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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5017

Introduced 2/10/2026, by Rep. Tony M. McCombie

SYNOPSIS AS INTRODUCED:

35 ILCS 5/201

Amends the Illinois Income Tax Act. Provides that the rate of tax on
individuals, trusts, and estates shall be (i) 4.5667% of the taxpayer's
net income for taxable years beginning on or after January 1, 2026 and
ending before January 1, 2027, (ii) 4.1833% of the taxpayer's net income
for taxable years beginning on or after January 1, 2027 and ending before
January 1, 2028, and (iii) 3.8% of the taxpayer's net income for taxable
years beginning on or after January 1, 2028 (currently, 4.95%). Provides
that the rate of tax for corporations is (i) 6.3% of the taxpayer's net
income for taxable years beginning on or after January 1, 2026 and ending
before January 1, 2027, (ii) 5.6% of the taxpayer's net income for taxable
years beginning on or after January 1, 2027 and ending before January 1,
2028, and (iii) 4.9% of the taxpayer's net income for taxable years
beginning on or after January 1, 2028. Effective immediately.
LRB104 15510 HLH 28674 b

A BILL FOR

HB5017
LRB104 15510 HLH 28674 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 Illinois Income Tax Act is amended by
5
changing Sections 201 and 901 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

HB5017
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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
and
16

ending before January 1, 2026
, an amount equal to 4.95% of
17

the taxpayer's net income for the taxable year.
18

(5.5) In the case of an individual, trust, or estate,
19

for taxable years beginning prior to January 1, 2026, and
20

ending after December 31, 2025, an amount equal to the sum
21

of (i) 4.95% of the taxpayer's net income for the period
22

prior to January 1, 2026, as calculated under Section
23

202.5, and (ii) 4.5667% of the taxpayer's net income for
24

the period after December 31, 2025, as calculated under
25

Section 202.5.

26

(5.6) In the case of an individual, trust, or estate,

HB5017
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1

for taxable years beginning on or after January 1, 2026
2

and ending before January 1, 2027, an amount equal to
3

4.5667% of the taxpayer's net income for the taxable year.

4

(5.7) In the case of an individual, trust, or estate,
5

for taxable years beginning prior to January 1, 2027, and
6

ending after December 31, 2026, an amount equal to the sum
7

of (i) 4.5667% of the taxpayer's net income for the period
8

prior to January 1, 2027, as calculated under Section
9

202.5, and (ii) 4.1833% of the taxpayer's net income for
10

the period after December 31, 2026, as calculated under
11

Section 202.5.

12

(5.8) In the case of an individual, trust, or estate,
13

for taxable years beginning on or after January 1, 2027
14

and ending before January 1, 2028, an amount equal to
15

4.1833% of the taxpayer's net income for the taxable year.

16

(5.9) In the case of an individual, trust, or estate,
17

for taxable years beginning prior to January 1, 2028, and
18

ending after December 31, 2027, an amount equal to the sum
19

of (i) 4.1833% of the taxpayer's net income for the period
20

prior to January 1, 2028, as calculated under Section
21

202.5, and (ii) 3.8% of the taxpayer's net income for the
22

period after December 31, 2027, as calculated under
23

Section 202.5.

24

(5.10) In the case of an individual, trust, or estate,
25

for taxable years beginning on or after January 1, 2028,
26

an amount equal to 3.8% of the taxpayer's net income for

HB5017
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LRB104 15510 HLH 28674 b
1

the taxable year.

2

(6) In the case of a corporation, for taxable years
3

ending prior to July 1, 1989, an amount equal to 4% of the
4

taxpayer's net income for the taxable year.
5

(7) In the case of a corporation, for taxable years
6

beginning prior to July 1, 1989 and ending after June 30,
7

1989, an amount equal to the sum of (i) 4% of the
8

taxpayer's net income for the period prior to July 1,
9

1989, as calculated under Section 202.3, and (ii) 4.8% of
10

the taxpayer's net income for the period after June 30,
11

1989, as calculated under Section 202.3.
12

(8) In the case of a corporation, for taxable years
13

beginning after June 30, 1989, and ending prior to January
14

1, 2011, an amount equal to 4.8% of the taxpayer's net
15

income for the taxable year.
16

(9) In the case of a corporation, for taxable years
17

beginning prior to January 1, 2011, and ending after
18

December 31, 2010, an amount equal to the sum of (i) 4.8%
19

of the taxpayer's net income for the period prior to
20

January 1, 2011, as calculated under Section 202.5, and
21

(ii) 7% of the taxpayer's net income for the period after
22

December 31, 2010, as calculated under Section 202.5.
23

(10) In the case of a corporation, for taxable years
24

beginning on or after January 1, 2011, and ending prior to
25

January 1, 2015, an amount equal to 7% of the taxpayer's
26

net income for the taxable year.

HB5017
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LRB104 15510 HLH 28674 b
1

(11) In the case of a corporation, for taxable years
2

beginning prior to January 1, 2015, and ending after
3

December 31, 2014, an amount equal to the sum of (i) 7% of
4

the taxpayer's net income for the period prior to January
5

1, 2015, as calculated under Section 202.5, and (ii) 5.25%
6

of the taxpayer's net income for the period after December
7

31, 2014, as calculated under Section 202.5.
8

(12) In the case of a corporation, for taxable years
9

beginning on or after January 1, 2015, and ending prior to
10

July 1, 2017, an amount equal to 5.25% of the taxpayer's
11

net income for the taxable year.
12

(13) In the case of a corporation, for taxable years
13

beginning prior to July 1, 2017, and ending after June 30,
14

2017, an amount equal to the sum of (i) 5.25% of the
15

taxpayer's net income for the period prior to July 1,
16

2017, as calculated under Section 202.5, and (ii) 7% of
17

the taxpayer's net income for the period after June 30,
18

2017, as calculated under Section 202.5.
19

(14) In the case of a corporation, for taxable years
20

beginning on or after July 1, 2017
and ending before
21

January 1, 2026
, an amount equal to 7% of the taxpayer's
22

net income for the taxable year.
23

(15) In the case of a corporation, for taxable years
24

beginning prior to January 1, 2026, and ending after
25

December 31, 2025, an amount equal to the sum of (i) 7% of
26

the taxpayer's net income for the period prior to January

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LRB104 15510 HLH 28674 b
1

1, 2026, as calculated under Section 202.5, and (ii) 6.3%
2

of the taxpayer's net income for the period after December
3

31, 2025, as calculated under Section 202.5.

4

(16) In the case of a corporation, for taxable years
5

beginning on or after January 1, 2026 and ending before
6

January 1, 2027, an amount equal to 6.3% of the taxpayer's
7

net income for the taxable year.

8

(17) In the case of a corporation, for taxable years
9

beginning prior to January 1, 2027, and ending after
10

December 31, 2026, an amount equal to the sum of (i) 6.3%
11

of the taxpayer's net income for the period prior to
12

January 1, 2027, as calculated under Section 202.5, and
13

(ii) 5.6% of the taxpayer's net income for the period
14

after December 31, 2026, as calculated under Section
15

202.5.

16

(18) In the case of a corporation, for taxable years
17

beginning on or after January 1, 2027 and ending before
18

January 1, 2028, an amount equal to 5.6% of the taxpayer's
19

net income for the taxable year.

20

(19) In the case of a corporation, for taxable years
21

beginning prior to January 1, 2028, and ending after
22

December 31, 2027, an amount equal to the sum of (i) 5.6%
23

of the taxpayer's net income for the period prior to
24

January 1, 2027, as calculated under Section 202.5, and
25

(ii) 4.9% of the taxpayer's net income for the period
26

after December 31, 2026, as calculated under Section

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LRB104 15510 HLH 28674 b
1

202.5.

2

(20) In the case of a corporation, for taxable years
3

beginning on or after January 1, 2028, an amount equal to
4

4.9% of the taxpayer's net income for the taxable year.

5

The rates under this subsection (b) are subject to the
6
provisions of Section 201.5.
7

(b-5) Surcharge; sale or exchange of assets, properties,
8
and intangibles of organization gaming licensees. For each of
9
taxable years 2019 through 2027, a surcharge is imposed on all
10
taxpayers on income arising from the sale or exchange of
11
capital assets, depreciable business property, real property
12
used in the trade or business, and Section 197 intangibles (i)
13
of an organization licensee under the Illinois Horse Racing
14
Act of 1975 and (ii) of an organization gaming licensee under
15
the Illinois Gambling Act. The amount of the surcharge is
16
equal to the amount of federal income tax liability for the
17
taxable year attributable to those sales and exchanges. The
18
surcharge imposed shall not apply if:
19

(1) the organization gaming license, organization
20

license, or racetrack property is transferred as a result
21

of any of the following:
22

(A) bankruptcy, a receivership, or a debt
23

adjustment initiated by or against the initial
24

licensee or the substantial owners of the initial
25

licensee;
26

(B) cancellation, revocation, or termination of

HB5017
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LRB104 15510 HLH 28674 b
1

any such license by the Illinois Gaming Board or the
2

Illinois Racing Board;
3

(C) a determination by the Illinois Gaming Board
4

that transfer of the license is in the best interests
5

of Illinois gaming;
6

(D) the death of an owner of the equity interest in
7

a licensee;
8

(E) the acquisition of a controlling interest in
9

the stock or substantially all of the assets of a
10

publicly traded company;
11

(F) a transfer by a parent company to a wholly
12

owned subsidiary; or
13

(G) the transfer or sale to or by one person to
14

another person where both persons were initial owners
15

of the license when the license was issued; or
16

(2) the controlling interest in the organization
17

gaming license, organization license, or racetrack
18

property is transferred in a transaction to lineal
19

descendants in which no gain or loss is recognized or as a
20

result of a transaction in accordance with Section 351 of
21

the Internal Revenue Code in which no gain or loss is
22

recognized; or
23

(3) live horse racing was not conducted in 2010 at a
24

racetrack located within 3 miles of the Mississippi River
25

under a license issued pursuant to the Illinois Horse
26

Racing Act of 1975.

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The transfer of an organization gaming license,
2
organization license, or racetrack property by a person other
3
than the initial licensee to receive the organization gaming
4
license is not subject to a surcharge. The Department shall
5
adopt rules necessary to implement and administer this
6
subsection.
7

(c) Personal Property Tax Replacement Income Tax.
8
Beginning on July 1, 1979 and thereafter, in addition to such
9
income tax, there is also hereby imposed the Personal Property
10
Tax Replacement Income Tax measured by net income on every
11
corporation (including Subchapter S corporations), partnership
12
and trust, for each taxable year ending after June 30, 1979.
13
Such taxes are imposed on the privilege of earning or
14
receiving income in or as a resident of this State. The
15
Personal Property Tax Replacement Income Tax shall be in
16
addition to the income tax imposed by subsections (a) and (b)
17
of this Section and in addition to all other occupation or
18
privilege taxes imposed by this State or by any municipal
19
corporation or political subdivision thereof.
20

(d) Additional Personal Property Tax Replacement Income
21
Tax Rates. The personal property tax replacement income tax
22
imposed by this subsection and subsection (c) of this Section
23
in the case of a corporation, other than a Subchapter S
24
corporation and except as adjusted by subsection (d-1), shall
25
be an additional amount equal to 2.85% of such taxpayer's net
26
income for the taxable year, except that beginning on January

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1
1, 1981, and thereafter, the rate of 2.85% specified in this
2
subsection shall be reduced to 2.5%, and in the case of a
3
partnership, trust or a Subchapter S corporation shall be an
4
additional amount equal to 1.5% of such taxpayer's net income
5
for the taxable year.
6

(d-1) Rate reduction for certain foreign insurers. In the
7
case of a foreign insurer, as defined by Section 35A-5 of the
8
Illinois Insurance Code, whose state or country of domicile
9
imposes on insurers domiciled in Illinois a retaliatory tax
10
(excluding any insurer whose premiums from reinsurance assumed
11
are 50% or more of its total insurance premiums as determined
12
under paragraph (2) of subsection (b) of Section 304, except
13
that for purposes of this determination premiums from
14
reinsurance do not include premiums from inter-affiliate
15
reinsurance arrangements), beginning with taxable years ending
16
on or after December 31, 1999, the sum of the rates of tax
17
imposed by subsections (b) and (d) shall be reduced (but not
18
increased) to the rate at which the total amount of tax imposed
19
under this Act, net of all credits allowed under this Act,
20
shall equal (i) the total amount of tax that would be imposed
21
on the foreign insurer's net income allocable to Illinois for
22
the taxable year by such foreign insurer's state or country of
23
domicile if that net income were subject to all income taxes
24
and taxes measured by net income imposed by such foreign
25
insurer's state or country of domicile, net of all credits
26
allowed or (ii) a rate of zero if no such tax is imposed on

HB5017
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LRB104 15510 HLH 28674 b
1
such income by the foreign insurer's state of domicile. For
2
the purposes of this subsection (d-1), an inter-affiliate
3
includes a mutual insurer under common management.
4

(1) For the purposes of subsection (d-1), in no event
5

shall the sum of the rates of tax imposed by subsections
6

(b) and (d) be reduced below the rate at which the sum of:
7

(A) the total amount of tax imposed on such
8

foreign insurer under this Act for a taxable year, net
9

of all credits allowed under this Act, plus
10

(B) the privilege tax imposed by Section 409 of
11

the Illinois Insurance Code, the fire insurance
12

company tax imposed by Section 12 of the Fire
13

Investigation Act, and the fire department taxes
14

imposed under Section 11-10-1 of the Illinois
15

Municipal Code,
16

equals 1.25% for taxable years ending prior to December
17

31, 2003, or 1.75% for taxable years ending on or after
18

December 31, 2003, of the net taxable premiums written for
19

the taxable year, as described by subsection (1) of
20

Section 409 of the Illinois Insurance Code. This paragraph
21

will in no event increase the rates imposed under
22

subsections (b) and (d).
23

(2) Any reduction in the rates of tax imposed by this
24

subsection shall be applied first against the rates
25

imposed by subsection (b) and only after the tax imposed
26

by subsection (a) net of all credits allowed under this

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LRB104 15510 HLH 28674 b
1

Section other than the credit allowed under subsection (i)
2

has been reduced to zero, against the rates imposed by
3

subsection (d).
4

This subsection (d-1) is exempt from the provisions of
5
Section 250.
6

(e) Investment credit. A taxpayer shall be allowed a
7
credit against the Personal Property Tax Replacement Income
8
Tax for investment in qualified property.
9

(1) A taxpayer shall be allowed a credit equal to .5%
10

of the basis of qualified property placed in service
11

during the taxable year, provided such property is placed
12

in service on or after July 1, 1984. There shall be allowed
13

an additional credit equal to .5% of the basis of
14

qualified property placed in service during the taxable
15

year, provided such property is placed in service on or
16

after July 1, 1986, and the taxpayer's base employment
17

within Illinois has increased by 1% or more over the
18

preceding year as determined by the taxpayer's employment
19

records filed with the Illinois Department of Employment
20

Security. Taxpayers who are new to Illinois shall be
21

deemed to have met the 1% growth in base employment for the
22

first year in which they file employment records with the
23

Illinois Department of Employment Security. The provisions
24

added to this Section by Public Act 85-1200 (and restored
25

by Public Act 87-895) shall be construed as declaratory of
26

existing law and not as a new enactment. If, in any year,

HB5017
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LRB104 15510 HLH 28674 b
1

the increase in base employment within Illinois over the
2

preceding year is less than 1%, the additional credit
3

shall be limited to that percentage times a fraction, the
4

numerator of which is .5% and the denominator of which is
5

1%, but shall not exceed .5%. The investment credit shall
6

not be allowed to the extent that it would reduce a
7

taxpayer's liability in any tax year below zero, nor may
8

any credit for qualified property be allowed for any year
9

other than the year in which the property was placed in
10

service in Illinois. For tax years ending on or after
11

December 31, 1987, and on or before December 31, 1988, the
12

credit shall be allowed for the tax year in which the
13

property is placed in service, or, if the amount of the
14

credit exceeds the tax liability for that year, whether it
15

exceeds the original liability or the liability as later
16

amended, such excess may be carried forward and applied to
17

the tax liability of the 5 taxable years following the
18

excess credit years if the taxpayer (i) makes investments
19

which cause the creation of a minimum of 2,000 full-time
20

equivalent jobs in Illinois, (ii) is located in an
21

enterprise zone established pursuant to the Illinois
22

Enterprise Zone Act and (iii) is certified by the
23

Department of Commerce and Community Affairs (now
24

Department of Commerce and Economic Opportunity) as
25

complying with the requirements specified in clause (i)
26

and (ii) by July 1, 1986. The Department of Commerce and

HB5017
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1

Community Affairs (now Department of Commerce and Economic
2

Opportunity) shall notify the Department of Revenue of all
3

such certifications immediately. For tax years ending
4

after December 31, 1988, the credit shall be allowed for
5

the tax year in which the property is placed in service,
6

or, if the amount of the credit exceeds the tax liability
7

for that year, whether it exceeds the original liability
8

or the liability as later amended, such excess may be
9

carried forward and applied to the tax liability of the 5
10

taxable years following the excess credit years. The
11

credit shall be applied to the earliest year for which
12

there is a liability. If there is credit from more than one
13

tax year that is available to offset a liability, earlier
14

credit shall be applied first.
15

(2) The term "qualified property" means property
16

which:
17

(A) is tangible, whether new or used, including
18

buildings and structural components of buildings and
19

signs that are real property, but not including land
20

or improvements to real property that are not a
21

structural component of a building such as
22

landscaping, sewer lines, local access roads, fencing,
23

parking lots, and other appurtenances;
24

(B) is depreciable pursuant to Section 167 of the
25

Internal Revenue Code, except that "3-year property"
26

as defined in Section 168(c)(2)(A) of that Code is not

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eligible for the credit provided by this subsection
2

(e);
3

(C) is acquired by purchase as defined in Section
4

179(d) of the Internal Revenue Code;
5

(D) is used in Illinois by a taxpayer who is
6

primarily engaged in manufacturing, or in mining coal
7

or fluorite, or in retailing, or was placed in service
8

on or after July 1, 2006 in a River Edge Redevelopment
9

Zone established pursuant to the River Edge
10

Redevelopment Zone Act; and
11

(E) has not previously been used in Illinois in
12

such a manner and by such a person as would qualify for
13

the credit provided by this subsection (e) or
14

subsection (f).
15

(3) For purposes of this subsection (e),
16

"manufacturing" means the material staging and production
17

of tangible personal property by procedures commonly
18

regarded as manufacturing, processing, fabrication, or
19

assembling which changes some existing material into new
20

shapes, new qualities, or new combinations. For purposes
21

of this subsection (e) the term "mining" shall have the
22

same meaning as the term "mining" in Section 613(c) of the
23

Internal Revenue Code. For purposes of this subsection
24

(e), the term "retailing" means the sale of tangible
25

personal property for use or consumption and not for
26

resale, or services rendered in conjunction with the sale

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of tangible personal property for use or consumption and
2

not for resale. For purposes of this subsection (e),
3

"tangible personal property" has the same meaning as when
4

that term is used in the Retailers' Occupation Tax Act,
5

and, for taxable years ending after December 31, 2008,
6

does not include the generation, transmission, or
7

distribution of electricity.
8

(4) The basis of qualified property shall be the basis
9

used to compute the depreciation deduction for federal
10

income tax purposes.
11

(5) If the basis of the property for federal income
12

tax depreciation purposes is increased after it has been
13

placed in service in Illinois by the taxpayer, the amount
14

of such increase shall be deemed property placed in
15

service on the date of such increase in basis.
16

(6) The term "placed in service" shall have the same
17

meaning as under Section 46 of the Internal Revenue Code.
18

(7) If during any taxable year, any property ceases to
19

be qualified property in the hands of the taxpayer within
20

48 months after being placed in service, or the situs of
21

any qualified property is moved outside Illinois within 48
22

months after being placed in service, the Personal
23

Property Tax Replacement Income Tax for such taxable year
24

shall be increased. Such increase shall be determined by
25

(i) recomputing the investment credit which would have
26

been allowed for the year in which credit for such

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property was originally allowed by eliminating such
2

property from such computation and, (ii) subtracting such
3

recomputed credit from the amount of credit previously
4

allowed. For the purposes of this paragraph (7), a
5

reduction of the basis of qualified property resulting
6

from a redetermination of the purchase price shall be
7

deemed a disposition of qualified property to the extent
8

of such reduction.
9

(8) Unless the investment credit is extended by law,
10

the basis of qualified property shall not include costs
11

incurred after December 31, 2018, except for costs
12

incurred pursuant to a binding contract entered into on or
13

before December 31, 2018.
14

(9) Each taxable year ending before December 31, 2000,
15

a partnership may elect to pass through to its partners
16

the credits to which the partnership is entitled under
17

this subsection (e) for the taxable year. A partner may
18

use the credit allocated to him or her under this
19

paragraph only against the tax imposed in subsections (c)
20

and (d) of this Section. If the partnership makes that
21

election, those credits shall be allocated among the
22

partners in the partnership in accordance with the rules
23

set forth in Section 704(b) of the Internal Revenue Code,
24

and the rules promulgated under that Section, and the
25

allocated amount of the credits shall be allowed to the
26

partners for that taxable year. The partnership shall make

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this election on its Personal Property Tax Replacement
2

Income Tax return for that taxable year. The election to
3

pass through the credits shall be irrevocable.
4

For taxable years ending on or after December 31,
5

2000, a partner that qualifies its partnership for a
6

subtraction under subparagraph (I) of paragraph (2) of
7

subsection (d) of Section 203 or a shareholder that
8

qualifies a Subchapter S corporation for a subtraction
9

under subparagraph (S) of paragraph (2) of subsection (b)
10

of Section 203 shall be allowed a credit under this
11

subsection (e) equal to its share of the credit earned
12

under this subsection (e) during the taxable year by the
13

partnership or Subchapter S corporation, determined in
14

accordance with the determination of income and
15

distributive share of income under Sections 702 and 704
16

and Subchapter S of the Internal Revenue Code. This
17

paragraph is exempt from the provisions of Section 250.
18

(f) Investment credit; Enterprise Zone; River Edge
19
Redevelopment Zone.
20

(1) A taxpayer shall be allowed a credit against the
21

tax imposed by subsections (a) and (b) of this Section for
22

investment in qualified property which is placed in
23

service in an Enterprise Zone created pursuant to the
24

Illinois Enterprise Zone Act or, for property placed in
25

service on or after July 1, 2006, a River Edge
26

Redevelopment Zone established pursuant to the River Edge

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Redevelopment Zone Act. For partners, shareholders of
2

Subchapter S corporations, and owners of limited liability
3

companies, if the liability company is treated as a
4

partnership for purposes of federal and State income
5

taxation, for taxable years ending before December 31,
6

2023, there shall be allowed a credit under this
7

subsection (f) to be determined in accordance with the
8

determination of income and distributive share of income
9

under Sections 702 and 704 and Subchapter S of the
10

Internal Revenue Code. For taxable years ending on or
11

after December 31, 2023, for partners and shareholders of
12

Subchapter S corporations, the provisions of Section 251
13

shall apply with respect to the credit under this
14

subsection. The credit shall be .5% of the basis for such
15

property. The credit shall be available only in the
16

taxable year in which the property is placed in service in
17

the Enterprise Zone or River Edge Redevelopment Zone and
18

shall not be allowed to the extent that it would reduce a
19

taxpayer's liability for the tax imposed by subsections
20

(a) and (b) of this Section to below zero. For tax years
21

ending on or after December 31, 1985, the credit shall be
22

allowed for the tax year in which the property is placed in
23

service, or, if the amount of the credit exceeds the tax
24

liability for that year, whether it exceeds the original
25

liability or the liability as later amended, such excess
26

may be carried forward and applied to the tax liability of

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1

the 5 taxable years following the excess credit year. The
2

credit shall be applied to the earliest year for which
3

there is a liability. If there is credit from more than one
4

tax year that is available to offset a liability, the
5

credit accruing first in time shall be applied first.
6

(2) The term qualified property means property which:
7

(A) is tangible, whether new or used, including
8

buildings and structural components of buildings;
9

(B) is depreciable pursuant to Section 167 of the
10

Internal Revenue Code, except that "3-year property"
11

as defined in Section 168(c)(2)(A) of that Code is not
12

eligible for the credit provided by this subsection
13

(f);
14

(C) is acquired by purchase as defined in Section
15

179(d) of the Internal Revenue Code;
16

(D) is used in the Enterprise Zone or River Edge
17

Redevelopment Zone by the taxpayer; and
18

(E) has not been previously used in Illinois in
19

such a manner and by such a person as would qualify for
20

the credit provided by this subsection (f) or
21

subsection (e).
22

(3) The basis of qualified property shall be the basis
23

used to compute the depreciation deduction for federal
24

income tax purposes.
25

(4) If the basis of the property for federal income
26

tax depreciation purposes is increased after it has been

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placed in service in the Enterprise Zone or River Edge
2

Redevelopment Zone by the taxpayer, the amount of such
3

increase shall be deemed property placed in service on the
4

date of such increase in basis.
5

(5) The term "placed in service" shall have the same
6

meaning as under Section 46 of the Internal Revenue Code.
7

(6) If during any taxable year, any property ceases to
8

be qualified property in the hands of the taxpayer within
9

48 months after being placed in service, or the situs of
10

any qualified property is moved outside the Enterprise
11

Zone or River Edge Redevelopment Zone within 48 months
12

after being placed in service, the tax imposed under
13

subsections (a) and (b) of this Section for such taxable
14

year shall be increased. Such increase shall be determined
15

by (i) recomputing the investment credit which would have
16

been allowed for the year in which credit for such
17

property was originally allowed by eliminating such
18

property from such computation, and (ii) subtracting such
19

recomputed credit from the amount of credit previously
20

allowed. For the purposes of this paragraph (6), a
21

reduction of the basis of qualified property resulting
22

from a redetermination of the purchase price shall be
23

deemed a disposition of qualified property to the extent
24

of such reduction.
25

(7) There shall be allowed an additional credit equal
26

to 0.5% of the basis of qualified property placed in

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service during the taxable year in a River Edge
2

Redevelopment Zone, provided such property is placed in
3

service on or after July 1, 2006, and the taxpayer's base
4

employment within Illinois has increased by 1% or more
5

over the preceding year as determined by the taxpayer's
6

employment records filed with the Illinois Department of
7

Employment Security. Taxpayers who are new to Illinois
8

shall be deemed to have met the 1% growth in base
9

employment for the first year in which they file
10

employment records with the Illinois Department of
11

Employment Security. If, in any year, the increase in base
12

employment within Illinois over the preceding year is less
13

than 1%, the additional credit shall be limited to that
14

percentage times a fraction, the numerator of which is
15

0.5% and the denominator of which is 1%, but shall not
16

exceed 0.5%.
17

(8) For taxable years beginning on or after January 1,
18

2021, there shall be allowed an Enterprise Zone
19

construction jobs credit against the taxes imposed under
20

subsections (a) and (b) of this Section as provided in
21

Section 13 of the Illinois Enterprise Zone Act.
22

The credit or credits may not reduce the taxpayer's
23

liability to less than zero. If the amount of the credit or
24

credits exceeds the taxpayer's liability, the excess may
25

be carried forward and applied against the taxpayer's
26

liability in succeeding calendar years in the same manner

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1

provided under paragraph (4) of Section 211 of this Act.
2

The credit or credits shall be applied to the earliest
3

year for which there is a tax liability. If there are
4

credits from more than one taxable year that are available
5

to offset a liability, the earlier credit shall be applied
6

first.
7

For partners, shareholders of Subchapter S
8

corporations, and owners of limited liability companies,
9

if the liability company is treated as a partnership for
10

the purposes of federal and State income taxation, for
11

taxable years ending before December 31, 2023, there shall
12

be allowed a credit under this Section to be determined in
13

accordance with the determination of income and
14

distributive share of income under Sections 702 and 704
15

and Subchapter S of the Internal Revenue Code. For taxable
16

years ending on or after December 31, 2023, for partners
17

and shareholders of Subchapter S corporations, the
18

provisions of Section 251 shall apply with respect to the
19

credit under this subsection.
20

The total aggregate amount of credits awarded under
21

the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
22

shall not exceed $20,000,000 in any State fiscal year.
23

This paragraph (8) is exempt from the provisions of
24

Section 250.
25

(g) (Blank).
26

(h) Investment credit; High Impact Business.

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(1) Subject to subsections (b) and (b-5) of Section
2

5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
3

be allowed a credit against the tax imposed by subsections
4

(a) and (b) of this Section for investment in qualified
5

property which is placed in service by a Department of
6

Commerce and Economic Opportunity designated High Impact
7

Business. The credit shall be .5% of the basis for such
8

property. The credit shall not be available (i) until the
9

minimum investments in qualified property set forth in
10

subdivision (a)(3)(A) of Section 5.5 of the Illinois
11

Enterprise Zone Act have been satisfied or (ii) until the
12

time authorized in subsection (b-5) of the Illinois
13

Enterprise Zone Act for entities designated as High Impact
14

Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
15

(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
16

Act, and shall not be allowed to the extent that it would
17

reduce a taxpayer's liability for the tax imposed by
18

subsections (a) and (b) of this Section to below zero. The
19

credit applicable to such investments shall be taken in
20

the taxable year in which such investments have been
21

completed. The credit for additional investments beyond
22

the minimum investment by a designated high impact
23

business authorized under subdivision (a)(3)(A) of Section
24

5.5 of the Illinois Enterprise Zone Act shall be available
25

only in the taxable year in which the property is placed in
26

service and shall not be allowed to the extent that it

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1

would reduce a taxpayer's liability for the tax imposed by
2

subsections (a) and (b) of this Section to below zero. For
3

tax years ending on or after December 31, 1987, the credit
4

shall be allowed for the tax year in which the property is
5

placed in service, or, if the amount of the credit exceeds
6

the tax liability for that year, whether it exceeds the
7

original liability or the liability as later amended, such
8

excess may be carried forward and applied to the tax
9

liability of the 5 taxable years following the excess
10

credit year. The credit shall be applied to the earliest
11

year for which there is a liability. If there is credit
12

from more than one tax year that is available to offset a
13

liability, the credit accruing first in time shall be
14

applied first.
15

Changes made in this subdivision (h)(1) by Public Act
16

88-670 restore changes made by Public Act 85-1182 and
17

reflect existing law.
18

(2) The term qualified property means property which:
19

(A) is tangible, whether new or used, including
20

buildings and structural components of buildings;
21

(B) is depreciable pursuant to Section 167 of the
22

Internal Revenue Code, except that "3-year property"
23

as defined in Section 168(c)(2)(A) of that Code is not
24

eligible for the credit provided by this subsection
25

(h);
26

(C) is acquired by purchase as defined in Section

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1

179(d) of the Internal Revenue Code; and
2

(D) is not eligible for the Enterprise Zone
3

Investment Credit provided by subsection (f) of this
4

Section.
5

(3) The basis of qualified property shall be the basis
6

used to compute the depreciation deduction for federal
7

income tax purposes.
8

(4) If the basis of the property for federal income
9

tax depreciation purposes is increased after it has been
10

placed in service in a federally designated Foreign Trade
11

Zone or Sub-Zone located in Illinois by the taxpayer, the
12

amount of such increase shall be deemed property placed in
13

service on the date of such increase in basis.
14

(5) The term "placed in service" shall have the same
15

meaning as under Section 46 of the Internal Revenue Code.
16

(6) If during any taxable year ending on or before
17

December 31, 1996, any property ceases to be qualified
18

property in the hands of the taxpayer within 48 months
19

after being placed in service, or the situs of any
20

qualified property is moved outside Illinois within 48
21

months after being placed in service, the tax imposed
22

under subsections (a) and (b) of this Section for such
23

taxable year shall be increased. Such increase shall be
24

determined by (i) recomputing the investment credit which
25

would have been allowed for the year in which credit for
26

such property was originally allowed by eliminating such

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1

property from such computation, and (ii) subtracting such
2

recomputed credit from the amount of credit previously
3

allowed. For the purposes of this paragraph (6), a
4

reduction of the basis of qualified property resulting
5

from a redetermination of the purchase price shall be
6

deemed a disposition of qualified property to the extent
7

of such reduction.
8

(7) Beginning with tax years ending after December 31,
9

1996, if a taxpayer qualifies for the credit under this
10

subsection (h) and thereby is granted a tax abatement and
11

the taxpayer relocates its entire facility in violation of
12

the explicit terms and length of the contract under
13

Section 18-183 of the Property Tax Code, the tax imposed
14

under subsections (a) and (b) of this Section shall be
15

increased for the taxable year in which the taxpayer
16

relocated its facility by an amount equal to the amount of
17

credit received by the taxpayer under this subsection (h).
18

(h-5) High Impact Business construction jobs credit. For
19
taxable years beginning on or after January 1, 2021, there
20
shall also be allowed a High Impact Business construction jobs
21
credit against the tax imposed under subsections (a) and (b)
22
of this Section as provided in subsections (i) and (j) of
23
Section 5.5 of the Illinois Enterprise Zone Act.
24

The credit or credits may not reduce the taxpayer's
25
liability to less than zero. If the amount of the credit or
26
credits exceeds the taxpayer's liability, the excess may be

HB5017
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1
carried forward and applied against the taxpayer's liability
2
in succeeding calendar years in the manner provided under
3
paragraph (4) of Section 211 of this Act. The credit or credits
4
shall be applied to the earliest year for which there is a tax
5
liability. If there are credits from more than one taxable
6
year that are available to offset a liability, the earlier
7
credit shall be applied first.
8

For partners, shareholders of Subchapter S corporations,
9
and owners of limited liability companies, for taxable years
10
ending before December 31, 2023, if the liability company is
11
treated as a partnership for the purposes of federal and State
12
income taxation, there shall be allowed a credit under this
13
Section to be determined in accordance with the determination
14
of income and distributive share of income under Sections 702
15
and 704 and Subchapter S of the Internal Revenue Code. For
16
taxable years ending on or after December 31, 2023, for
17
partners and shareholders of Subchapter S corporations, the
18
provisions of Section 251 shall apply with respect to the
19
credit under this subsection.
20

The total aggregate amount of credits awarded under the
21
Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
22
exceed $20,000,000 in any State fiscal year.
23

This subsection (h-5) is exempt from the provisions of
24
Section 250.
25

(i) Credit for Personal Property Tax Replacement Income
26
Tax. For tax years ending prior to December 31, 2003, a credit

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1
shall be allowed against the tax imposed by subsections (a)
2
and (b) of this Section for the tax imposed by subsections (c)
3
and (d) of this Section. This credit shall be computed by
4
multiplying the tax imposed by subsections (c) and (d) of this
5
Section by a fraction, the numerator of which is base income
6
allocable to Illinois and the denominator of which is Illinois
7
base income, and further multiplying the product by the tax
8
rate imposed by subsections (a) and (b) of this Section.
9

Any credit earned on or after December 31, 1986 under this
10
subsection which is unused in the year the credit is computed
11
because it exceeds the tax liability imposed by subsections
12
(a) and (b) for that year (whether it exceeds the original
13
liability or the liability as later amended) may be carried
14
forward and applied to the tax liability imposed by
15
subsections (a) and (b) of the 5 taxable years following the
16
excess credit year, provided that no credit may be carried
17
forward to any year ending on or after December 31, 2003. This
18
credit shall be applied first to the earliest year for which
19
there is a liability. If there is a credit under this
20
subsection from more than one tax year that is available to
21
offset a liability the earliest credit arising under this
22
subsection shall be applied first.
23

If, during any taxable year ending on or after December
24
31, 1986, the tax imposed by subsections (c) and (d) of this
25
Section for which a taxpayer has claimed a credit under this
26
subsection (i) is reduced, the amount of credit for such tax

HB5017
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1
shall also be reduced. Such reduction shall be determined by
2
recomputing the credit to take into account the reduced tax
3
imposed by subsections (c) and (d). If any portion of the
4
reduced amount of credit has been carried to a different
5
taxable year, an amended return shall be filed for such
6
taxable year to reduce the amount of credit claimed.
7

(j) Training expense credit. Beginning with tax years
8
ending on or after December 31, 1986 and prior to December 31,
9
2003, a taxpayer shall be allowed a credit against the tax
10
imposed by subsections (a) and (b) under this Section for all
11
amounts paid or accrued, on behalf of all persons employed by
12
the taxpayer in Illinois or Illinois residents employed
13
outside of Illinois by a taxpayer, for educational or
14
vocational training in semi-technical or technical fields or
15
semi-skilled or skilled fields, which were deducted from gross
16
income in the computation of taxable income. The credit
17
against the tax imposed by subsections (a) and (b) shall be
18
1.6% of such training expenses. For partners, shareholders of
19
subchapter S corporations, and owners of limited liability
20
companies, if the liability company is treated as a
21
partnership for purposes of federal and State income taxation,
22
for taxable years ending before December 31, 2023, there shall
23
be allowed a credit under this subsection (j) to be determined
24
in accordance with the determination of income and
25
distributive share of income under Sections 702 and 704 and
26
subchapter S of the Internal Revenue Code. For taxable years

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1
ending on or after December 31, 2023, for partners and
2
shareholders of Subchapter S corporations, the provisions of
3
Section 251 shall apply with respect to the credit under this
4
subsection.
5

Any credit allowed under this subsection which is unused
6
in the year the credit is earned may be carried forward to each
7
of the 5 taxable years following the year for which the credit
8
is first computed until it is used. This credit shall be
9
applied first to the earliest year for which there is a
10
liability. If there is a credit under this subsection from
11
more than one tax year that is available to offset a liability,
12
the earliest credit arising under this subsection shall be
13
applied first. No carryforward credit may be claimed in any
14
tax year ending on or after December 31, 2003.
15

(k) Research and development credit. For tax years ending
16
after July 1, 1990 and prior to December 31, 2003, and
17
beginning again for tax years ending on or after December 31,
18
2004, and ending prior to January 1, 2032, a taxpayer shall be
19
allowed a credit against the tax imposed by subsections (a)
20
and (b) of this Section for increasing research activities in
21
this State. The credit allowed against the tax imposed by
22
subsections (a) and (b) shall be equal to 6 1/2% of the
23
qualifying expenditures for increasing research activities in
24
this State. For partners, shareholders of subchapter S
25
corporations, and owners of limited liability companies, if
26
the liability company is treated as a partnership for purposes

HB5017
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LRB104 15510 HLH 28674 b
1
of federal and State income taxation, for taxable years ending
2
before December 31, 2023, there shall be allowed a credit
3
under this subsection to be determined in accordance with the
4
determination of income and distributive share of income under
5
Sections 702 and 704 and subchapter S of the Internal Revenue
6
Code. For taxable years ending on or after December 31, 2023,
7
for partners and shareholders of Subchapter S corporations,
8
the provisions of Section 251 shall apply with respect to the
9
credit under this subsection.
10

For purposes of this subsection, "qualifying expenditures"
11
means the qualifying expenditures as defined for the federal
12
credit for increasing research activities which would be
13
allowable under Section 41 of the Internal Revenue Code and
14
which are conducted in this State, "qualifying expenditures
15
for increasing research activities in this State" means the
16
excess of qualifying expenditures for the taxable year in
17
which incurred over qualifying expenditures for the base
18
period, "qualifying expenditures for the base period" means
19
the average of the qualifying expenditures for each year in
20
the base period, and "base period" means the 3 taxable years
21
immediately preceding the taxable year for which the
22
determination is being made.
23

Any credit in excess of the tax liability for the taxable
24
year may be carried forward. A taxpayer may elect to have the
25
unused credit shown on its final completed return carried over
26
as a credit against the tax liability for the following 5

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1
taxable years or until it has been fully used, whichever
2
occurs first; provided that no credit earned in a tax year
3
ending prior to December 31, 2003 may be carried forward to any
4
year ending on or after December 31, 2003.
5

If an unused credit is carried forward to a given year from
6
2 or more earlier years, that credit arising in the earliest
7
year will be applied first against the tax liability for the
8
given year. If a tax liability for the given year still
9
remains, the credit from the next earliest year will then be
10
applied, and so on, until all credits have been used or no tax
11
liability for the given year remains. Any remaining unused
12
credit or credits then will be carried forward to the next
13
following year in which a tax liability is incurred, except
14
that no credit can be carried forward to a year which is more
15
than 5 years after the year in which the expense for which the
16
credit is given was incurred.
17

No inference shall be drawn from Public Act 91-644 in
18
construing this Section for taxable years beginning before
19
January 1, 1999.
20

It is the intent of the General Assembly that the research
21
and development credit under this subsection (k) shall apply
22
continuously for all tax years ending on or after December 31,
23
2004 and ending prior to January 1, 2032, including, but not
24
limited to, the period beginning on January 1, 2016 and ending
25
on July 6, 2017 (the effective date of Public Act 100-22). All
26
actions taken in reliance on the continuation of the credit

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1
under this subsection (k) by any taxpayer are hereby
2
validated.
3

(l) Environmental Remediation Tax Credit.
4

(i) For tax years ending after December 31, 1997 and
5

on or before December 31, 2001, a taxpayer shall be
6

allowed a credit against the tax imposed by subsections
7

(a) and (b) of this Section for certain amounts paid for
8

unreimbursed eligible remediation costs, as specified in
9

this subsection. For purposes of this Section,
10

"unreimbursed eligible remediation costs" means costs
11

approved by the Illinois Environmental Protection Agency
12

("Agency") under Section 58.14 of the Environmental
13

Protection Act that were paid in performing environmental
14

remediation at a site for which a No Further Remediation
15

Letter was issued by the Agency and recorded under Section
16

58.10 of the Environmental Protection Act. The credit must
17

be claimed for the taxable year in which Agency approval
18

of the eligible remediation costs is granted. The credit
19

is not available to any taxpayer if the taxpayer or any
20

related party caused or contributed to, in any material
21

respect, a release of regulated substances on, in, or
22

under the site that was identified and addressed by the
23

remedial action pursuant to the Site Remediation Program
24

of the Environmental Protection Act. After the Pollution
25

Control Board rules are adopted pursuant to the Illinois
26

Administrative Procedure Act for the administration and

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1

enforcement of Section 58.9 of the Environmental
2

Protection Act, determinations as to credit availability
3

for purposes of this Section shall be made consistent with
4

those rules. For purposes of this Section, "taxpayer"
5

includes a person whose tax attributes the taxpayer has
6

succeeded to under Section 381 of the Internal Revenue
7

Code and "related party" includes the persons disallowed a
8

deduction for losses by paragraphs (b), (c), and (f)(1) of
9

Section 267 of the Internal Revenue Code by virtue of
10

being a related taxpayer, as well as any of its partners.
11

The credit allowed against the tax imposed by subsections
12

(a) and (b) shall be equal to 25% of the unreimbursed
13

eligible remediation costs in excess of $100,000 per site,
14

except that the $100,000 threshold shall not apply to any
15

site contained in an enterprise zone as determined by the
16

Department of Commerce and Community Affairs (now
17

Department of Commerce and Economic Opportunity). The
18

total credit allowed shall not exceed $40,000 per year
19

with a maximum total of $150,000 per site. For partners
20

and shareholders of subchapter S corporations, there shall
21

be allowed a credit under this subsection to be determined
22

in accordance with the determination of income and
23

distributive share of income under Sections 702 and 704
24

and subchapter S of the Internal Revenue Code.
25

(ii) A credit allowed under this subsection that is
26

unused in the year the credit is earned may be carried

HB5017
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1

forward to each of the 5 taxable years following the year
2

for which the credit is first earned until it is used. The
3

term "unused credit" does not include any amounts of
4

unreimbursed eligible remediation costs in excess of the
5

maximum credit per site authorized under paragraph (i).
6

This credit shall be applied first to the earliest year
7

for which there is a liability. If there is a credit under
8

this subsection from more than one tax year that is
9

available to offset a liability, the earliest credit
10

arising under this subsection shall be applied first. A
11

credit allowed under this subsection may be sold to a
12

buyer as part of a sale of all or part of the remediation
13

site for which the credit was granted. The purchaser of a
14

remediation site and the tax credit shall succeed to the
15

unused credit and remaining carry-forward period of the
16

seller. To perfect the transfer, the assignor shall record
17

the transfer in the chain of title for the site and provide
18

written notice to the Director of the Illinois Department
19

of Revenue of the assignor's intent to sell the
20

remediation site and the amount of the tax credit to be
21

transferred as a portion of the sale. In no event may a
22

credit be transferred to any taxpayer if the taxpayer or a
23

related party would not be eligible under the provisions
24

of subsection (i).
25

(iii) For purposes of this Section, the term "site"
26

shall have the same meaning as under Section 58.2 of the

HB5017
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1

Environmental Protection Act.
2

(m) Education expense credit. Beginning with tax years
3
ending after December 31, 1999, a taxpayer who is the
4
custodian of one or more qualifying pupils shall be allowed a
5
credit against the tax imposed by subsections (a) and (b) of
6
this Section for qualified education expenses incurred on
7
behalf of the qualifying pupils. The credit shall be equal to
8
25% of qualified education expenses, but in no event may the
9
total credit under this subsection claimed by a family that is
10
the custodian of qualifying pupils exceed (i) $500 for tax
11
years ending prior to December 31, 2017, and (ii) $750 for tax
12
years ending on or after December 31, 2017. In no event shall a
13
credit under this subsection reduce the taxpayer's liability
14
under this Act to less than zero. Notwithstanding any other
15
provision of law, for taxable years beginning on or after
16
January 1, 2017, no taxpayer may claim a credit under this
17
subsection (m) if the taxpayer's adjusted gross income for the
18
taxable year exceeds (i) $500,000, in the case of spouses
19
filing a joint federal tax return or (ii) $250,000, in the case
20
of all other taxpayers. This subsection is exempt from the
21
provisions of Section 250 of this Act.
22

For purposes of this subsection:
23

"Qualifying pupils" means individuals who (i) are
24
residents of the State of Illinois, (ii) are under the age of
25
21 at the close of the school year for which a credit is
26
sought, and (iii) during the school year for which a credit is

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1
sought were full-time pupils enrolled in a kindergarten
2
through twelfth grade education program at any school, as
3
defined in this subsection.
4

"Qualified education expense" means the amount incurred on
5
behalf of a qualifying pupil in excess of $250 for tuition,
6
book fees, and lab fees at the school in which the pupil is
7
enrolled during the regular school year.
8

"School" means any public or nonpublic elementary or
9
secondary school in Illinois that is in compliance with Title
10
VI of the Civil Rights Act of 1964 and attendance at which
11
satisfies the requirements of Section 26-1 of the School Code,
12
except that nothing shall be construed to require a child to
13
attend any particular public or nonpublic school to qualify
14
for the credit under this Section.
15

"Custodian" means, with respect to qualifying pupils, an
16
Illinois resident who is a parent, the parents, a legal
17
guardian, or the legal guardians of the qualifying pupils.
18

(n) River Edge Redevelopment Zone site remediation tax
19
credit.
20

(i) For tax years ending on or after December 31,
21

2006, a taxpayer shall be allowed a credit against the tax
22

imposed by subsections (a) and (b) of this Section for
23

certain amounts paid for unreimbursed eligible remediation
24

costs, as specified in this subsection. For purposes of
25

this Section, "unreimbursed eligible remediation costs"
26

means costs approved by the Illinois Environmental

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LRB104 15510 HLH 28674 b
1

Protection Agency ("Agency") under Section 58.14a of the
2

Environmental Protection Act that were paid in performing
3

environmental remediation at a site within a River Edge
4

Redevelopment Zone for which a No Further Remediation
5

Letter was issued by the Agency and recorded under Section
6

58.10 of the Environmental Protection Act. The credit must
7

be claimed for the taxable year in which Agency approval
8

of the eligible remediation costs is granted. The credit
9

is not available to any taxpayer if the taxpayer or any
10

related party caused or contributed to, in any material
11

respect, a release of regulated substances on, in, or
12

under the site that was identified and addressed by the
13

remedial action pursuant to the Site Remediation Program
14

of the Environmental Protection Act. Determinations as to
15

credit availability for purposes of this Section shall be
16

made consistent with rules adopted by the Pollution
17

Control Board pursuant to the Illinois Administrative
18

Procedure Act for the administration and enforcement of
19

Section 58.9 of the Environmental Protection Act. For
20

purposes of this Section, "taxpayer" includes a person
21

whose tax attributes the taxpayer has succeeded to under
22

Section 381 of the Internal Revenue Code and "related
23

party" includes the persons disallowed a deduction for
24

losses by paragraphs (b), (c), and (f)(1) of Section 267
25

of the Internal Revenue Code by virtue of being a related
26

taxpayer, as well as any of its partners. The credit

HB5017
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1

allowed against the tax imposed by subsections (a) and (b)
2

shall be equal to 25% of the unreimbursed eligible
3

remediation costs in excess of $100,000 per site.
4

(ii) A credit allowed under this subsection that is
5

unused in the year the credit is earned may be carried
6

forward to each of the 5 taxable years following the year
7

for which the credit is first earned until it is used. This
8

credit shall be applied first to the earliest year for
9

which there is a liability. If there is a credit under this
10

subsection from more than one tax year that is available
11

to offset a liability, the earliest credit arising under
12

this subsection shall be applied first. A credit allowed
13

under this subsection may be sold to a buyer as part of a
14

sale of all or part of the remediation site for which the
15

credit was granted. The purchaser of a remediation site
16

and the tax credit shall succeed to the unused credit and
17

remaining carry-forward period of the seller. To perfect
18

the transfer, the assignor shall record the transfer in
19

the chain of title for the site and provide written notice
20

to the Director of the Illinois Department of Revenue of
21

the assignor's intent to sell the remediation site and the
22

amount of the tax credit to be transferred as a portion of
23

the sale. In no event may a credit be transferred to any
24

taxpayer if the taxpayer or a related party would not be
25

eligible under the provisions of subsection (i).
26

(iii) For purposes of this Section, the term "site"

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LRB104 15510 HLH 28674 b
1

shall have the same meaning as under Section 58.2 of the
2

Environmental Protection Act.
3

(o) For each of taxable years during the Compassionate Use
4
of Medical Cannabis Program, a surcharge is imposed on all
5
taxpayers on income arising from the sale or exchange of
6
capital assets, depreciable business property, real property
7
used in the trade or business, and Section 197 intangibles of
8
an organization registrant under the Compassionate Use of
9
Medical Cannabis Program Act. The amount of the surcharge is
10
equal to the amount of federal income tax liability for the
11
taxable year attributable to those sales and exchanges. The
12
surcharge imposed does not apply if:
13

(1) the medical cannabis cultivation center
14

registration, medical cannabis dispensary registration, or
15

the property of a registration is transferred as a result
16

of any of the following:
17

(A) bankruptcy, a receivership, or a debt
18

adjustment initiated by or against the initial
19

registration or the substantial owners of the initial
20

registration;
21

(B) cancellation, revocation, or termination of
22

any registration by the Illinois Department of Public
23

Health;
24

(C) a determination by the Illinois Department of
25

Public Health that transfer of the registration is in
26

the best interests of Illinois qualifying patients as

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1

defined by the Compassionate Use of Medical Cannabis
2

Program Act;
3

(D) the death of an owner of the equity interest in
4

a registrant;
5

(E) the acquisition of a controlling interest in
6

the stock or substantially all of the assets of a
7

publicly traded company;
8

(F) a transfer by a parent company to a wholly
9

owned subsidiary; or
10

(G) the transfer or sale to or by one person to
11

another person where both persons were initial owners
12

of the registration when the registration was issued;
13

or
14

(2) the cannabis cultivation center registration,
15

medical cannabis dispensary registration, or the
16

controlling interest in a registrant's property is
17

transferred in a transaction to lineal descendants in
18

which no gain or loss is recognized or as a result of a
19

transaction in accordance with Section 351 of the Internal
20

Revenue Code in which no gain or loss is recognized.
21

(p) Pass-through entity tax.
22

(1) For taxable years ending on or after December 31,
23

2021 and beginning prior to January 1, 2026, a partnership
24

(other than a publicly traded partnership under Section
25

7704 of the Internal Revenue Code) or Subchapter S
26

corporation may elect to apply the provisions of this

HB5017
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LRB104 15510 HLH 28674 b
1

subsection. A separate election shall be made for each
2

taxable year. Such election shall be made at such time,
3

and in such form and manner as prescribed by the
4

Department, and, once made, is irrevocable.
5

(2) Entity-level tax. A partnership or Subchapter S
6

corporation electing to apply the provisions of this
7

subsection shall be subject to a tax for the privilege of
8

earning or receiving income in this State in an amount
9

equal to
a percentage

4.95%
of the taxpayer's net income
10

for the taxable year.
For the purposes of this
11

subparagraph (p), that percentage shall be the tax rate
12

imposed on individuals, trusts, and estates under
13

subsection (b) of this Section.

14

(3) Net income defined.
15

(A) In general. For purposes of paragraph (2), the
16

term net income has the same meaning as defined in
17

Section 202 of this Act, except that, for tax years
18

ending on or after December 31, 2023, a deduction
19

shall be allowed in computing base income for
20

distributions to a retired partner to the extent that
21

the partner's distributions are exempt from tax under
22

Section 203(a)(2)(F) of this Act. In addition, the
23

following modifications shall not apply:
24

(i) the standard exemption allowed under
25

Section 204;
26

(ii) the deduction for net losses allowed

HB5017
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LRB104 15510 HLH 28674 b
1

under Section 207;
2

(iii) in the case of an S corporation, the
3

modification under Section 203(b)(2)(S); and
4

(iv) in the case of a partnership, the
5

modifications under Section 203(d)(2)(H) and
6

Section 203(d)(2)(I).
7

(B) Special rule for tiered partnerships. If a
8

taxpayer making the election under paragraph (1) is a
9

partner of another taxpayer making the election under
10

paragraph (1), net income shall be computed as
11

provided in subparagraph (A), except that the taxpayer
12

shall subtract its distributive share of the net
13

income of the electing partnership (including its
14

distributive share of the net income of the electing
15

partnership derived as a distributive share from
16

electing partnerships in which it is a partner).
17

(4) Credit for entity level tax. Each partner or
18

shareholder of a taxpayer making the election under this
19

Section shall be allowed a credit against the tax imposed
20

under subsections (a) and (b) of Section 201 of this Act
21

for the taxable year of the partnership or Subchapter S
22

corporation for which an election is in effect ending
23

within or with the taxable year of the partner or
24

shareholder in an amount equal to
the tax rate imposed on
25

individuals, trusts, and estates under subsection (b) of
26

this Section

4.95%
times the partner or shareholder's

HB5017
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LRB104 15510 HLH 28674 b
1

distributive share of the net income of the electing
2

partnership or Subchapter S corporation, but not to exceed
3

the partner's or shareholder's share of the tax imposed
4

under paragraph (1) which is actually paid by the
5

partnership or Subchapter S corporation. If the taxpayer
6

is a partnership or Subchapter S corporation that is
7

itself a partner of a partnership making the election
8

under paragraph (1), the credit under this paragraph shall
9

be allowed to the taxpayer's partners or shareholders (or
10

if the partner is a partnership or Subchapter S
11

corporation then its partners or shareholders) in
12

accordance with the determination of income and
13

distributive share of income under Sections 702 and 704
14

and Subchapter S of the Internal Revenue Code. If the
15

amount of the credit allowed under this paragraph exceeds
16

the partner's or shareholder's liability for tax imposed
17

under subsections (a) and (b) of Section 201 of this Act
18

for the taxable year, such excess shall be treated as an
19

overpayment for purposes of Section 909 of this Act.
20

(5) Nonresidents. A nonresident individual who is a
21

partner or shareholder of a partnership or Subchapter S
22

corporation for a taxable year for which an election is in
23

effect under paragraph (1) shall not be required to file
24

an income tax return under this Act for such taxable year
25

if the only source of net income of the individual (or the
26

individual and the individual's spouse in the case of a

HB5017
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LRB104 15510 HLH 28674 b
1

joint return) is from an entity making the election under
2

paragraph (1) and the credit allowed to the partner or
3

shareholder under paragraph (4) equals or exceeds the
4

individual's liability for the tax imposed under
5

subsections (a) and (b) of Section 201 of this Act for the
6

taxable year.
7

(6) Liability for tax. Except as provided in this
8

paragraph, a partnership or Subchapter S making the
9

election under paragraph (1) is liable for the
10

entity-level tax imposed under paragraph (2). If the
11

electing partnership or corporation fails to pay the full
12

amount of tax deemed assessed under paragraph (2), the
13

partners or shareholders shall be liable to pay the tax
14

assessed (including penalties and interest). Each partner
15

or shareholder shall be liable for the unpaid assessment
16

based on the ratio of the partner's or shareholder's share
17

of the net income of the partnership over the total net
18

income of the partnership. If the partnership or
19

Subchapter S corporation fails to pay the tax assessed
20

(including penalties and interest) and thereafter an
21

amount of such tax is paid by the partners or
22

shareholders, such amount shall not be collected from the
23

partnership or corporation.
24

(7) Foreign tax. For purposes of the credit allowed
25

under Section 601(b)(3) of this Act, tax paid by a
26

partnership or Subchapter S corporation to another state

HB5017
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LRB104 15510 HLH 28674 b
1

which, as determined by the Department, is substantially
2

similar to the tax imposed under this subsection, shall be
3

considered tax paid by the partner or shareholder to the
4

extent that the partner's or shareholder's share of the
5

income of the partnership or Subchapter S corporation
6

allocated and apportioned to such other state bears to the
7

total income of the partnership or Subchapter S
8

corporation allocated or apportioned to such other state.
9

(8) Suspension of withholding. The provisions of
10

Section 709.5 of this Act shall not apply to a partnership
11

or Subchapter S corporation for the taxable year for which
12

an election under paragraph (1) is in effect.
13

(9) Requirement to pay estimated tax. For each taxable
14

year for which an election under paragraph (1) is in
15

effect, a partnership or Subchapter S corporation is
16

required to pay estimated tax for such taxable year under
17

Sections 803 and 804 of this Act if the amount payable as
18

estimated tax can reasonably be expected to exceed $500.
19

(10) The provisions of this subsection shall apply
20

only with respect to taxable years for which the
21

limitation on individual deductions applies under Section
22

164(b)(6) of the Internal Revenue Code.
23
(Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21;
24
103-9, eff. 6-7-23; 103-396, eff. 1-1-24; 103-595, eff.
25
6-26-24; 103-605, eff. 7-1-24.)

26

Section 99.
Effective date.
This Act takes effect upon

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1
becoming law.

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