103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4194

 

Introduced 10/25/2023, by Rep. Angelica Guerrero-Cuellar - Elizabeth "Lisa" Hernandez - Kelly M. Burke and Martin J. Moylan

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 40/5
35 ILCS 40/10
35 ILCS 40/40
35 ILCS 40/65
35 ILCS 5/224

    Amends the Invest in Kids Act. Provides that a taxpayer may take a credit under the Act for tax years ending before January 1, 2029 (currently January 1, 2024). Provides that, beginning in calendar year 2024, the aggregate amount of credits the Department of Revenue may award under the Act in any calendar year may not exceed $50,000,000 (currently, $75,000,000). Provides that contributions under the Act may be directed to students whose permanent address is located in an underserved area but may not be directed to a particular student. Provides that, for taxable years beginning on or after January 1, 2024, the amount of the credit under the Act shall be 100% of the first $5,000 in contributions made by the taxpayer during the taxable year, plus (i) 55% of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is not directed to students whose permanent address is located in an underserved area and (ii) 65% of the of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is directed to students whose permanent address is located in an underserved area. Effective immediately.


LRB103 34921 HLH 64794 b

 

 

A BILL FOR

 

HB4194LRB103 34921 HLH 64794 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Invest in Kids Act is amended by changing
5Sections 5, 10, 40, and 65 as follows:
 
6    (35 ILCS 40/5)
7    (Section scheduled to be repealed on January 1, 2025)
8    Sec. 5. Definitions. As used in this Act:
9    "Authorized contribution" means the contribution amount
10that is listed on the contribution authorization certificate
11issued to the taxpayer.
12    "Board" means the State Board of Education.
13    "Contribution" means a donation made by the taxpayer
14during the taxable year for providing scholarships as provided
15in this Act.
16    "Custodian" means, with respect to eligible students, an
17Illinois resident who is a parent or legal guardian of the
18eligible student or students.
19    "Department" means the Department of Revenue.
20    "Eligible student" means a child who:
21        (1) is a member of a household whose federal adjusted
22    gross income the year before he or she initially receives
23    a scholarship under this program, as determined by the

 

 

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1    Department, does not exceed 300% of the federal poverty
2    level and, once the child receives a scholarship, does not
3    exceed 400% of the federal poverty level;
4        (2) is eligible to attend a public elementary school
5    or high school in Illinois in the semester immediately
6    preceding the semester for which he or she first receives
7    a scholarship or is starting school in Illinois for the
8    first time when he or she first receives a scholarship;
9    and
10        (3) resides in Illinois while receiving a scholarship.
11    "Family member" means a parent, child, or sibling, whether
12by whole blood, half blood, or adoption; spouse; or stepchild.
13    "Focus district" means a school district which has a
14school that is either (i) a school that has one or more
15subgroups in which the average student performance is at or
16below the State average for the lowest 10% of student
17performance in that subgroup or (ii) a school with an average
18graduation rate of less than 60% and not identified for
19priority.
20    "Jointly administered CTE program" means a program or set
21of programs within a non-public school located in Illinois, as
22determined by the State Board of Education pursuant to Section
237.5 of this Act.
24    "Necessary costs and fees" includes the customary charge
25for instruction and use of facilities in general and the
26additional fixed fees charged for specified purposes that are

 

 

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1required generally of non-scholarship recipients for each
2academic period for which the scholarship applicant actually
3enrolls, including costs associated with student assessments,
4but does not include fees payable only once and other
5contingent deposits that are refundable in whole or in part.
6The Board may prescribe, by rules consistent with this Act,
7detailed provisions concerning the computation of necessary
8costs and fees.
9    "Scholarship granting organization" means an entity that:
10        (1) is exempt from taxation under Section 501(c)(3) of
11    the Internal Revenue Code;
12        (2) uses at least 95% of the qualified contributions
13    received during a taxable year for scholarships;
14        (3) provides scholarships to students according to the
15    guidelines of this Act;
16        (4) deposits and holds qualified contributions and any
17    income derived from qualified contributions in an account
18    that is separate from the organization's operating fund or
19    other funds until such qualified contributions or income
20    are withdrawn for use; and
21        (5) is approved to issue certificates of receipt.
22    "Technical academy" means a non-public school located in
23Illinois that: (1) registers with the Board pursuant to
24Section 2-3.25 of the School Code; and (2) operates or will
25operate a jointly administered CTE program as the primary
26focus of the school. To maintain its status as a technical

 

 

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1academy, the non-public school must obtain recognition from
2the Board pursuant to Section 2-3.25o of the School Code
3within 2 calendar years of its registration with the Board.
4    "Qualified contribution" means the authorized contribution
5made by a taxpayer to a scholarship granting organization for
6which the taxpayer has received a certificate of receipt from
7such organization.
8    "Qualified school" means a non-public school located in
9Illinois and recognized by the Board pursuant to Section
102-3.25o of the School Code.
11    "Scholarship" means an educational scholarship awarded to
12an eligible student to attend a qualified school of their
13custodians' choice in an amount not exceeding the necessary
14costs and fees to attend that school.
15    "Taxpayer" means any individual, corporation, partnership,
16trust, or other entity subject to the Illinois income tax. For
17the purposes of this Act, 2 individuals filing a joint return
18shall be considered one taxpayer.
19    "Underserved area" has the meaning given to that term in
20Section 5-5 of the Economic Development for a Growing Economy
21Tax Credit Act.
22(Source: P.A. 102-16, eff. 6-17-21.)
 
23    (35 ILCS 40/10)
24    (Section scheduled to be repealed on January 1, 2025)
25    Sec. 10. Credit awards.

 

 

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1    (a) The Department shall award credits against the tax
2imposed under subsections (a) and (b) of Section 201 of the
3Illinois Income Tax Act to taxpayers who make qualified
4contributions. For taxable years beginning before January 1,
52024 contributions made under this Act, the credit shall be
6equal to 75% of the total amount of qualified contributions
7made by the taxpayer during a taxable year, not to exceed a
8credit of $1,000,000 per taxpayer. For taxable years beginning
9on or after January 1, 2024, the credit shall be calculated as
10follows:
11        (1) If the total amount of qualified contributions
12    made by the taxpayer during the taxable year does not
13    exceed $5,000, then the credit shall be equal to 100% of
14    the total amount of qualified contributions made by the
15    taxpayer during the taxable year.
16        (2) If the total amount of qualified contributions
17    made by the taxpayer during the taxable year exceeds
18    $5,000, then the credit shall be equal to 100% of the first
19    $5,000 in contributions made by the taxpayer, plus (i) 55%
20    of the portion of the qualified contributions made by the
21    taxpayer that exceeds the first $5,000 and is not directed
22    to students whose permanent address is located in an
23    underserved area and (ii) 65% of the of the portion of the
24    qualified contributions made by the taxpayer that exceeds
25    the first $5,000 and is directed to students whose
26    permanent address is located in an underserved area.

 

 

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1    For taxable years ending on or after January 1, 2024, the
2total credit amount per taxpayer shall not exceed $500,000 in
3any taxable year.
4    (b) Through calendar year 2023, the The aggregate amount
5of all credits the Department may award under this Act in any
6calendar year may not exceed $75,000,000. Beginning in
7calendar year 2024, the aggregate amount of all credits the
8Department may award under this Act in any calendar year may
9not exceed $50,000,000.
10    (c) Except as otherwise provided in this subsection,
11contributions Contributions made by corporations (including
12Subchapter S corporations), partnerships, and trusts under
13this Act may not be directed to a particular subset of schools,
14a particular school, a particular group of students, or a
15particular student. Except as otherwise provided in this
16Section, contributions Contributions made by individuals under
17this Act may be directed to a particular subset of schools or a
18particular school but may not be directed to a particular
19group of students or a particular student. Notwithstanding the
20provisions of this subsection, on and after January 1, 2024,
21contributions made by any taxpayer may be directed to students
22whose permanent address is located in an underserved area but
23may not be directed to a particular student.
24    (d) (Blank). No credit shall be taken under this Act for
25any qualified contribution for which the taxpayer claims a
26federal income tax deduction.

 

 

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1    (e) Credits shall be awarded in a manner, as determined by
2the Department, that is geographically proportionate to
3enrollment in recognized non-public schools in Illinois. If
4the cap on the aggregate credits that may be awarded by the
5Department is not reached by June 1 of a given year, the
6Department shall award remaining credits on a first-come,
7first-served basis, without regard to the limitation of this
8subsection. Credits awarded for qualified contributions that
9are directed to students whose permanent address is located in
10an underserved area shall be awarded without regard to this
11subsection but shall not exceed 15% of the annual statewide
12program cap.
13    (f) Credits awarded for donations made to a technical
14academy shall be awarded without regard to subsection (e), but
15shall not exceed 15% of the annual statewide program cap. For
16the purposes of this subsection, "technical academy" means a
17technical academy that is registered with the Board within 30
18days after the effective date of this amendatory Act of the
19102nd General Assembly.
20(Source: P.A. 102-16, eff. 6-17-21.)
 
21    (35 ILCS 40/40)
22    (Section scheduled to be repealed on January 1, 2025)
23    Sec. 40. Scholarship granting organization
24responsibilities.
25    (a) Before granting a scholarship for an academic year,

 

 

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1all scholarship granting organizations shall assess and
2document each student's eligibility for the academic year.
3    (b) A scholarship granting organization shall grant
4scholarships only to eligible students.
5    (c) A scholarship granting organization shall allow an
6eligible student to attend any qualified school of the
7student's choosing, subject to the availability of funds.
8    (d) In granting scholarships, beginning in the 2022-2023
9school year and for each school year thereafter, a scholarship
10granting organization shall give priority to eligible students
11who received a scholarship from a scholarship granting
12organization during the previous school year. Second priority
13shall be given to the following priority groups:
14        (1) (blank);
15        (2) eligible students who are members of a household
16    whose previous year's total annual income does not exceed
17    185% of the federal poverty level;
18        (3) eligible students who reside within a focus
19    district; and
20        (4) eligible students who are siblings of students
21    currently receiving a scholarship.
22    (d-5) A scholarship granting organization shall begin
23granting scholarships no later than February 1 preceding the
24school year for which the scholarship is sought. Each priority
25group identified in subsection (d) of this Section shall be
26eligible to receive scholarships on a first-come, first-served

 

 

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1basis until April 1 immediately preceding the school year for
2which the scholarship is sought, starting with the first
3priority group identified in subsection (d) of this Section.
4Applications for scholarships for eligible students meeting
5the qualifications of one or more priority groups that are
6received before April 1 must be either approved or denied
7within 10 business days after receipt. Beginning April 1, all
8eligible students shall be eligible to receive scholarships
9without regard to the priority groups identified in subsection
10(d) of this Section.
11    (e) Except as provided in subsection (e-5) of this
12Section, scholarships shall not exceed the lesser of (i) the
13statewide average operational expense per student among public
14schools or (ii) the necessary costs and fees for attendance at
15the qualified school. A qualified school may set a lower
16maximum scholarship amount for eligible students whose family
17income falls within paragraphs (2) and (3) of this subsection
18(e); that amount may not exceed the necessary costs and fees
19for attendance at the qualified school and is subject to the
20limitations on average scholarship amounts set forth in
21paragraphs (2) and (3) of this subsection, as applicable. The
22qualified school shall notify the scholarship granting
23organization of its necessary costs and fees as well as any
24maximum scholarship amount set by the school. Scholarships
25shall be prorated as follows:
26        (1) for eligible students whose household income is

 

 

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1    less than 185% of the federal poverty level, the
2    scholarship shall be 100% of the amount determined
3    pursuant to this subsection (e) and subsection (e-5) of
4    this Section;
5        (2) for eligible students whose household income is
6    185% or more of the federal poverty level but less than
7    250% of the federal poverty level, the average of
8    scholarships shall be 75% of the amount determined
9    pursuant to this subsection (e) and subsection (e-5) of
10    this Section; and
11        (3) for eligible students whose household income is
12    250% or more of the federal poverty level, the average of
13    scholarships shall be 50% of the amount determined
14    pursuant to this subsection (e) and subsection (e-5) of
15    this Section.
16    (e-5) The statewide average operational expense per
17student among public schools shall be multiplied by the
18following factors:
19        (1) for students determined eligible to receive
20    services under the federal Individuals with Disabilities
21    Education Act, 2;
22        (2) for students who are English learners, as defined
23    in subsection (d) of Section 14C-2 of the School Code,
24    1.2; and
25        (3) for students who are gifted and talented children,
26    as defined in Section 14A-20 of the School Code, 1.1.

 

 

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1    (f) A scholarship granting organization shall distribute
2scholarship payments to the participating school where the
3student is enrolled.
4    (g) For the 2018-2019 school year through the 2027-2028
52022-2023 school year, each scholarship granting organization
6shall expend no less than 75% of the qualified contributions
7received during the calendar year in which the qualified
8contributions were received. No more than 25% of the qualified
9contributions may be carried forward to the following calendar
10year.
11    (h) For the 2028-2029 2023-2024 school year, each
12scholarship granting organization shall expend all qualified
13contributions received during the calendar year in which the
14qualified contributions were received. No qualified
15contributions may be carried forward to the following calendar
16year.
17    (i) A scholarship granting organization shall allow an
18eligible student to transfer a scholarship during a school
19year to any other participating school of the custodian's
20choice. Such scholarships shall be prorated.
21    (j) With the prior approval of the Department, a
22scholarship granting organization may transfer funds to
23another scholarship granting organization if additional funds
24are required to meet scholarship demands at the receiving
25scholarship granting organization. All transferred funds must
26be deposited by the receiving scholarship granting

 

 

HB4194- 12 -LRB103 34921 HLH 64794 b

1organization into its scholarship accounts. All transferred
2amounts received by any scholarship granting organization must
3be separately disclosed to the Department.
4    (k) If the approval of a scholarship granting organization
5is revoked as provided in Section 20 of this Act or the
6scholarship granting organization is dissolved, all remaining
7qualified contributions of the scholarship granting
8organization shall be transferred to another scholarship
9granting organization. All transferred funds must be deposited
10by the receiving scholarship granting organization into its
11scholarship accounts.
12    (l) Scholarship granting organizations shall make
13reasonable efforts to advertise the availability of
14scholarships to eligible students.
15(Source: P.A. 102-699, eff. 4-19-22; 102-1059, eff. 6-10-22;
16103-154, eff. 6-30-23.)
 
17    (35 ILCS 40/65)
18    (Section scheduled to be repealed on January 1, 2025)
19    Sec. 65. Credit period; repeal.
20    (a) A taxpayer may take a credit under this Act for tax
21years beginning on or after January 1, 2018 and ending before
22January 1, 2029 January 1, 2024. A taxpayer may not take a
23credit pursuant to this Act for tax years beginning on or after
24January 1, 2029 January 1, 2024.
25    (b) This Act is repealed on January 1, 2030 January 1,

 

 

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12025.
2(Source: P.A. 102-16, eff. 6-17-21.)
 
3    Section 10. The Illinois Income Tax Act is amended by
4changing Section 224 as follows:
 
5    (35 ILCS 5/224)
6    Sec. 224. Invest in Kids credit.
7    (a) For taxable years beginning on or after January 1,
82018 and ending before January 1, 2029 January 1, 2024, each
9taxpayer for whom a tax credit has been awarded by the
10Department under the Invest in Kids Act is entitled to a credit
11against the tax imposed under subsections (a) and (b) of
12Section 201 of this Act in an amount equal to the amount
13awarded under the Invest in Kids Act.
14    (b) For partners, shareholders of subchapter S
15corporations, and owners of limited liability companies, if
16the liability company is treated as a partnership for purposes
17of federal and State income taxation, the credit under this
18Section shall be determined in accordance with the
19determination of income and distributive share of income under
20Sections 702 and 704 and subchapter S of the Internal Revenue
21Code.
22    (c) The credit may not be carried back and may not reduce
23the taxpayer's liability to less than zero. If the amount of
24the credit exceeds the tax liability for the year, the excess

 

 

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1may be carried forward and applied to the tax liability of the
25 taxable years following the excess credit year. The tax
3credit shall be applied to the earliest year for which there is
4a tax liability. If there are credits for more than one year
5that are available to offset the liability, the earlier credit
6shall be applied first.
7    (d) (Blank). A tax credit awarded by the Department under
8the Invest in Kids Act may not be claimed for any qualified
9contribution for which the taxpayer claims a federal income
10tax deduction.
11(Source: P.A. 102-699, eff. 4-19-22.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.