103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5193

 

Introduced 2/9/2024, by Rep. Brad Halbrook

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201

    Amends the Illinois Income Tax Act. Reduces the rate of tax on individuals, trusts, and estates from 4.95% to 3.99% for taxable years beginning on or after January 1, 2025. Effective immediately.


LRB103 38317 HLH 68452 b

 

 

A BILL FOR

 

HB5193LRB103 38317 HLH 68452 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 Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)
7    Sec. 201. Tax imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (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

 

 

HB5193- 2 -LRB103 38317 HLH 68452 b

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

 

 

HB5193- 3 -LRB103 38317 HLH 68452 b

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, 2025, 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 before January 1, 2025 and
20    ending after December 31, 2024, an amount equal to the sum
21    of (i) 4.95% of the taxpayer's net income for the period
22    before January 1, 2025, as calculated under Section 202.5,
23    and (ii) 3.99% of the taxpayer's net income for the period
24    after December 31, 2024, as calculated under Section
25    202.5.
26        (5.6) In the case of an individual, trust, or estate,

 

 

HB5193- 4 -LRB103 38317 HLH 68452 b

1    for taxable years beginning on or after January 1, 2025,
2    an amount equal to 3.99% of the taxpayer's net income for
3    the taxable year.
4        (6) In the case of a corporation, for taxable years
5    ending prior to July 1, 1989, an amount equal to 4% of the
6    taxpayer's net income for the taxable year.
7        (7) In the case of a corporation, for taxable years
8    beginning prior to July 1, 1989 and ending after June 30,
9    1989, an amount equal to the sum of (i) 4% of the
10    taxpayer's net income for the period prior to July 1,
11    1989, as calculated under Section 202.3, and (ii) 4.8% of
12    the taxpayer's net income for the period after June 30,
13    1989, as calculated under Section 202.3.
14        (8) In the case of a corporation, for taxable years
15    beginning after June 30, 1989, and ending prior to January
16    1, 2011, an amount equal to 4.8% of the taxpayer's net
17    income for the taxable year.
18        (9) In the case of a corporation, for taxable years
19    beginning prior to January 1, 2011, and ending after
20    December 31, 2010, an amount equal to the sum of (i) 4.8%
21    of the taxpayer's net income for the period prior to
22    January 1, 2011, as calculated under Section 202.5, and
23    (ii) 7% of the taxpayer's net income for the period after
24    December 31, 2010, as calculated under Section 202.5.
25        (10) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2011, and ending prior to

 

 

HB5193- 5 -LRB103 38317 HLH 68452 b

1    January 1, 2015, an amount equal to 7% of the taxpayer's
2    net income for the taxable year.
3        (11) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2015, and ending after
5    December 31, 2014, an amount equal to the sum of (i) 7% of
6    the taxpayer's net income for the period prior to January
7    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
8    of the taxpayer's net income for the period after December
9    31, 2014, as calculated under Section 202.5.
10        (12) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2015, and ending prior to
12    July 1, 2017, an amount equal to 5.25% of the taxpayer's
13    net income for the taxable year.
14        (13) In the case of a corporation, for taxable years
15    beginning prior to July 1, 2017, and ending after June 30,
16    2017, an amount equal to the sum of (i) 5.25% of the
17    taxpayer's net income for the period prior to July 1,
18    2017, as calculated under Section 202.5, and (ii) 7% of
19    the taxpayer's net income for the period after June 30,
20    2017, as calculated under Section 202.5.
21        (14) In the case of a corporation, for taxable years
22    beginning on or after July 1, 2017, an amount equal to 7%
23    of the taxpayer's net income for the taxable year.
24    The rates under this subsection (b) are subject to the
25provisions of Section 201.5.
26    (b-5) Surcharge; sale or exchange of assets, properties,

 

 

HB5193- 6 -LRB103 38317 HLH 68452 b

1and intangibles of organization gaming licensees. For each of
2taxable years 2019 through 2027, a surcharge is imposed on all
3taxpayers on income arising from the sale or exchange of
4capital assets, depreciable business property, real property
5used in the trade or business, and Section 197 intangibles (i)
6of an organization licensee under the Illinois Horse Racing
7Act of 1975 and (ii) of an organization gaming licensee under
8the Illinois Gambling Act. The amount of the surcharge is
9equal to the amount of federal income tax liability for the
10taxable year attributable to those sales and exchanges. The
11surcharge imposed shall not apply if:
12        (1) the organization gaming license, organization
13    license, or racetrack property is transferred as a result
14    of any of the following:
15            (A) bankruptcy, a receivership, or a debt
16        adjustment initiated by or against the initial
17        licensee or the substantial owners of the initial
18        licensee;
19            (B) cancellation, revocation, or termination of
20        any such license by the Illinois Gaming Board or the
21        Illinois Racing Board;
22            (C) a determination by the Illinois Gaming Board
23        that transfer of the license is in the best interests
24        of Illinois gaming;
25            (D) the death of an owner of the equity interest in
26        a licensee;

 

 

HB5193- 7 -LRB103 38317 HLH 68452 b

1            (E) the acquisition of a controlling interest in
2        the stock or substantially all of the assets of a
3        publicly traded company;
4            (F) a transfer by a parent company to a wholly
5        owned subsidiary; or
6            (G) the transfer or sale to or by one person to
7        another person where both persons were initial owners
8        of the license when the license was issued; or
9        (2) the controlling interest in the organization
10    gaming license, organization license, or racetrack
11    property is transferred in a transaction to lineal
12    descendants in which no gain or loss is recognized or as a
13    result of a transaction in accordance with Section 351 of
14    the Internal Revenue Code in which no gain or loss is
15    recognized; or
16        (3) live horse racing was not conducted in 2010 at a
17    racetrack located within 3 miles of the Mississippi River
18    under a license issued pursuant to the Illinois Horse
19    Racing Act of 1975.
20    The transfer of an organization gaming license,
21organization license, or racetrack property by a person other
22than the initial licensee to receive the organization gaming
23license is not subject to a surcharge. The Department shall
24adopt rules necessary to implement and administer this
25subsection.
26    (c) Personal Property Tax Replacement Income Tax.

 

 

HB5193- 8 -LRB103 38317 HLH 68452 b

1Beginning on July 1, 1979 and thereafter, in addition to such
2income tax, there is also hereby imposed the Personal Property
3Tax Replacement Income Tax measured by net income on every
4corporation (including Subchapter S corporations), partnership
5and trust, for each taxable year ending after June 30, 1979.
6Such taxes are imposed on the privilege of earning or
7receiving income in or as a resident of this State. The
8Personal Property Tax Replacement Income Tax shall be in
9addition to the income tax imposed by subsections (a) and (b)
10of this Section and in addition to all other occupation or
11privilege taxes imposed by this State or by any municipal
12corporation or political subdivision thereof.
13    (d) Additional Personal Property Tax Replacement Income
14Tax Rates. The personal property tax replacement income tax
15imposed by this subsection and subsection (c) of this Section
16in the case of a corporation, other than a Subchapter S
17corporation and except as adjusted by subsection (d-1), shall
18be an additional amount equal to 2.85% of such taxpayer's net
19income for the taxable year, except that beginning on January
201, 1981, and thereafter, the rate of 2.85% specified in this
21subsection shall be reduced to 2.5%, and in the case of a
22partnership, trust or a Subchapter S corporation shall be an
23additional amount equal to 1.5% of such taxpayer's net income
24for the taxable year.
25    (d-1) Rate reduction for certain foreign insurers. In the
26case of a foreign insurer, as defined by Section 35A-5 of the

 

 

HB5193- 9 -LRB103 38317 HLH 68452 b

1Illinois Insurance Code, whose state or country of domicile
2imposes on insurers domiciled in Illinois a retaliatory tax
3(excluding any insurer whose premiums from reinsurance assumed
4are 50% or more of its total insurance premiums as determined
5under paragraph (2) of subsection (b) of Section 304, except
6that for purposes of this determination premiums from
7reinsurance do not include premiums from inter-affiliate
8reinsurance arrangements), beginning with taxable years ending
9on or after December 31, 1999, the sum of the rates of tax
10imposed by subsections (b) and (d) shall be reduced (but not
11increased) to the rate at which the total amount of tax imposed
12under this Act, net of all credits allowed under this Act,
13shall equal (i) the total amount of tax that would be imposed
14on the foreign insurer's net income allocable to Illinois for
15the taxable year by such foreign insurer's state or country of
16domicile if that net income were subject to all income taxes
17and taxes measured by net income imposed by such foreign
18insurer's state or country of domicile, net of all credits
19allowed or (ii) a rate of zero if no such tax is imposed on
20such income by the foreign insurer's state of domicile. For
21the purposes of this subsection (d-1), an inter-affiliate
22includes a mutual insurer under common management.
23        (1) For the purposes of subsection (d-1), in no event
24    shall the sum of the rates of tax imposed by subsections
25    (b) and (d) be reduced below the rate at which the sum of:
26            (A) the total amount of tax imposed on such

 

 

HB5193- 10 -LRB103 38317 HLH 68452 b

1        foreign insurer under this Act for a taxable year, net
2        of all credits allowed under this Act, plus
3            (B) the privilege tax imposed by Section 409 of
4        the Illinois Insurance Code, the fire insurance
5        company tax imposed by Section 12 of the Fire
6        Investigation Act, and the fire department taxes
7        imposed under Section 11-10-1 of the Illinois
8        Municipal Code,
9    equals 1.25% for taxable years ending prior to December
10    31, 2003, or 1.75% for taxable years ending on or after
11    December 31, 2003, of the net taxable premiums written for
12    the taxable year, as described by subsection (1) of
13    Section 409 of the Illinois Insurance Code. This paragraph
14    will in no event increase the rates imposed under
15    subsections (b) and (d).
16        (2) Any reduction in the rates of tax imposed by this
17    subsection shall be applied first against the rates
18    imposed by subsection (b) and only after the tax imposed
19    by subsection (a) net of all credits allowed under this
20    Section other than the credit allowed under subsection (i)
21    has been reduced to zero, against the rates imposed by
22    subsection (d).
23    This subsection (d-1) is exempt from the provisions of
24Section 250.
25    (e) Investment credit. A taxpayer shall be allowed a
26credit against the Personal Property Tax Replacement Income

 

 

HB5193- 11 -LRB103 38317 HLH 68452 b

1Tax for investment in qualified property.
2        (1) A taxpayer shall be allowed a credit equal to .5%
3    of the basis of qualified property placed in service
4    during the taxable year, provided such property is placed
5    in service on or after July 1, 1984. There shall be allowed
6    an additional credit equal to .5% of the basis of
7    qualified property placed in service during the taxable
8    year, provided such property is placed in service on or
9    after July 1, 1986, and the taxpayer's base employment
10    within Illinois has increased by 1% or more over the
11    preceding year as determined by the taxpayer's employment
12    records filed with the Illinois Department of Employment
13    Security. Taxpayers who are new to Illinois shall be
14    deemed to have met the 1% growth in base employment for the
15    first year in which they file employment records with the
16    Illinois Department of Employment Security. The provisions
17    added to this Section by Public Act 85-1200 (and restored
18    by Public Act 87-895) shall be construed as declaratory of
19    existing law and not as a new enactment. If, in any year,
20    the increase in base employment within Illinois over the
21    preceding year is less than 1%, the additional credit
22    shall be limited to that percentage times a fraction, the
23    numerator of which is .5% and the denominator of which is
24    1%, but shall not exceed .5%. The investment credit shall
25    not be allowed to the extent that it would reduce a
26    taxpayer's liability in any tax year below zero, nor may

 

 

HB5193- 12 -LRB103 38317 HLH 68452 b

1    any credit for qualified property be allowed for any year
2    other than the year in which the property was placed in
3    service in Illinois. For tax years ending on or after
4    December 31, 1987, and on or before December 31, 1988, the
5    credit shall be allowed for the tax year in which the
6    property is placed in service, or, if the amount of the
7    credit exceeds the tax liability for that year, whether it
8    exceeds the original liability or the liability as later
9    amended, such excess may be carried forward and applied to
10    the tax liability of the 5 taxable years following the
11    excess credit years if the taxpayer (i) makes investments
12    which cause the creation of a minimum of 2,000 full-time
13    equivalent jobs in Illinois, (ii) is located in an
14    enterprise zone established pursuant to the Illinois
15    Enterprise Zone Act and (iii) is certified by the
16    Department of Commerce and Community Affairs (now
17    Department of Commerce and Economic Opportunity) as
18    complying with the requirements specified in clause (i)
19    and (ii) by July 1, 1986. The Department of Commerce and
20    Community Affairs (now Department of Commerce and Economic
21    Opportunity) shall notify the Department of Revenue of all
22    such certifications immediately. For tax years ending
23    after December 31, 1988, the credit shall be allowed for
24    the tax year in which the property is placed in service,
25    or, if the amount of the credit exceeds the tax liability
26    for that year, whether it exceeds the original liability

 

 

HB5193- 13 -LRB103 38317 HLH 68452 b

1    or the liability as later amended, such excess may be
2    carried forward and applied to the tax liability of the 5
3    taxable years following the excess credit years. The
4    credit shall be applied to the earliest year for which
5    there is a liability. If there is credit from more than one
6    tax year that is available to offset a liability, earlier
7    credit shall be applied first.
8        (2) The term "qualified property" means property
9    which:
10            (A) is tangible, whether new or used, including
11        buildings and structural components of buildings and
12        signs that are real property, but not including land
13        or improvements to real property that are not a
14        structural component of a building such as
15        landscaping, sewer lines, local access roads, fencing,
16        parking lots, and other appurtenances;
17            (B) is depreciable pursuant to Section 167 of the
18        Internal Revenue Code, except that "3-year property"
19        as defined in Section 168(c)(2)(A) of that Code is not
20        eligible for the credit provided by this subsection
21        (e);
22            (C) is acquired by purchase as defined in Section
23        179(d) of the Internal Revenue Code;
24            (D) is used in Illinois by a taxpayer who is
25        primarily engaged in manufacturing, or in mining coal
26        or fluorite, or in retailing, or was placed in service

 

 

HB5193- 14 -LRB103 38317 HLH 68452 b

1        on or after July 1, 2006 in a River Edge Redevelopment
2        Zone established pursuant to the River Edge
3        Redevelopment Zone Act; and
4            (E) has not previously been used in Illinois in
5        such a manner and by such a person as would qualify for
6        the credit provided by this subsection (e) or
7        subsection (f).
8        (3) For purposes of this subsection (e),
9    "manufacturing" means the material staging and production
10    of tangible personal property by procedures commonly
11    regarded as manufacturing, processing, fabrication, or
12    assembling which changes some existing material into new
13    shapes, new qualities, or new combinations. For purposes
14    of this subsection (e) the term "mining" shall have the
15    same meaning as the term "mining" in Section 613(c) of the
16    Internal Revenue Code. For purposes of this subsection
17    (e), the term "retailing" means the sale of tangible
18    personal property for use or consumption and not for
19    resale, or services rendered in conjunction with the sale
20    of tangible personal property for use or consumption and
21    not for resale. For purposes of this subsection (e),
22    "tangible personal property" has the same meaning as when
23    that term is used in the Retailers' Occupation Tax Act,
24    and, for taxable years ending after December 31, 2008,
25    does not include the generation, transmission, or
26    distribution of electricity.

 

 

HB5193- 15 -LRB103 38317 HLH 68452 b

1        (4) The basis of qualified property shall be the basis
2    used to compute the depreciation deduction for federal
3    income tax purposes.
4        (5) If the basis of the property for federal income
5    tax depreciation purposes is increased after it has been
6    placed in service in Illinois by the taxpayer, the amount
7    of such increase shall be deemed property placed in
8    service on the date of such increase in basis.
9        (6) The term "placed in service" shall have the same
10    meaning as under Section 46 of the Internal Revenue Code.
11        (7) If during any taxable year, any property ceases to
12    be qualified property in the hands of the taxpayer within
13    48 months after being placed in service, or the situs of
14    any qualified property is moved outside Illinois within 48
15    months after being placed in service, the Personal
16    Property Tax Replacement Income Tax for such taxable year
17    shall be increased. Such increase shall be determined by
18    (i) recomputing the investment credit which would have
19    been allowed for the year in which credit for such
20    property was originally allowed by eliminating such
21    property from such computation and, (ii) subtracting such
22    recomputed credit from the amount of credit previously
23    allowed. For the purposes of this paragraph (7), a
24    reduction of the basis of qualified property resulting
25    from a redetermination of the purchase price shall be
26    deemed a disposition of qualified property to the extent

 

 

HB5193- 16 -LRB103 38317 HLH 68452 b

1    of such reduction.
2        (8) Unless the investment credit is extended by law,
3    the basis of qualified property shall not include costs
4    incurred after December 31, 2018, except for costs
5    incurred pursuant to a binding contract entered into on or
6    before December 31, 2018.
7        (9) Each taxable year ending before December 31, 2000,
8    a partnership may elect to pass through to its partners
9    the credits to which the partnership is entitled under
10    this subsection (e) for the taxable year. A partner may
11    use the credit allocated to him or her under this
12    paragraph only against the tax imposed in subsections (c)
13    and (d) of this Section. If the partnership makes that
14    election, those credits shall be allocated among the
15    partners in the partnership in accordance with the rules
16    set forth in Section 704(b) of the Internal Revenue Code,
17    and the rules promulgated under that Section, and the
18    allocated amount of the credits shall be allowed to the
19    partners for that taxable year. The partnership shall make
20    this election on its Personal Property Tax Replacement
21    Income Tax return for that taxable year. The election to
22    pass through the credits shall be irrevocable.
23        For taxable years ending on or after December 31,
24    2000, a partner that qualifies its partnership for a
25    subtraction under subparagraph (I) of paragraph (2) of
26    subsection (d) of Section 203 or a shareholder that

 

 

HB5193- 17 -LRB103 38317 HLH 68452 b

1    qualifies a Subchapter S corporation for a subtraction
2    under subparagraph (S) of paragraph (2) of subsection (b)
3    of Section 203 shall be allowed a credit under this
4    subsection (e) equal to its share of the credit earned
5    under this subsection (e) during the taxable year by the
6    partnership or Subchapter S corporation, determined in
7    accordance with the determination of income and
8    distributive share of income under Sections 702 and 704
9    and Subchapter S of the Internal Revenue Code. This
10    paragraph is exempt from the provisions of Section 250.
11    (f) Investment credit; Enterprise Zone; River Edge
12Redevelopment Zone.
13        (1) A taxpayer shall be allowed a credit against the
14    tax imposed by subsections (a) and (b) of this Section for
15    investment in qualified property which is placed in
16    service in an Enterprise Zone created pursuant to the
17    Illinois Enterprise Zone Act or, for property placed in
18    service on or after July 1, 2006, a River Edge
19    Redevelopment Zone established pursuant to the River Edge
20    Redevelopment Zone Act. For partners, shareholders of
21    Subchapter S corporations, and owners of limited liability
22    companies, if the liability company is treated as a
23    partnership for purposes of federal and State income
24    taxation, for taxable years ending before December 31,
25    2023, there shall be allowed a credit under this
26    subsection (f) to be determined in accordance with the

 

 

HB5193- 18 -LRB103 38317 HLH 68452 b

1    determination of income and distributive share of income
2    under Sections 702 and 704 and Subchapter S of the
3    Internal Revenue Code. For taxable years ending on or
4    after December 31, 2023, for partners and shareholders of
5    Subchapter S corporations, the provisions of Section 251
6    shall apply with respect to the credit under this
7    subsection. The credit shall be .5% of the basis for such
8    property. The credit shall be available only in the
9    taxable year in which the property is placed in service in
10    the Enterprise Zone or River Edge Redevelopment Zone and
11    shall not be allowed to the extent that it would reduce a
12    taxpayer's liability for the tax imposed by subsections
13    (a) and (b) of this Section to below zero. For tax years
14    ending on or after December 31, 1985, the credit shall be
15    allowed for the tax year in which the property is placed in
16    service, or, if the amount of the credit exceeds the tax
17    liability for that year, whether it exceeds the original
18    liability or the liability as later amended, such excess
19    may be carried forward and applied to the tax liability of
20    the 5 taxable years following the excess credit year. The
21    credit shall be applied to the earliest year for which
22    there is a liability. If there is credit from more than one
23    tax year that is available to offset a liability, the
24    credit accruing first in time shall be applied first.
25        (2) The term qualified property means property which:
26            (A) is tangible, whether new or used, including

 

 

HB5193- 19 -LRB103 38317 HLH 68452 b

1        buildings and structural components of buildings;
2            (B) is depreciable pursuant to Section 167 of the
3        Internal Revenue Code, except that "3-year property"
4        as defined in Section 168(c)(2)(A) of that Code is not
5        eligible for the credit provided by this subsection
6        (f);
7            (C) is acquired by purchase as defined in Section
8        179(d) of the Internal Revenue Code;
9            (D) is used in the Enterprise Zone or River Edge
10        Redevelopment Zone by the taxpayer; and
11            (E) has not been previously used in Illinois in
12        such a manner and by such a person as would qualify for
13        the credit provided by this subsection (f) or
14        subsection (e).
15        (3) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (4) If the basis of the property for federal income
19    tax depreciation purposes is increased after it has been
20    placed in service in the Enterprise Zone or River Edge
21    Redevelopment Zone by the taxpayer, the amount of such
22    increase shall be deemed property placed in service on the
23    date of such increase in basis.
24        (5) The term "placed in service" shall have the same
25    meaning as under Section 46 of the Internal Revenue Code.
26        (6) If during any taxable year, any property ceases to

 

 

HB5193- 20 -LRB103 38317 HLH 68452 b

1    be qualified property in the hands of the taxpayer within
2    48 months after being placed in service, or the situs of
3    any qualified property is moved outside the Enterprise
4    Zone or River Edge Redevelopment Zone within 48 months
5    after being placed in service, the tax imposed under
6    subsections (a) and (b) of this Section for such taxable
7    year shall be increased. Such increase shall be determined
8    by (i) recomputing the investment credit which would have
9    been allowed for the year in which credit for such
10    property was originally allowed by eliminating such
11    property from such computation, and (ii) subtracting such
12    recomputed credit from the amount of credit previously
13    allowed. For the purposes of this paragraph (6), a
14    reduction of the basis of qualified property resulting
15    from a redetermination of the purchase price shall be
16    deemed a disposition of qualified property to the extent
17    of such reduction.
18        (7) There shall be allowed an additional credit equal
19    to 0.5% of the basis of qualified property placed in
20    service during the taxable year in a River Edge
21    Redevelopment Zone, provided such property is placed in
22    service on or after July 1, 2006, and the taxpayer's base
23    employment within Illinois has increased by 1% or more
24    over the preceding year as determined by the taxpayer's
25    employment records filed with the Illinois Department of
26    Employment Security. Taxpayers who are new to Illinois

 

 

HB5193- 21 -LRB103 38317 HLH 68452 b

1    shall be deemed to have met the 1% growth in base
2    employment for the first year in which they file
3    employment records with the Illinois Department of
4    Employment Security. If, in any year, the increase in base
5    employment within Illinois over the preceding year is less
6    than 1%, the additional credit shall be limited to that
7    percentage times a fraction, the numerator of which is
8    0.5% and the denominator of which is 1%, but shall not
9    exceed 0.5%.
10        (8) For taxable years beginning on or after January 1,
11    2021, there shall be allowed an Enterprise Zone
12    construction jobs credit against the taxes imposed under
13    subsections (a) and (b) of this Section as provided in
14    Section 13 of the Illinois Enterprise Zone Act.
15        The credit or credits may not reduce the taxpayer's
16    liability to less than zero. If the amount of the credit or
17    credits exceeds the taxpayer's liability, the excess may
18    be carried forward and applied against the taxpayer's
19    liability in succeeding calendar years in the same manner
20    provided under paragraph (4) of Section 211 of this Act.
21    The credit or credits shall be applied to the earliest
22    year for which there is a tax liability. If there are
23    credits from more than one taxable year that are available
24    to offset a liability, the earlier credit shall be applied
25    first.
26        For partners, shareholders of Subchapter S

 

 

HB5193- 22 -LRB103 38317 HLH 68452 b

1    corporations, and owners of limited liability companies,
2    if the liability company is treated as a partnership for
3    the purposes of federal and State income taxation, for
4    taxable years ending before December 31, 2023, there shall
5    be allowed a credit under this Section to be determined in
6    accordance with the determination of income and
7    distributive share of income under Sections 702 and 704
8    and Subchapter S of the Internal Revenue Code. For taxable
9    years ending on or after December 31, 2023, for partners
10    and shareholders of Subchapter S corporations, the
11    provisions of Section 251 shall apply with respect to the
12    credit under this subsection.
13        The total aggregate amount of credits awarded under
14    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
15    shall not exceed $20,000,000 in any State fiscal year.
16        This paragraph (8) is exempt from the provisions of
17    Section 250.
18    (g) (Blank).
19    (h) Investment credit; High Impact Business.
20        (1) Subject to subsections (b) and (b-5) of Section
21    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
22    be allowed a credit against the tax imposed by subsections
23    (a) and (b) of this Section for investment in qualified
24    property which is placed in service by a Department of
25    Commerce and Economic Opportunity designated High Impact
26    Business. The credit shall be .5% of the basis for such

 

 

HB5193- 23 -LRB103 38317 HLH 68452 b

1    property. The credit shall not be available (i) until the
2    minimum investments in qualified property set forth in
3    subdivision (a)(3)(A) of Section 5.5 of the Illinois
4    Enterprise Zone Act have been satisfied or (ii) until the
5    time authorized in subsection (b-5) of the Illinois
6    Enterprise Zone Act for entities designated as High Impact
7    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
8    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
9    Act, and shall not be allowed to the extent that it would
10    reduce a taxpayer's liability for the tax imposed by
11    subsections (a) and (b) of this Section to below zero. The
12    credit applicable to such investments shall be taken in
13    the taxable year in which such investments have been
14    completed. The credit for additional investments beyond
15    the minimum investment by a designated high impact
16    business authorized under subdivision (a)(3)(A) of Section
17    5.5 of the Illinois Enterprise Zone Act shall be available
18    only in the taxable year in which the property is placed in
19    service and shall not be allowed to the extent that it
20    would reduce a taxpayer's liability for the tax imposed by
21    subsections (a) and (b) of this Section to below zero. For
22    tax years ending on or after December 31, 1987, the credit
23    shall be allowed for the tax year in which the property is
24    placed in service, or, if the amount of the credit exceeds
25    the tax liability for that year, whether it exceeds the
26    original liability or the liability as later amended, such

 

 

HB5193- 24 -LRB103 38317 HLH 68452 b

1    excess may be carried forward and applied to the tax
2    liability of the 5 taxable years following the excess
3    credit year. The credit shall be applied to the earliest
4    year for which there is a liability. If there is credit
5    from more than one tax year that is available to offset a
6    liability, the credit accruing first in time shall be
7    applied first.
8        Changes made in this subdivision (h)(1) by Public Act
9    88-670 restore changes made by Public Act 85-1182 and
10    reflect existing law.
11        (2) The term qualified property means property which:
12            (A) is tangible, whether new or used, including
13        buildings and structural components of buildings;
14            (B) is depreciable pursuant to Section 167 of the
15        Internal Revenue Code, except that "3-year property"
16        as defined in Section 168(c)(2)(A) of that Code is not
17        eligible for the credit provided by this subsection
18        (h);
19            (C) is acquired by purchase as defined in Section
20        179(d) of the Internal Revenue Code; and
21            (D) is not eligible for the Enterprise Zone
22        Investment Credit provided by subsection (f) of this
23        Section.
24        (3) The basis of qualified property shall be the basis
25    used to compute the depreciation deduction for federal
26    income tax purposes.

 

 

HB5193- 25 -LRB103 38317 HLH 68452 b

1        (4) If the basis of the property for federal income
2    tax depreciation purposes is increased after it has been
3    placed in service in a federally designated Foreign Trade
4    Zone or Sub-Zone located in Illinois by the taxpayer, the
5    amount of such increase shall be deemed property placed in
6    service on the date of such increase in basis.
7        (5) The term "placed in service" shall have the same
8    meaning as under Section 46 of the Internal Revenue Code.
9        (6) If during any taxable year ending on or before
10    December 31, 1996, any property ceases to be qualified
11    property in the hands of the taxpayer within 48 months
12    after being placed in service, or the situs of any
13    qualified property is moved outside Illinois within 48
14    months after being placed in service, the tax imposed
15    under subsections (a) and (b) of this Section for such
16    taxable year shall be increased. Such increase shall be
17    determined by (i) recomputing the investment credit which
18    would have been allowed for the year in which credit for
19    such property was originally allowed by eliminating such
20    property from such computation, and (ii) subtracting such
21    recomputed credit from the amount of credit previously
22    allowed. For the purposes of this paragraph (6), a
23    reduction of the basis of qualified property resulting
24    from a redetermination of the purchase price shall be
25    deemed a disposition of qualified property to the extent
26    of such reduction.

 

 

HB5193- 26 -LRB103 38317 HLH 68452 b

1        (7) Beginning with tax years ending after December 31,
2    1996, if a taxpayer qualifies for the credit under this
3    subsection (h) and thereby is granted a tax abatement and
4    the taxpayer relocates its entire facility in violation of
5    the explicit terms and length of the contract under
6    Section 18-183 of the Property Tax Code, the tax imposed
7    under subsections (a) and (b) of this Section shall be
8    increased for the taxable year in which the taxpayer
9    relocated its facility by an amount equal to the amount of
10    credit received by the taxpayer under this subsection (h).
11    (h-5) High Impact Business construction jobs credit. For
12taxable years beginning on or after January 1, 2021, there
13shall also be allowed a High Impact Business construction jobs
14credit against the tax imposed under subsections (a) and (b)
15of this Section as provided in subsections (i) and (j) of
16Section 5.5 of the Illinois Enterprise Zone Act.
17    The credit or credits may not reduce the taxpayer's
18liability to less than zero. If the amount of the credit or
19credits exceeds the taxpayer's liability, the excess may be
20carried forward and applied against the taxpayer's liability
21in succeeding calendar years in the manner provided under
22paragraph (4) of Section 211 of this Act. The credit or credits
23shall be applied to the earliest year for which there is a tax
24liability. If there are credits from more than one taxable
25year that are available to offset a liability, the earlier
26credit shall be applied first.

 

 

HB5193- 27 -LRB103 38317 HLH 68452 b

1    For partners, shareholders of Subchapter S corporations,
2and owners of limited liability companies, for taxable years
3ending before December 31, 2023, if the liability company is
4treated as a partnership for the purposes of federal and State
5income taxation, there shall be allowed a credit under this
6Section to be determined in accordance with the determination
7of income and distributive share of income under Sections 702
8and 704 and Subchapter S of the Internal Revenue Code. For
9taxable years ending on or after December 31, 2023, for
10partners and shareholders of Subchapter S corporations, the
11provisions of Section 251 shall apply with respect to the
12credit under this subsection.
13    The total aggregate amount of credits awarded under the
14Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
15exceed $20,000,000 in any State fiscal year.
16    This subsection (h-5) is exempt from the provisions of
17Section 250.
18    (i) Credit for Personal Property Tax Replacement Income
19Tax. For tax years ending prior to December 31, 2003, a credit
20shall be allowed against the tax imposed by subsections (a)
21and (b) of this Section for the tax imposed by subsections (c)
22and (d) of this Section. This credit shall be computed by
23multiplying the tax imposed by subsections (c) and (d) of this
24Section by a fraction, the numerator of which is base income
25allocable to Illinois and the denominator of which is Illinois
26base income, and further multiplying the product by the tax

 

 

HB5193- 28 -LRB103 38317 HLH 68452 b

1rate imposed by subsections (a) and (b) of this Section.
2    Any credit earned on or after December 31, 1986 under this
3subsection which is unused in the year the credit is computed
4because it exceeds the tax liability imposed by subsections
5(a) and (b) for that year (whether it exceeds the original
6liability or the liability as later amended) may be carried
7forward and applied to the tax liability imposed by
8subsections (a) and (b) of the 5 taxable years following the
9excess credit year, provided that no credit may be carried
10forward to any year ending on or after December 31, 2003. This
11credit shall be applied first to the earliest year for which
12there is a liability. If there is a credit under this
13subsection from more than one tax year that is available to
14offset a liability the earliest credit arising under this
15subsection shall be applied first.
16    If, during any taxable year ending on or after December
1731, 1986, the tax imposed by subsections (c) and (d) of this
18Section for which a taxpayer has claimed a credit under this
19subsection (i) is reduced, the amount of credit for such tax
20shall also be reduced. Such reduction shall be determined by
21recomputing the credit to take into account the reduced tax
22imposed by subsections (c) and (d). If any portion of the
23reduced amount of credit has been carried to a different
24taxable year, an amended return shall be filed for such
25taxable year to reduce the amount of credit claimed.
26    (j) Training expense credit. Beginning with tax years

 

 

HB5193- 29 -LRB103 38317 HLH 68452 b

1ending on or after December 31, 1986 and prior to December 31,
22003, a taxpayer shall be allowed a credit against the tax
3imposed by subsections (a) and (b) under this Section for all
4amounts paid or accrued, on behalf of all persons employed by
5the taxpayer in Illinois or Illinois residents employed
6outside of Illinois by a taxpayer, for educational or
7vocational training in semi-technical or technical fields or
8semi-skilled or skilled fields, which were deducted from gross
9income in the computation of taxable income. The credit
10against the tax imposed by subsections (a) and (b) shall be
111.6% of such training expenses. For partners, shareholders of
12subchapter S corporations, and owners of limited liability
13companies, if the liability company is treated as a
14partnership for purposes of federal and State income taxation,
15for taxable years ending before December 31, 2023, there shall
16be allowed a credit under this subsection (j) to be determined
17in accordance with the determination of income and
18distributive share of income under Sections 702 and 704 and
19subchapter S of the Internal Revenue Code. For taxable years
20ending on or after December 31, 2023, for partners and
21shareholders of Subchapter S corporations, the provisions of
22Section 251 shall apply with respect to the credit under this
23subsection.
24    Any credit allowed under this subsection which is unused
25in the year the credit is earned may be carried forward to each
26of the 5 taxable years following the year for which the credit

 

 

HB5193- 30 -LRB103 38317 HLH 68452 b

1is first computed until it is used. This credit shall be
2applied first to the earliest year for which there is a
3liability. If there is a credit under this subsection from
4more than one tax year that is available to offset a liability,
5the earliest credit arising under this subsection shall be
6applied first. No carryforward credit may be claimed in any
7tax year ending on or after December 31, 2003.
8    (k) Research and development credit. For tax years ending
9after July 1, 1990 and prior to December 31, 2003, and
10beginning again for tax years ending on or after December 31,
112004, and ending prior to January 1, 2027, a taxpayer shall be
12allowed a credit against the tax imposed by subsections (a)
13and (b) of this Section for increasing research activities in
14this State. The credit allowed against the tax imposed by
15subsections (a) and (b) shall be equal to 6 1/2% of the
16qualifying expenditures for increasing research activities in
17this State. For partners, shareholders of subchapter S
18corporations, and owners of limited liability companies, if
19the liability company is treated as a partnership for purposes
20of federal and State income taxation, for taxable years ending
21before December 31, 2023, there shall be allowed a credit
22under this subsection to be determined in accordance with the
23determination of income and distributive share of income under
24Sections 702 and 704 and subchapter S of the Internal Revenue
25Code. For taxable years ending on or after December 31, 2023,
26for partners and shareholders of Subchapter S corporations,

 

 

HB5193- 31 -LRB103 38317 HLH 68452 b

1the provisions of Section 251 shall apply with respect to the
2credit under this subsection.
3    For purposes of this subsection, "qualifying expenditures"
4means the qualifying expenditures as defined for the federal
5credit for increasing research activities which would be
6allowable under Section 41 of the Internal Revenue Code and
7which are conducted in this State, "qualifying expenditures
8for increasing research activities in this State" means the
9excess of qualifying expenditures for the taxable year in
10which incurred over qualifying expenditures for the base
11period, "qualifying expenditures for the base period" means
12the average of the qualifying expenditures for each year in
13the base period, and "base period" means the 3 taxable years
14immediately preceding the taxable year for which the
15determination is being made.
16    Any credit in excess of the tax liability for the taxable
17year may be carried forward. A taxpayer may elect to have the
18unused credit shown on its final completed return carried over
19as a credit against the tax liability for the following 5
20taxable years or until it has been fully used, whichever
21occurs first; provided that no credit earned in a tax year
22ending prior to December 31, 2003 may be carried forward to any
23year ending on or after December 31, 2003.
24    If an unused credit is carried forward to a given year from
252 or more earlier years, that credit arising in the earliest
26year will be applied first against the tax liability for the

 

 

HB5193- 32 -LRB103 38317 HLH 68452 b

1given year. If a tax liability for the given year still
2remains, the credit from the next earliest year will then be
3applied, and so on, until all credits have been used or no tax
4liability for the given year remains. Any remaining unused
5credit or credits then will be carried forward to the next
6following year in which a tax liability is incurred, except
7that no credit can be carried forward to a year which is more
8than 5 years after the year in which the expense for which the
9credit is given was incurred.
10    No inference shall be drawn from Public Act 91-644 in
11construing this Section for taxable years beginning before
12January 1, 1999.
13    It is the intent of the General Assembly that the research
14and development credit under this subsection (k) shall apply
15continuously for all tax years ending on or after December 31,
162004 and ending prior to January 1, 2027, including, but not
17limited to, the period beginning on January 1, 2016 and ending
18on July 6, 2017 (the effective date of Public Act 100-22). All
19actions taken in reliance on the continuation of the credit
20under this subsection (k) by any taxpayer are hereby
21validated.
22    (l) Environmental Remediation Tax Credit.
23        (i) For tax years ending after December 31, 1997 and
24    on or before December 31, 2001, a taxpayer shall be
25    allowed a credit against the tax imposed by subsections
26    (a) and (b) of this Section for certain amounts paid for

 

 

HB5193- 33 -LRB103 38317 HLH 68452 b

1    unreimbursed eligible remediation costs, as specified in
2    this subsection. For purposes of this Section,
3    "unreimbursed eligible remediation costs" means costs
4    approved by the Illinois Environmental Protection Agency
5    ("Agency") under Section 58.14 of the Environmental
6    Protection Act that were paid in performing environmental
7    remediation at a site for which a No Further Remediation
8    Letter was issued by the Agency and recorded under Section
9    58.10 of the Environmental Protection Act. The credit must
10    be claimed for the taxable year in which Agency approval
11    of the eligible remediation costs is granted. The credit
12    is not available to any taxpayer if the taxpayer or any
13    related party caused or contributed to, in any material
14    respect, a release of regulated substances on, in, or
15    under the site that was identified and addressed by the
16    remedial action pursuant to the Site Remediation Program
17    of the Environmental Protection Act. After the Pollution
18    Control Board rules are adopted pursuant to the Illinois
19    Administrative Procedure Act for the administration and
20    enforcement of Section 58.9 of the Environmental
21    Protection Act, determinations as to credit availability
22    for purposes of this Section shall be made consistent with
23    those rules. For purposes of this Section, "taxpayer"
24    includes a person whose tax attributes the taxpayer has
25    succeeded to under Section 381 of the Internal Revenue
26    Code and "related party" includes the persons disallowed a

 

 

HB5193- 34 -LRB103 38317 HLH 68452 b

1    deduction for losses by paragraphs (b), (c), and (f)(1) of
2    Section 267 of the Internal Revenue Code by virtue of
3    being a related taxpayer, as well as any of its partners.
4    The credit allowed against the tax imposed by subsections
5    (a) and (b) shall be equal to 25% of the unreimbursed
6    eligible remediation costs in excess of $100,000 per site,
7    except that the $100,000 threshold shall not apply to any
8    site contained in an enterprise zone as determined by the
9    Department of Commerce and Community Affairs (now
10    Department of Commerce and Economic Opportunity). The
11    total credit allowed shall not exceed $40,000 per year
12    with a maximum total of $150,000 per site. For partners
13    and shareholders of subchapter S corporations, there shall
14    be allowed a credit under this subsection to be determined
15    in accordance with the determination of income and
16    distributive share of income under Sections 702 and 704
17    and subchapter S of the Internal Revenue Code.
18        (ii) A credit allowed under this subsection that is
19    unused in the year the credit is earned may be carried
20    forward to each of the 5 taxable years following the year
21    for which the credit is first earned until it is used. The
22    term "unused credit" does not include any amounts of
23    unreimbursed eligible remediation costs in excess of the
24    maximum credit per site authorized under paragraph (i).
25    This credit shall be applied first to the earliest year
26    for which there is a liability. If there is a credit under

 

 

HB5193- 35 -LRB103 38317 HLH 68452 b

1    this subsection from more than one tax year that is
2    available to offset a liability, the earliest credit
3    arising under this subsection shall be applied first. A
4    credit allowed under this subsection may be sold to a
5    buyer as part of a sale of all or part of the remediation
6    site for which the credit was granted. The purchaser of a
7    remediation site and the tax credit shall succeed to the
8    unused credit and remaining carry-forward period of the
9    seller. To perfect the transfer, the assignor shall record
10    the transfer in the chain of title for the site and provide
11    written notice to the Director of the Illinois Department
12    of Revenue of the assignor's intent to sell the
13    remediation site and the amount of the tax credit to be
14    transferred as a portion of the sale. In no event may a
15    credit be transferred to any taxpayer if the taxpayer or a
16    related party would not be eligible under the provisions
17    of subsection (i).
18        (iii) For purposes of this Section, the term "site"
19    shall have the same meaning as under Section 58.2 of the
20    Environmental Protection Act.
21    (m) Education expense credit. Beginning with tax years
22ending after December 31, 1999, a taxpayer who is the
23custodian of one or more qualifying pupils shall be allowed a
24credit against the tax imposed by subsections (a) and (b) of
25this Section for qualified education expenses incurred on
26behalf of the qualifying pupils. The credit shall be equal to

 

 

HB5193- 36 -LRB103 38317 HLH 68452 b

125% of qualified education expenses, but in no event may the
2total credit under this subsection claimed by a family that is
3the custodian of qualifying pupils exceed (i) $500 for tax
4years ending prior to December 31, 2017, and (ii) $750 for tax
5years ending on or after December 31, 2017. In no event shall a
6credit under this subsection reduce the taxpayer's liability
7under this Act to less than zero. Notwithstanding any other
8provision of law, for taxable years beginning on or after
9January 1, 2017, no taxpayer may claim a credit under this
10subsection (m) if the taxpayer's adjusted gross income for the
11taxable year exceeds (i) $500,000, in the case of spouses
12filing a joint federal tax return or (ii) $250,000, in the case
13of all other taxpayers. This subsection is exempt from the
14provisions of Section 250 of this Act.
15    For purposes of this subsection:
16    "Qualifying pupils" means individuals who (i) are
17residents of the State of Illinois, (ii) are under the age of
1821 at the close of the school year for which a credit is
19sought, and (iii) during the school year for which a credit is
20sought were full-time pupils enrolled in a kindergarten
21through twelfth grade education program at any school, as
22defined in this subsection.
23    "Qualified education expense" means the amount incurred on
24behalf of a qualifying pupil in excess of $250 for tuition,
25book fees, and lab fees at the school in which the pupil is
26enrolled during the regular school year.

 

 

HB5193- 37 -LRB103 38317 HLH 68452 b

1    "School" means any public or nonpublic elementary or
2secondary school in Illinois that is in compliance with Title
3VI of the Civil Rights Act of 1964 and attendance at which
4satisfies the requirements of Section 26-1 of the School Code,
5except that nothing shall be construed to require a child to
6attend any particular public or nonpublic school to qualify
7for the credit under this Section.
8    "Custodian" means, with respect to qualifying pupils, an
9Illinois resident who is a parent, the parents, a legal
10guardian, or the legal guardians of the qualifying pupils.
11    (n) River Edge Redevelopment Zone site remediation tax
12credit.
13        (i) For tax years ending on or after December 31,
14    2006, a taxpayer shall be allowed a credit against the tax
15    imposed by subsections (a) and (b) of this Section for
16    certain amounts paid for unreimbursed eligible remediation
17    costs, as specified in this subsection. For purposes of
18    this Section, "unreimbursed eligible remediation costs"
19    means costs approved by the Illinois Environmental
20    Protection Agency ("Agency") under Section 58.14a of the
21    Environmental Protection Act that were paid in performing
22    environmental remediation at a site within a River Edge
23    Redevelopment Zone for which a No Further Remediation
24    Letter was issued by the Agency and recorded under Section
25    58.10 of the Environmental Protection Act. The credit must
26    be claimed for the taxable year in which Agency approval

 

 

HB5193- 38 -LRB103 38317 HLH 68452 b

1    of the eligible remediation costs is granted. The credit
2    is not available to any taxpayer if the taxpayer or any
3    related party caused or contributed to, in any material
4    respect, a release of regulated substances on, in, or
5    under the site that was identified and addressed by the
6    remedial action pursuant to the Site Remediation Program
7    of the Environmental Protection Act. Determinations as to
8    credit availability for purposes of this Section shall be
9    made consistent with rules adopted by the Pollution
10    Control Board pursuant to the Illinois Administrative
11    Procedure Act for the administration and enforcement of
12    Section 58.9 of the Environmental Protection Act. For
13    purposes of this Section, "taxpayer" includes a person
14    whose tax attributes the taxpayer has succeeded to under
15    Section 381 of the Internal Revenue Code and "related
16    party" includes the persons disallowed a deduction for
17    losses by paragraphs (b), (c), and (f)(1) of Section 267
18    of the Internal Revenue Code by virtue of being a related
19    taxpayer, as well as any of its partners. The credit
20    allowed against the tax imposed by subsections (a) and (b)
21    shall be equal to 25% of the unreimbursed eligible
22    remediation costs in excess of $100,000 per site.
23        (ii) A credit allowed under this subsection that is
24    unused in the year the credit is earned may be carried
25    forward to each of the 5 taxable years following the year
26    for which the credit is first earned until it is used. This

 

 

HB5193- 39 -LRB103 38317 HLH 68452 b

1    credit shall be applied first to the earliest year for
2    which there is a liability. If there is a credit under this
3    subsection from more than one tax year that is available
4    to offset a liability, the earliest credit arising under
5    this subsection shall be applied first. A credit allowed
6    under this subsection may be sold to a buyer as part of a
7    sale of all or part of the remediation site for which the
8    credit was granted. The purchaser of a remediation site
9    and the tax credit shall succeed to the unused credit and
10    remaining carry-forward period of the seller. To perfect
11    the transfer, the assignor shall record the transfer in
12    the chain of title for the site and provide written notice
13    to the Director of the Illinois Department of Revenue of
14    the assignor's intent to sell the remediation site and the
15    amount of the tax credit to be transferred as a portion of
16    the sale. In no event may a credit be transferred to any
17    taxpayer if the taxpayer or a related party would not be
18    eligible under the provisions of subsection (i).
19        (iii) For purposes of this Section, the term "site"
20    shall have the same meaning as under Section 58.2 of the
21    Environmental Protection Act.
22    (o) For each of taxable years during the Compassionate Use
23of Medical Cannabis Program, a surcharge is imposed on all
24taxpayers on income arising from the sale or exchange of
25capital assets, depreciable business property, real property
26used in the trade or business, and Section 197 intangibles of

 

 

HB5193- 40 -LRB103 38317 HLH 68452 b

1an organization registrant under the Compassionate Use of
2Medical Cannabis Program Act. The amount of the surcharge is
3equal to the amount of federal income tax liability for the
4taxable year attributable to those sales and exchanges. The
5surcharge imposed does not apply if:
6        (1) the medical cannabis cultivation center
7    registration, medical cannabis dispensary registration, or
8    the property of a registration is transferred as a result
9    of any of the following:
10            (A) bankruptcy, a receivership, or a debt
11        adjustment initiated by or against the initial
12        registration or the substantial owners of the initial
13        registration;
14            (B) cancellation, revocation, or termination of
15        any registration by the Illinois Department of Public
16        Health;
17            (C) a determination by the Illinois Department of
18        Public Health that transfer of the registration is in
19        the best interests of Illinois qualifying patients as
20        defined by the Compassionate Use of Medical Cannabis
21        Program Act;
22            (D) the death of an owner of the equity interest in
23        a registrant;
24            (E) the acquisition of a controlling interest in
25        the stock or substantially all of the assets of a
26        publicly traded company;

 

 

HB5193- 41 -LRB103 38317 HLH 68452 b

1            (F) a transfer by a parent company to a wholly
2        owned subsidiary; or
3            (G) the transfer or sale to or by one person to
4        another person where both persons were initial owners
5        of the registration when the registration was issued;
6        or
7        (2) the cannabis cultivation center registration,
8    medical cannabis dispensary registration, or the
9    controlling interest in a registrant's property is
10    transferred in a transaction to lineal descendants in
11    which no gain or loss is recognized or as a result of a
12    transaction in accordance with Section 351 of the Internal
13    Revenue Code in which no gain or loss is recognized.
14    (p) Pass-through entity tax.
15        (1) For taxable years ending on or after December 31,
16    2021 and beginning prior to January 1, 2026, a partnership
17    (other than a publicly traded partnership under Section
18    7704 of the Internal Revenue Code) or Subchapter S
19    corporation may elect to apply the provisions of this
20    subsection. A separate election shall be made for each
21    taxable year. Such election shall be made at such time,
22    and in such form and manner as prescribed by the
23    Department, and, once made, is irrevocable.
24        (2) Entity-level tax. A partnership or Subchapter S
25    corporation electing to apply the provisions of this
26    subsection shall be subject to a tax for the privilege of

 

 

HB5193- 42 -LRB103 38317 HLH 68452 b

1    earning or receiving income in this State in an amount
2    equal to 4.95% of the taxpayer's net income for the
3    taxable year.
4        (3) Net income defined.
5            (A) In general. For purposes of paragraph (2), the
6        term net income has the same meaning as defined in
7        Section 202 of this Act, except that, for tax years
8        ending on or after December 31, 2023, a deduction
9        shall be allowed in computing base income for
10        distributions to a retired partner to the extent that
11        the partner's distributions are exempt from tax under
12        Section 203(a)(2)(F) of this Act. In addition, the
13        following modifications shall not apply:
14                (i) the standard exemption allowed under
15            Section 204;
16                (ii) the deduction for net losses allowed
17            under Section 207;
18                (iii) in the case of an S corporation, the
19            modification under Section 203(b)(2)(S); and
20                (iv) in the case of a partnership, the
21            modifications under Section 203(d)(2)(H) and
22            Section 203(d)(2)(I).
23            (B) Special rule for tiered partnerships. If a
24        taxpayer making the election under paragraph (1) is a
25        partner of another taxpayer making the election under
26        paragraph (1), net income shall be computed as

 

 

HB5193- 43 -LRB103 38317 HLH 68452 b

1        provided in subparagraph (A), except that the taxpayer
2        shall subtract its distributive share of the net
3        income of the electing partnership (including its
4        distributive share of the net income of the electing
5        partnership derived as a distributive share from
6        electing partnerships in which it is a partner).
7        (4) Credit for entity level tax. Each partner or
8    shareholder of a taxpayer making the election under this
9    Section shall be allowed a credit against the tax imposed
10    under subsections (a) and (b) of Section 201 of this Act
11    for the taxable year of the partnership or Subchapter S
12    corporation for which an election is in effect ending
13    within or with the taxable year of the partner or
14    shareholder in an amount equal to 4.95% times the partner
15    or shareholder's distributive share of the net income of
16    the electing partnership or Subchapter S corporation, but
17    not to exceed the partner's or shareholder's share of the
18    tax imposed under paragraph (1) which is actually paid by
19    the partnership or Subchapter S corporation. If the
20    taxpayer is a partnership or Subchapter S corporation that
21    is itself a partner of a partnership making the election
22    under paragraph (1), the credit under this paragraph shall
23    be allowed to the taxpayer's partners or shareholders (or
24    if the partner is a partnership or Subchapter S
25    corporation then its partners or shareholders) in
26    accordance with the determination of income and

 

 

HB5193- 44 -LRB103 38317 HLH 68452 b

1    distributive share of income under Sections 702 and 704
2    and Subchapter S of the Internal Revenue Code. If the
3    amount of the credit allowed under this paragraph exceeds
4    the partner's or shareholder's liability for tax imposed
5    under subsections (a) and (b) of Section 201 of this Act
6    for the taxable year, such excess shall be treated as an
7    overpayment for purposes of Section 909 of this Act.
8        (5) Nonresidents. A nonresident individual who is a
9    partner or shareholder of a partnership or Subchapter S
10    corporation for a taxable year for which an election is in
11    effect under paragraph (1) shall not be required to file
12    an income tax return under this Act for such taxable year
13    if the only source of net income of the individual (or the
14    individual and the individual's spouse in the case of a
15    joint return) is from an entity making the election under
16    paragraph (1) and the credit allowed to the partner or
17    shareholder under paragraph (4) equals or exceeds the
18    individual's liability for the tax imposed under
19    subsections (a) and (b) of Section 201 of this Act for the
20    taxable year.
21        (6) Liability for tax. Except as provided in this
22    paragraph, a partnership or Subchapter S making the
23    election under paragraph (1) is liable for the
24    entity-level tax imposed under paragraph (2). If the
25    electing partnership or corporation fails to pay the full
26    amount of tax deemed assessed under paragraph (2), the

 

 

HB5193- 45 -LRB103 38317 HLH 68452 b

1    partners or shareholders shall be liable to pay the tax
2    assessed (including penalties and interest). Each partner
3    or shareholder shall be liable for the unpaid assessment
4    based on the ratio of the partner's or shareholder's share
5    of the net income of the partnership over the total net
6    income of the partnership. If the partnership or
7    Subchapter S corporation fails to pay the tax assessed
8    (including penalties and interest) and thereafter an
9    amount of such tax is paid by the partners or
10    shareholders, such amount shall not be collected from the
11    partnership or corporation.
12        (7) Foreign tax. For purposes of the credit allowed
13    under Section 601(b)(3) of this Act, tax paid by a
14    partnership or Subchapter S corporation to another state
15    which, as determined by the Department, is substantially
16    similar to the tax imposed under this subsection, shall be
17    considered tax paid by the partner or shareholder to the
18    extent that the partner's or shareholder's share of the
19    income of the partnership or Subchapter S corporation
20    allocated and apportioned to such other state bears to the
21    total income of the partnership or Subchapter S
22    corporation allocated or apportioned to such other state.
23        (8) Suspension of withholding. The provisions of
24    Section 709.5 of this Act shall not apply to a partnership
25    or Subchapter S corporation for the taxable year for which
26    an election under paragraph (1) is in effect.

 

 

HB5193- 46 -LRB103 38317 HLH 68452 b

1        (9) Requirement to pay estimated tax. For each taxable
2    year for which an election under paragraph (1) is in
3    effect, a partnership or Subchapter S corporation is
4    required to pay estimated tax for such taxable year under
5    Sections 803 and 804 of this Act if the amount payable as
6    estimated tax can reasonably be expected to exceed $500.
7        (10) The provisions of this subsection shall apply
8    only with respect to taxable years for which the
9    limitation on individual deductions applies under Section
10    164(b)(6) of the Internal Revenue Code.
11(Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21;
12103-9, eff. 6-7-23; 103-396, eff. 1-1-24; revised 12-12-23.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.