SMALL BUSINESS TAX CREDIT

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HB1819 - 104th General Assembly

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB1819

Introduced 1/28/2025, by Rep. Curtis J. Tarver, II

SYNOPSIS AS INTRODUCED:

35 ILCS 25/10
35 ILCS 25/25
35 ILCS 25/35

Amends the Small Business Job Creation Tax Credit Act. Renews the
program for incentive periods beginning on or after July 1, 2018 and ending
on or before June 30, 2025. Removes language concerning the Put Illinois to
Work Program for the second series of incentive periods. Provides that the
term "full-time employee" means an individual who is employed for a basic
wage for at least 35 hours each week (currently, employed for a basic wage
for at least 35 hours each week or renders any other standard of service
generally accepted by industry custom or practice as full-time
employment). Provides that a net increase in the number of full-time
Illinois employees shall be treated as continuous if a different new
employee is hired as a replacement within 8 weeks after the position
becomes vacant (currently, a reasonable time). Effective immediately.
LRB104 08829 HLH 18884 b

A BILL FOR

HB1819
LRB104 08829 HLH 18884 b
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 Small Business Job Creation Tax Credit Act
5
is amended by changing Sections 10, 25, and 35 as follows:

6

(35 ILCS 25/10)
7

Sec. 10.
Definitions.
In this Act:
8

"Applicant" means a person that is operating a business
9
located within the State of Illinois that is engaged in
10
interstate or intrastate commerce and either:
11

(1) has no more than 50 full-time employees, without
12

regard to the location of employment of such employees at
13

the beginning of the incentive period; or
14

(2)
for incentive periods ending on or before June 30,
15

2016,
hired within the incentive period an employee who
16

had participated as worker-trainee in the Put Illinois to
17

Work Program during 2010.
18

In the case of any person that is a member of a unitary
19
business group within the meaning of subdivision (a)(27) of
20
Section 1501 of the Illinois Income Tax Act, "applicant"
21
refers to the unitary business group.
22

"Certificate" means the tax credit certificate issued by
23
the Department under Section 35 of this Act.

HB1819
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LRB104 08829 HLH 18884 b
1

"Certificate of eligibility" means the certificate issued
2
by the Department under Section 20 of this Act.
3

"Credit" means the amount awarded by the Department to an
4
applicant by issuance of a certificate under Section 35 of
5
this Act for each new full-time equivalent employee hired or
6
job created.
7

"Department" means the Department of Commerce and Economic
8
Opportunity.
9

"Director" means the Director of the Department.
10

"Full-time employee" means an individual who is employed
11
for a basic wage for at least 35 hours each week
or who renders
12
any other standard of service generally accepted by industry
13
custom or practice as full-time employment
. An individual for
14
whom a W-2 is issued by a Professional Employer Organization
15
is a full-time employee if he or she is employed in the service
16
of the applicant for a basic wage for at least 35 hours each
17
week
or renders any other standard of service generally
18
accepted by industry custom or practice as full-time
19
employment
. For the purposes of this Act, such an individual
20
shall be considered a full-time employee of the applicant.
21

"Professional Employer Organization" (PEO) shall have the
22
same meaning as defined in Section 5-5 of the Economic
23
Development for a Growing Economy Tax Credit Act. As used in
24
this Section, "Professional Employer Organization" does not
25
include a day and temporary labor service agency regulated
26
under the Day and Temporary Labor Services Act.

HB1819
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LRB104 08829 HLH 18884 b
1

"Incentive period" means the period beginning on July 1
2
and ending on June 30 of the following year. The first
series
3
of
incentive
periods

period
shall begin on July 1, 2010 and
the
4
last incentive period shall
end on June 30, 2016.
The second
5
series of incentive periods shall begin on July 1, 2018 and end
6
on June 30, 2025.
7

"Basic wage" means compensation for employment that is no
8
less than $10 per hour or the equivalent salary for a new
9
employee.
10

"New employee" means a full-time employee
who first became
11
employed by an applicant with less than 50 full-time employees
12
within the incentive period whose hire results in a net
13
increase in the applicant's full-time Illinois employees and
14
who is receiving a basic wage as compensation.

:

15

(1) who first became employed by an applicant with
16

less than 50 full-time employees within the incentive
17

period whose hire results in a net increase in the
18

applicant's full-time Illinois employees and who is
19

receiving a basic wage as compensation; or

20

(2) who participated as a worker-trainee in the Put
21

Illinois to Work Program during 2010 and who is
22

subsequently hired during the incentive period by an
23

applicant and who is receiving a basic wage as
24

compensation.

25

The term "new employee" does not include:
26

(1) a person who was previously employed in Illinois

HB1819
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LRB104 08829 HLH 18884 b
1

by the applicant or a related member prior to the onset of
2

the incentive period; or
3

(2) any individual who has a direct or indirect
4

ownership interest of at least 5% in the profits, capital,
5

or value of the applicant or a related member.
6

"Noncompliance date" means, in the case of an applicant
7
that is not complying with the requirements of the provisions
8
of this Act, the day following the last date upon which the
9
taxpayer was in compliance with the requirements of the
10
provisions of this Act, as determined by the Director,
11
pursuant to Section 45 of this Act.
12

"Put Illinois to Work Program" means a worker training and
13
employment program that was established by the State of
14
Illinois with funding from the United States Department of
15
Health and Human Services of Emergency Temporary Assistance
16
for Needy Families funds authorized by the American Recovery
17
and Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA
18
TANF funds were in turn used by the State of Illinois to fund
19
the Put Illinois to Work Program.
20

"Related member" means a person that, with respect to the
21
applicant during any portion of the incentive period, is any
22
one of the following,
23

(1) An individual, if the individual and the members
24

of the individual's family (as defined in Section 318 of
25

the Internal Revenue Code) own directly, indirectly,
26

beneficially, or constructively, in the aggregate, at

HB1819
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LRB104 08829 HLH 18884 b
1

least 50% of the value of the outstanding profits,
2

capital, stock, or other ownership interest in the
3

applicant.
4

(2) A partnership, estate, or trust and any partner or
5

beneficiary, if the partnership, estate, or trust and its
6

partners or beneficiaries own directly, indirectly,
7

beneficially, or constructively, in the aggregate, at
8

least 50% of the profits, capital, stock, or other
9

ownership interest in the applicant.
10

(3) A corporation, and any party related to the
11

corporation in a manner that would require an attribution
12

of stock from the corporation under the attribution rules
13

of Section 318 of the Internal Revenue Code, if the
14

applicant and any other related member own, in the
15

aggregate, directly, indirectly, beneficially, or
16

constructively, at least 50% of the value of the
17

corporation's outstanding stock.
18

(4) A corporation and any party related to that
19

corporation in a manner that would require an attribution
20

of stock from the corporation to the party or from the
21

party to the corporation under the attribution rules of
22

Section 318 of the Internal Revenue Code, if the
23

corporation and all such related parties own, in the
24

aggregate, at least 50% of the profits, capital, stock, or
25

other ownership interest in the applicant.
26

(5) A person to or from whom there is attribution of

HB1819
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LRB104 08829 HLH 18884 b
1

stock ownership in accordance with Section 1563(e) of the
2

Internal Revenue Code, except that for purposes of
3

determining whether a person is a related member under
4

this paragraph, "20%" shall be substituted for "5%"
5

whenever "5%" appears in Section 1563(e) of the Internal
6

Revenue Code.
7
(Source: P.A. 100-863, eff. 8-14-18.)

8

(35 ILCS 25/25)
9

Sec. 25.
Tax credit.
10

(a) Subject to the conditions set forth in this Act, an
11
applicant is entitled to a credit against payment of taxes
12
withheld under Section 704A of the Illinois Income Tax Act:
13

(1) for new employees who participated as
14

worker-trainees in the Put Illinois to Work Program during
15

2010
, for incentive periods ending on or before June 30,
16

2016
:
17

(A) in the first calendar year ending on or after
18

the date that is 6 months after December 31, 2010, or
19

the date of hire, whichever is later. Under this
20

subparagraph, the applicant is entitled to one-half of
21

the credit allowable for each new employee who is
22

employed for at least 6 months after the date of hire;
23

and
24

(B) in the first calendar year ending on or after
25

the date that is 12 months after December 31, 2010, or

HB1819
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LRB104 08829 HLH 18884 b
1

the date of hire, whichever is later. Under this
2

subparagraph, the applicant is entitled to one-half of
3

the credit allowable for each new employee who is
4

employed for at least 12 months after the date of hire;
5

(2) for all other new employees, in the first
6

calendar year ending on or after the date that is 12 months
7

after the date of hire of a new employee. The credit shall
8

be allowed as a credit to an applicant for each full-time
9

employee hired during the incentive period that results in
10

a net increase in full-time Illinois employees, where the
11

net increase in the employer's full-time Illinois
12

employees is maintained for at least 12 months.
13

(b) The Department shall make credit awards under this Act
14
to further job creation.
15

(c) The credit shall be claimed for the first calendar
16
year ending on or after the date on which the certificate is
17
issued by the Department.
18

(d) The credit shall not exceed $2,500 per new employee
19
hired.
20

(e) The net increase in full-time Illinois employees,
21
measured on an annual full-time equivalent basis, shall be the
22
total number of full-time Illinois employees of the applicant
23
on the final day of the incentive period, minus the number of
24
full-time Illinois employees employed by the employer on the
25
first day of that same incentive period. For purposes of the
26
calculation, an employer that begins doing business in this

HB1819
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LRB104 08829 HLH 18884 b
1
State during the incentive period, as determined by the
2
Director, shall be treated as having zero Illinois employees
3
on the first day of the incentive period.
4

(f) The net increase in the number of full-time Illinois
5
employees of the applicant under subsection (e) must be
6
sustained continuously for at least 12 months, starting with
7
the date of hire of a new employee during the incentive period.
8
Eligibility for the credit does not depend on the continuous
9
employment of any particular individual. For purposes of this
10
subsection (f), if a new employee ceases to be employed before
11
the completion of the 12-month period for any reason, the net
12
increase in the number of full-time Illinois employees shall
13
be treated as continuous if a different new employee is hired
14
as a replacement
within a reasonable time
for the same
15
position
within 8 weeks after the position becomes vacant
.
16

(g) The Department shall promulgate rules to enable an
17
applicant for which a PEO has been contracted to issue W-2s and
18
make payment of taxes withheld under Section 704A of the
19
Illinois Income Tax Act for new employees to retain the
20
benefit of tax credits to which the applicant is otherwise
21
entitled under this Act.
22
(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
23
97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)

24

(35 ILCS 25/35)
25

Sec. 35.
Application for award of tax credit; tax credit

HB1819
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LRB104 08829 HLH 18884 b
1
certificate.
2

(a) On or after the conclusion of the 12-month period (or
3
6-month period, for purposes of subparagraph (A) of item (1)
4
of subsection (a) of Section 25) after a new employee has been
5
hired, an applicant shall file with the Department an
6
application for award of a credit. The application shall
7
include the following:
8

(1) The names, Social Security numbers, job
9

descriptions, salary or wage rates, and dates of hire of
10

the new employees with respect to whom the credit is being
11

requested
, and an indication of whether each new employee
12

listed participated as a worker-trainee in the Put
13

Illinois to Work Program
.
14

(2) A certification that each new employee listed has
15

been retained on the job for one year (or 6 months, for
16

purposes of subparagraph (A) of item (1) of subsection (a)
17

of Section 25) from the date of hire.
18

(3) The number of new employees hired by the applicant
19

during the incentive period.
20

(4) The net increase in the number of full-time
21

Illinois employees of the applicant (including the new
22

employees listed in the request) between the beginning of
23

the incentive period and the dates on which the new
24

employees listed in the request were hired. This
25

requirement does not apply for tax credits the applicant
26

is seeking because the new employee had participated as a

HB1819
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LRB104 08829 HLH 18884 b
1

worker-trainee in the Put Illinois to Work Program.
2

(5) An agreement that the Director is authorized to
3

verify with the appropriate State agencies the information
4

contained in the request before issuing a certificate to
5

the applicant.
6

(6) Any other information the Department determines to
7

be appropriate.
8

(b) Although an application may be filed at any time after
9
the conclusion of the 12-month period (or 6-month period, for
10
purposes of subparagraph (A) of item (1) of subsection (a) of
11
Section 25) after a new employee was hired, an application
12
filed more than 90 days after the earliest date on which it
13
could have been filed shall not be awarded any credit if, prior
14
to the date it is filed, the Department has received
15
applications under this Section for credits totaling more than
16
$50,000,000.
17

(c) The Department shall issue a certificate to each
18
applicant awarded a credit under this Act. The certificate
19
shall include the following:
20

(1) The name and taxpayer identification number of the
21

applicant.
22

(2) The date on which the certificate is issued.
23

(3) The credit amount that will be allowed.
24

(4) Any other information the Department determines to
25

be appropriate.
26
(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)

HB1819
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LRB104 08829 HLH 18884 b
1

Section 99.
Effective date.
This Act takes effect upon
2
becoming law.

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