever occurs
first; provided that no credit earned in a tax year ending
prior to December 31, 2003 may be carried forward to any year
ending on or after December 31, 2003.
    If an unused credit is carried forward to a given year from
2 or more earlier years, that credit arising in the earliest
year will be applied first against the tax liability for the
given year. If a tax liability for the given year still
remains, the credit from the next earliest year will then be
applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused
credit or credits then will be carried forward to the next
following year in which a tax liability is incurred, except
that no credit can be carried forward to a year which is more
than 5 years after the year in which the expense for which the
credit is given was incurred.
    No inference shall be drawn from this amendatory Act of the
91st General Assembly in construing this Section for taxable
years beginning before January 1, 1999.
    It is the intent of the General Assembly that the research
and development credit under this subsection (k) shall apply
continuously for all tax years ending on or after December 31,
2004 and ending prior to January 1, 2027 January 1, 2022,
including, but not limited to, the period beginning on January
1, 2016 and ending on the effective date of this amendatory Act
of the 100th General Assembly. All actions taken in reliance on
the continuation of the credit under this subsection (k) by any
taxpayer are hereby validated.
    (l) Environmental Remediation Tax Credit.
        (i) For tax years ending after December 31, 1997 and on
    or before December 31, 2001, a taxpayer shall be allowed a
    credit against the tax imposed by subsections (a) and (b)
    of this Section for certain amounts paid for unreimbursed
    eligible remediation costs, as specified in this
    subsection. For purposes of this Section, "unreimbursed
    eligible remediation costs" means costs approved by the
    Illinois Environmental Protection Agency ("Agency") under
    Section 58.14 of the Environmental Protection Act that were
    paid in performing environmental remediation at a site for
    which a No Further Remediation Letter was issued by the
    Agency and recorded under Section 58.10 of the
    Environmental Protection Act. The credit must be claimed
    for the taxable year in which Agency approval of the
    eligible remediation costs is granted. The credit is not
    available to any taxpayer if the taxpayer or any related
    party caused or contributed to, in any material respect, a
    release of regulated substances on, in, or under the site
    that was identified and addressed by the remedial action
    pursuant to the Site Remediation Program of the
    Environmental Protection Act. After the Pollution Control
    Board rules are adopted pursuant to the Illinois
    Administrative Procedure Act for the administration and
    enforcement of Section 58.9 of the Environmental
    Protection Act, determinations as to credit availability
    for purposes of this Section shall be made consistent with
    those rules. For purposes of this Section, "taxpayer"
    includes a person whose tax attributes the taxpayer has
    succeeded to under Section 381 of the Internal Revenue Code
    and "related party" includes the persons disallowed a
    deduction for losses by paragraphs (b), (c), and (f)(1) of
    Section 267 of the Internal Revenue Code by virtue of being
    a related taxpayer, as well as any of its partners. The
    credit allowed against the tax imposed by subsections (a)
    and (b) shall be equal to 25% of the unreimbursed eligible
    remediation costs in excess of $100,000 per site, except
    that the $100,000 threshold shall not apply to any site
    contained in an enterprise zone as determined by the
    Department of Commerce and Community Affairs (now
    Department of Commerce and Economic Opportunity). The
    total credit allowed shall not exceed $40,000 per year with
    a maximum total of $150,000 per site. For partners and
    shareholders of subchapter S corporations, there shall be
    allowed a credit under this subsection to be determined in
    accordance with the determination of income and
    distributive share of income under Sections 702 and 704 and
    subchapter S of the Internal Revenue Code.
        (ii) A credit allowed under this subsection that is
    unused in the year the credit is earned may be carried
    forward to each of the 5 taxable years following the year
    for which the credit is first earned until it is used. The
    term "unused credit" does not include any amounts of
    unreimbursed eligible remediation costs in excess of the
    maximum credit per site authorized under paragraph (i).
    This credit shall be applied first to the earliest year for
    which there is a liability. If there is a credit under this
    subsection from more than one tax year that is available to
    offset a liability, the earliest credit arising under this
    subsection shall be applied first. A credit allowed under
    this subsection may be sold to a buyer as part of a sale of
    all or part of the remediation site for which the credit
    was granted. The purchaser of a remediation site and the
    tax credit shall succeed to the unused credit and remaining
    carry-forward period of the seller. To perfect the
    transfer, the assignor shall record the transfer in the
    chain of title for the site and provide written notice to
    the Director of the Illinois Department of Revenue of the
    assignor's intent to sell the remediation site and the
    amount of the tax credit to be transferred as a portion of
    the sale. In no event may a credit be transferred to any
    taxpayer if the taxpayer or a related party would not be
    eligible under the provisions of subsection (i).
        (iii) For purposes of this Section, the term "site"
    shall have the same meaning as under Section 58.2 of the
    Environmental Protection Act.
    (m) Education expense credit. Beginning with tax years
ending after December 31, 1999, a taxpayer who is the custodian
of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this
Section for qualified education expenses incurred on behalf of
the qualifying pupils. The credit shall be equal to 25% of
qualified education expenses, but in no event may the total
credit under this subsection claimed by a family that is the
custodian of qualifying pupils exceed (i) $500 for tax years
ending prior to December 31, 2017, and (ii) $750 for tax years
ending on or after December 31, 2017. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. Notwithstanding any other
provision of law, for taxable years beginning on or after
January 1, 2017, no taxpayer may claim a credit under this
subsection (m) if the taxpayer's adjusted gross income for the
taxable year exceeds (i) $500,000, in the case of spouses
filing a joint federal tax return or (ii) $250,000, in the case
of all other taxpayers. This subsection is exempt from the
provisions of Section 250 of this Act.
    For purposes of this subsection:
    "Qualifying pupils" means individuals who (i) are
residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit is
sought were full-time pupils enrolled in a kindergarten through
twelfth grade education program at any school, as defined in
this subsection.
    "Qualified education expense" means the amount incurred on
behalf of a qualifying pupil in excess of $250 for tuition,
book fees, and lab fees at the school in which the pupil is
enrolled during the regular school year.
    "School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School Code,
except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for
the credit under this Section.
    "Custodian" means, with respect to qualifying pupils, an
Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
    (n) River Edge Redevelopment Zone site remediation tax
credit.
        (i) For tax years ending on or after December 31, 2006,
    a taxpayer shall be allowed a credit against the tax
    imposed by subsections (a) and (b) of this Section for
    certain amounts paid for unreimbursed eligible remediation
    costs, as specified in this subsection. For purposes of
    this Section, "unreimbursed eligible remediation costs"
    means costs approved by the Illinois Environmental
    Protection Agency ("Agency") under Section 58.14a of the
    Environmental Protection Act that were paid in performing
    environmental remediation at a site within a River Edge
    Redevelopment Zone for which a No Further Remediation
    Letter was issued by the Agency and recorded under Section
    58.10 of the Environmental Protection Act. The credit must
    be claimed for the taxable year in which Agency approval of
    the eligible remediation costs is granted. The credit is
    not available to any taxpayer if the taxpayer or any
    related party caused or contributed to, in any material
    respect, a release of regulated substances on, in, or under
    the site that was identified and addressed by the remedial
    action pursuant to the Site Remediation Program of the
    Environmental Protection Act. Determinations as to credit
    availability for purposes of this Section shall be made
    consistent with rules adopted by the Pollution Control
    Board pursuant to the Illinois Administrative Procedure
    Act for the administration and enforcement of Section 58.9
    of the Environmental Protection Act. For purposes of this
    Section, "taxpayer" includes a person whose tax attributes
    the taxpayer has succeeded to under Section 381 of the
    Internal Revenue Code and "related party" includes the
    persons disallowed a deduction for losses by paragraphs
    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
    Code by virtue of being a related taxpayer, as well as any
    of its partners. The credit allowed against the tax imposed
    by subsections (a) and (b) shall be equal to 25% of the
    unreimbursed eligible remediation costs in excess of
    $100,000 per site.
        (ii) A credit allowed under this subsection that is
    unused in the year the credit is earned may be carried
    forward to each of the 5 taxable years following the year
    for which the credit is first earned until it is used. This
    credit shall be applied first to the earliest year for
    which there is a liability. If there is a credit under this
    subsection from more than one tax year that is available to
    offset a liability, the earliest credit arising under this
    subsection shall be applied first. A credit allowed under
    this subsection may be sold to a buyer as part of a sale of
    all or part of the remediation site for which the credit
    was granted. The purchaser of a remediation site and the
    tax credit shall succeed to the unused credit and remaining
    carry-forward period of the seller. To perfect the
    transfer, the assignor shall record the transfer in the
    chain of title for the site and provide written notice to
    the Director of the Illinois Department of Revenue of the
    assignor's intent to sell the remediation site and the
    amount of the tax credit to be transferred as a portion of
    the sale. In no event may a credit be transferred to any
    taxpayer if the taxpayer or a related party would not be
    eligible under the provisions of subsection (i).
        (iii) For purposes of this Section, the term "site"
    shall have the same meaning as under Section 58.2 of the
    Environmental Protection Act.
    (o) For each of taxable years during the Compassionate Use
of Medical Cannabis Pilot Program, a surcharge is imposed on
all taxpayers on income arising from the sale or exchange of
capital assets, depreciable business property, real property
used in the trade or business, and Section 197 intangibles of
an organization registrant under the Compassionate Use of
Medical Cannabis Pilot Program Act. The amount of the surcharge
is equal to the amount of federal income tax liability for the
taxable year attributable to those sales and exchanges. The
surcharge imposed does not apply if:
        (1) the medical cannabis cultivation center
    registration, medical cannabis dispensary registration, or
    the property of a registration is transferred as a result
    of any of the following:
            (A) bankruptcy, a receivership, or a debt
        adjustment initiated by or against the initial
        registration or the substantial owners of the initial
        registration;
            (B) cancellation, revocation, or termination of
        any registration by the Illinois Department of Public
        Health;
            (C) a determination by the Illinois Department of
        Public Health that transfer of the registration is in
        the best interests of Illinois qualifying patients as
        defined by the Compassionate Use of Medical Cannabis
        Pilot Program Act;
            (D) the death of an owner of the equity interest in
        a registrant;
            (E) the acquisition of a controlling interest in
        the stock or substantially all of the assets of a
        publicly traded company;
            (F) a transfer by a parent company to a wholly
        owned subsidiary; or
            (G) the transfer or sale to or by one person to
        another person where both persons were initial owners
        of the registration when the registration was issued;
        or
        (2) the cannabis cultivation center registration,
    medical cannabis dispensary registration, or the
    controlling interest in a registrant's property is
    transferred in a transaction to lineal descendants in which
    no gain or loss is recognized or as a result of a
    transaction in accordance with Section 351 of the Internal
    Revenue Code in which no gain or loss is recognized.
(Source: P.A. 100-22, eff. 7-6-17.)
 
    (35 ILCS 5/229 new)
    Sec. 229. Apprenticeship education expense credit.
    (a) As used in this Section:
    "Department" means the Department of Commerce and Economic
Opportunity.
    "Employer" means an Illinois taxpayer who is the employer
of the qualifying apprentice.
    "Qualifying apprentice" means an individual who: (i) is a
resident of the State of Illinois; (ii) is at least 16 years
old at the close of the school year for which a credit is
sought; (iii) during the school year for which a credit is
sought, was a full-time apprentice enrolled in an
apprenticeship program which is registered with the United
States Department of Labor, Office of Apprenticeship; and (iv)
is employed in Illinois by the taxpayer who is the employer.
    "Qualified education expense" means the amount incurred on
behalf of a qualifying apprentice not to exceed $3,500 for
tuition, book fees, and lab fees at the school or community
college in which the apprentice is enrolled during the regular
school year.
    "School" means any public or nonpublic secondary school in
Illinois that is: (i) an institution of higher education that
provides a program that leads to an industry-recognized
postsecondary credential or degree; (ii) an entity that carries
out programs registered under the federal National
Apprenticeship Act; or (iii) another public or private provider
of a program of training services, which may include a joint
labor-management organization.
    (b) For taxable years beginning on or after January 1,
2020, and beginning on or before January 1, 2025, the employer
of one or more qualifying apprentices shall be allowed a credit
against the tax imposed by subsections (a) and (b) of Section
201 of the Illinois Income Tax Act for qualified education
expenses incurred on behalf of a qualifying apprentice. The
credit shall be equal to 100% of the qualified education
expenses, but in no event may the total credit amount awarded
to a single taxpayer in a single taxable year exceed $3,500 per
qualifying apprentice. A taxpayer shall be entitled to an
additional $1,500 credit against the tax imposed by subsections
(a) and (b) of Section 201 of the Illinois Income Tax Act if
(i) the qualifying apprentice resides in an underserved area as
defined in Section 5-5 of the Economic Development for a
Growing Economy Tax Credit Act during the school year for which
a credit is sought by an employer or (ii) the employer's
principal place of business is located in an underserved area,
as defined in Section 5-5 of the Economic Development for a
Growing Economy Tax Credit Act. In no event shall a credit
under this Section reduce the taxpayer's liability under this
Act to less than zero. For partners, shareholders of Subchapter
S corporations, and owners of limited liability companies, if
the liability company is treated as a partnership for purposes
of federal and State income taxation, there shall be allowed a
credit under this Section to be determined in accordance with
the determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code.
    (c) The Department shall implement a program to certify
applicants for an apprenticeship credit under this Section.
Upon satisfactory review, the Department shall issue a tax
credit certificate to an employer incurring costs on behalf of
a qualifying apprentice stating the amount of the tax credit to
which the employer is entitled. If the employer is seeking a
tax credit for multiple qualifying apprentices, the Department
may issue a single tax credit certificate that encompasses the
aggregate total of tax credits for qualifying apprentices for a
single employer.
    (d) The Department, in addition to those powers granted
under the Civil Administrative Code of Illinois, is granted and
shall have all the powers necessary or convenient to carry out
and effectuate the purposes and provisions of this Section,
including, but not limited to, power and authority to:
        (1) Adopt rules deemed necessary and appropriate for
    the administration of this Section; establish forms for
    applications, notifications, contracts, or any other
    agreements; and accept applications at any time during the
    year and require that all applications be submitted via the
    Internet. The Department shall require that applications
    be submitted in electronic form.
        (2) Provide guidance and assistance to applicants
    pursuant to the provisions of this Section and cooperate
    with applicants to promote, foster, and support job
    creation within the State.
        (3) Enter into agreements and memoranda of
    understanding for participation of and engage in
    cooperation with agencies of the federal government, units
    of local government, universities, research foundations or
    institutions, regional economic development corporations,
    or other organizations for the purposes of this Section.
        (4) Gather information and conduct inquiries, in the
    manner and by the methods it deems desirable, including,
    without limitation, gathering information with respect to
    applicants for the purpose of making any designations or
    certifications necessary or desirable or to gather
    information in furtherance of the purposes of this Act.
        (5) Establish, negotiate, and effectuate any term,
    agreement, or other document with any person necessary or
    appropriate to accomplish the purposes of this Section, and
    consent, subject to the provisions of any agreement with
    another party, to the modification or restructuring of any
    agreement to which the Department is a party.
        (6) Provide for sufficient personnel to permit
    administration, staffing, operation, and related support
    required to adequately discharge its duties and
    responsibilities described in this Section from funds made
    available through charges to applicants or from funds as
    may be appropriated by the General Assembly for the
    administration of this Section.
        (7) Require applicants, upon written request, to issue
    any necessary authorization to the appropriate federal,
    State, or local authority or any other person for the
    release to the Department of information requested by the
    Department, including, but not be limited to, financial
    reports, returns, or records relating to the applicant or
    to the amount of credit allowable under this Section.
        (8) Require that an applicant shall, at all times, keep
    proper books of record and account in accordance with
    generally accepted accounting principles consistently
    applied, with the books, records, or papers related to the
    agreement in the custody or control of the applicant open
    for reasonable Department inspection and audits,
    including, without limitation, the making of copies of the
    books, records, or papers.
        (9) Take whatever actions are necessary or appropriate
    to protect the State's interest in the event of bankruptcy,
    default, foreclosure, or noncompliance with the terms and
    conditions of financial assistance or participation
    required under this Section or any agreement entered into
    under this Section, including the power to sell, dispose
    of, lease, or rent, upon terms and conditions determined by
    the Department to be appropriate, real or personal property
    that the Department may recover as a result of these
    actions.
    (e) The Department, in consultation with the Department of
Revenue, shall adopt rules to administer this Section. The
aggregate amount of the tax credits that may be claimed under
this Section for qualified education expenses incurred by an
employer on behalf of a qualifying apprentice shall be limited
to $5,000,000 per calendar year. If applications for a greater
amount are received, credits shall be allowed on a first-come
first-served basis, based on the date on which each properly
completed application for a certificate of eligibility is
received by the Department. If more than one certificate is
received on the same day, the credits will be awarded based on
the time of submission for that particular day.
    (f) An employer may not sell or otherwise transfer a credit
awarded under this Section to another person or taxpayer.
    (g) The employer shall provide the Department such
information as the Department may require, including but not
limited to: (i) the name, age, and taxpayer identification
number of each qualifying apprentice employed by the taxpayer
during the taxable year; (ii) the amount of qualified education
expenses incurred with respect to each qualifying apprentice;
and (iii) the name of the school at which the qualifying
apprentice is enrolled and the qualified education expenses are
incurred.
    (h) On or before July 1 of each year, the Department shall
report to the Governor and the General Assembly on the tax
credit certificates awarded under this Section for the prior
calendar year. The report must include:
        (1) the name of each employer awarded or allocated a
    credit;
        (2) the number of qualifying apprentices for whom the
    employer has incurred qualified education expenses;
        (3) the North American Industry Classification System
    (NAICS) code applicable to each employer awarded or
    allocated a credit;
        (4) the amount of the credit awarded or allocated to
    each employer;
        (5) the total number of employers awarded or allocated
    a credit;
        (6) the total number of qualifying apprentices for whom
    employers receiving credits under this Section incurred
    qualified education expenses; and
        (7) the average cost to the employer of all
    apprenticeships receiving credits under this Section.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.