HB3407 101ST GENERAL ASSEMBLY

LRB101 08958 HLH 54049 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3407

Introduced , by Rep. Karina Villa

SYNOPSIS AS INTRODUCED:

35 ILCS 5/229 new

Amends the Illinois Income Tax Act. Provides that a taxpayer who has incurred at least $20,000 in undergraduate student loan debt and has at least $5,000 in outstanding undergraduate student loan debt at the time of the application is entitled to a credit as awarded by the Department of Revenue. Provides that Department of Revenue that the amount of the credit shall not exceed $ 5,000 per taxpayer. Provides that the total amount of credits approved by the Department of Revenue under the provisions of the amendatory Act may not exceed $5,000,000 in any taxable year. Contains recapture provisions. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

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 Section 229 as follows:

(35 ILCS 5/229 new)

Sec. 229. Student loan payments.

(a) For taxable years beginning on or after January 1, 2019, a qualified taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 for the taxable year in which the Department certifies a tax credit under this Section.

(b) By September 15 of each year, a qualified taxpayer shall submit an application to the Department for the credit allowed under this Section. The taxpayer shall submit with the application an assurance that the he or she will use any credit approved under this Section for the repayment of his or her undergraduate student loan debt as soon as practicable. By December 15 of each year, the Department shall certify to the individual the amount of any tax credit approved under this Section, not to exceed $ 5,000. For any taxable year, the total amount of credits approved by the Department under this Section may not exceed $5,000,000.

The total amount of the credit claimed under this Section shall be recaptured if the individual does not use the credit amount for the repayment of the individual's undergraduate student loan debt within 2 years from the close of the taxable year for which the credit is claimed. If the amount is recaptured, the individual who claimed the credit shall pay the total amount of the credit claimed as taxes payable to the State for the taxable year in which the event requiring recapture of the credit occurs.

The Department shall prioritize tax credit recipients and amounts based on qualified taxpayers who:

(1) have higher debt burden to income ratios;

(2) graduated from a public university located in the State;

(3) did not receive a tax credit in a prior year; or

(4) were eligible for in-State tuition.

(c) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(e) As used in this Section "qualified taxpayer" means a taxpayer who:

(1) has incurred at least $20,000 in undergraduate student loan debt; and

(2) has at least $5,000 in outstanding undergraduate student loan debt when submitting an application under subsection (b) of this Section.

(f) This Section is exempt from the provisions of Section 250.

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