HB4565 103RD GENERAL ASSEMBLY

LRB103 35519 HLH 65591 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4565

Introduced 1/31/2024, by Rep. Ryan Spain

SYNOPSIS AS INTRODUCED:

35 ILCS 5/241 new

Amends the Illinois Income Tax Act. Creates an income tax credit not to exceed 25% of the eligible costs incurred by the taxpayer during the taxable year in connection with the production of a biobased product. Provides that the Department of Commerce and Economic Opportunity shall award the credits. Provides that the total aggregate amount of credits awarded under those provisions shall not exceed $20,000,000 in any State fiscal year. Effective immediately.

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 241 as follows:

(35 ILCS 5/241 new)

Sec. 241. Biobased products credit.

(a) For taxable years beginning on or after January 1, 2025, each taxpayer who incurs eligible costs during the taxable year in connection with the production of a biobased product may apply to the Department of Commerce and Economic Opportunity for a credit against the taxes imposed by subsections (a) and (b) of Section 201. The credit may not exceed 25% of those eligible costs. Upon satisfactory review, the Department of Commerce and Economic Opportunity shall issue a tax credit certificate to the applicant stating the amount of the tax credit to which the applicant is entitled. The total aggregate amount of credits awarded under this Section shall not exceed $20,000,000 in any State fiscal year.

To be eligible for the credit under this Section, the biobased product must be produced in Illinois; however, the raw materials are not required to be sourced from Illinois.

(b) A credit under this Section that is awarded to a partner of a partnership or a shareholder of a subchapter S corporation shall be awarded as provided in Section 251.

(c) 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 credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, the earlier credit shall be applied first. In no event shall a credit under this Section reduce the taxpayer's liability to less than zero.

(d) As used in this Section:

"Biobased product" means a commercial or industrial product (other than food or fuel) that is derived from raw materials such as plants and other renewable agricultural, marine, or forestry materials and that meets either of the following criteria:

(1) the product is primarily (at least 50%) composed of biological products, including renewable domestic agricultural materials, renewable chemicals, or forestry materials; or

(2) the product is an intermediate ingredient or feedstock and 100% of the carbon in the product is from renewable, biological sources verified using ASTM D6866 or equivalent radioisotope testing.

"Eligible costs" means:

(1) costs associated with studies, surveys, the development of plans and specifications, implementation, and program administration, including, but not limited to, professional services costs, architectural costs, engineering costs, legal costs, financial services costs, and planning and administrative costs;

(2) marketing costs;

(3) property assembly costs, including, but not limited to, costs associated with the acquisition of land and other real or personal property or rights or interests in property, demolition of buildings, and site preparation;

(4) costs of rehabilitation, reconstruction, repair, or remodeling of existing buildings;

(5) costs of construction of new buildings;

(6) costs of construction of public works or improvements related to business development, including, but not limited to, streets, sidewalks, water service, and sanitary and storm sewer service;

(7) costs of eliminating or removing contaminants and other impediments; including, but not limited to, site improvements, the installation of parking lots and other concrete or asphalt barriers, and the clearing or grading of land;

(8) costs associated with job training and retraining;

(9) up to 30% of the financing costs; and

(10) costs of capital equipment purchases.

(e) The Department of Commerce and Economic Opportunity shall adopt rules to implement this Section.

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

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