103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3474

 

Introduced 2/8/2024, by Sen. Elgie R. Sims, Jr.

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 605/605-1115 new
35 ILCS 5/201
35 ILCS 5/241 new

    Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Provides that the Department of Commerce and Economic Opportunity shall award income tax credits in an amount equal to 13% of the qualifying quantum information science expenditures made by the taxpayer during the taxable year. Amends the Illinois Income Tax Act to make conforming changes. Further amends the Illinois Income Tax Act to extend the research and development credit to tax years ending before January 1, 2037 (currently, January 1, 2027). Effective immediately.


LRB103 36904 HLH 67017 b

 

 

A BILL FOR

 

SB3474LRB103 36904 HLH 67017 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 Department of Commerce and Economic
5Opportunity Law of the Civil Administrative Code of Illinois
6is amended by adding Section 605-1115 as follows:
 
7    (20 ILCS 605/605-1115 new)
8    Sec. 605-1115. Quantum information science research and
9development.
10    (a) In order to advance and increase quantum information
11science investment and research in the State of Illinois, and
12to make the State of Illinois a leader in the are of quantum
13information science, quantum computing, and other applications
14of quantum science in technology, there is hereby created the
15Quantum Information Science Research and Development Tax
16Credit Program.
17    (b) For taxable years ending on or after December 31,
182025, the Department shall issue a tax credit certificate
19against the taxes imposed under subsections (a) and (b) of
20Section 201 of the Illinois Income Tax Act in an amount equal
21to 13% of the qualifying quantum information science
22expenditures made by the taxpayer during the taxable year.
23    (c) Taxpayers seeking a credit certificate for qualifying

 

 

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1quantum information science expenditures shall apply to the
2Department in the form and manner specified by the Department.
3    (d) The total aggregate amount of the credits awarded
4under this Section shall not exceed $25,000,000 in any
5calendar year.
6    (e) The Department, in consultation with the Department of
7Revenue, shall adopt rules to implement and administer this
8Section.
9    (f) This Section is exempt from the provisions of Section
10250 of the Illinois Income Tax Act.
11    (g) As used in this Section:
12    "Qualifying quantum information science expenditures"
13means expenditures specifically related to advancing quantum
14information science research and development in the State of
15Illinois that would otherwise be qualifying expenditures as
16defined for the federal credit for increasing research
17activities that are allowable under Section 41 of the Internal
18Revenue Code and that are conducted in this State.
19    "Quantum information science" has the meaning given to
20that term in Section 2 of the federal National Quantum
21Initiative Act.
 
22    Section 10. The Illinois Income Tax Act is amended by
23changing Section 201 and by adding Section 241 as follows:
 
24    (35 ILCS 5/201)

 

 

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1    Sec. 201. Tax imposed.
2    (a) In general. A tax measured by net income is hereby
3imposed on every individual, corporation, trust and estate for
4each taxable year ending after July 31, 1969 on the privilege
5of earning or receiving income in or as a resident of this
6State. Such tax shall be in addition to all other occupation or
7privilege taxes imposed by this State or by any municipal
8corporation or political subdivision thereof.
9    (b) Rates. The tax imposed by subsection (a) of this
10Section shall be determined as follows, except as adjusted by
11subsection (d-1):
12        (1) In the case of an individual, trust or estate, for
13    taxable years ending prior to July 1, 1989, an amount
14    equal to 2 1/2% of the taxpayer's net income for the
15    taxable year.
16        (2) In the case of an individual, trust or estate, for
17    taxable years beginning prior to July 1, 1989 and ending
18    after June 30, 1989, an amount equal to the sum of (i) 2
19    1/2% of the taxpayer's net income for the period prior to
20    July 1, 1989, as calculated under Section 202.3, and (ii)
21    3% of the taxpayer's net income for the period after June
22    30, 1989, as calculated under Section 202.3.
23        (3) In the case of an individual, trust or estate, for
24    taxable years beginning after June 30, 1989, and ending
25    prior to January 1, 2011, an amount equal to 3% of the
26    taxpayer's net income for the taxable year.

 

 

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1        (4) In the case of an individual, trust, or estate,
2    for taxable years beginning prior to January 1, 2011, and
3    ending after December 31, 2010, an amount equal to the sum
4    of (i) 3% of the taxpayer's net income for the period prior
5    to January 1, 2011, as calculated under Section 202.5, and
6    (ii) 5% of the taxpayer's net income for the period after
7    December 31, 2010, as calculated under Section 202.5.
8        (5) In the case of an individual, trust, or estate,
9    for taxable years beginning on or after January 1, 2011,
10    and ending prior to January 1, 2015, an amount equal to 5%
11    of the taxpayer's net income for the taxable year.
12        (5.1) In the case of an individual, trust, or estate,
13    for taxable years beginning prior to January 1, 2015, and
14    ending after December 31, 2014, an amount equal to the sum
15    of (i) 5% of the taxpayer's net income for the period prior
16    to January 1, 2015, as calculated under Section 202.5, and
17    (ii) 3.75% of the taxpayer's net income for the period
18    after December 31, 2014, as calculated under Section
19    202.5.
20        (5.2) In the case of an individual, trust, or estate,
21    for taxable years beginning on or after January 1, 2015,
22    and ending prior to July 1, 2017, an amount equal to 3.75%
23    of the taxpayer's net income for the taxable year.
24        (5.3) In the case of an individual, trust, or estate,
25    for taxable years beginning prior to July 1, 2017, and
26    ending after June 30, 2017, an amount equal to the sum of

 

 

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1    (i) 3.75% of the taxpayer's net income for the period
2    prior to July 1, 2017, as calculated under Section 202.5,
3    and (ii) 4.95% of the taxpayer's net income for the period
4    after June 30, 2017, as calculated under Section 202.5.
5        (5.4) In the case of an individual, trust, or estate,
6    for taxable years beginning on or after July 1, 2017, an
7    amount equal to 4.95% of the taxpayer's net income for the
8    taxable year.
9        (6) In the case of a corporation, for taxable years
10    ending prior to July 1, 1989, an amount equal to 4% of the
11    taxpayer's net income for the taxable year.
12        (7) In the case of a corporation, for taxable years
13    beginning prior to July 1, 1989 and ending after June 30,
14    1989, an amount equal to the sum of (i) 4% of the
15    taxpayer's net income for the period prior to July 1,
16    1989, as calculated under Section 202.3, and (ii) 4.8% of
17    the taxpayer's net income for the period after June 30,
18    1989, as calculated under Section 202.3.
19        (8) In the case of a corporation, for taxable years
20    beginning after June 30, 1989, and ending prior to January
21    1, 2011, an amount equal to 4.8% of the taxpayer's net
22    income for the taxable year.
23        (9) In the case of a corporation, for taxable years
24    beginning prior to January 1, 2011, and ending after
25    December 31, 2010, an amount equal to the sum of (i) 4.8%
26    of the taxpayer's net income for the period prior to

 

 

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1    January 1, 2011, as calculated under Section 202.5, and
2    (ii) 7% of the taxpayer's net income for the period after
3    December 31, 2010, as calculated under Section 202.5.
4        (10) In the case of a corporation, for taxable years
5    beginning on or after January 1, 2011, and ending prior to
6    January 1, 2015, an amount equal to 7% of the taxpayer's
7    net income for the taxable year.
8        (11) In the case of a corporation, for taxable years
9    beginning prior to January 1, 2015, and ending after
10    December 31, 2014, an amount equal to the sum of (i) 7% of
11    the taxpayer's net income for the period prior to January
12    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
13    of the taxpayer's net income for the period after December
14    31, 2014, as calculated under Section 202.5.
15        (12) In the case of a corporation, for taxable years
16    beginning on or after January 1, 2015, and ending prior to
17    July 1, 2017, an amount equal to 5.25% of the taxpayer's
18    net income for the taxable year.
19        (13) In the case of a corporation, for taxable years
20    beginning prior to July 1, 2017, and ending after June 30,
21    2017, an amount equal to the sum of (i) 5.25% of the
22    taxpayer's net income for the period prior to July 1,
23    2017, as calculated under Section 202.5, and (ii) 7% of
24    the taxpayer's net income for the period after June 30,
25    2017, as calculated under Section 202.5.
26        (14) In the case of a corporation, for taxable years

 

 

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1    beginning on or after July 1, 2017, an amount equal to 7%
2    of the taxpayer's net income for the taxable year.
3    The rates under this subsection (b) are subject to the
4provisions of Section 201.5.
5    (b-5) Surcharge; sale or exchange of assets, properties,
6and intangibles of organization gaming licensees. For each of
7taxable years 2019 through 2027, a surcharge is imposed on all
8taxpayers on income arising from the sale or exchange of
9capital assets, depreciable business property, real property
10used in the trade or business, and Section 197 intangibles (i)
11of an organization licensee under the Illinois Horse Racing
12Act of 1975 and (ii) of an organization gaming licensee under
13the Illinois Gambling Act. The amount of the surcharge is
14equal to the amount of federal income tax liability for the
15taxable year attributable to those sales and exchanges. The
16surcharge imposed shall not apply if:
17        (1) the organization gaming license, organization
18    license, or racetrack property is transferred as a result
19    of any of the following:
20            (A) bankruptcy, a receivership, or a debt
21        adjustment initiated by or against the initial
22        licensee or the substantial owners of the initial
23        licensee;
24            (B) cancellation, revocation, or termination of
25        any such license by the Illinois Gaming Board or the
26        Illinois Racing Board;

 

 

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1            (C) a determination by the Illinois Gaming Board
2        that transfer of the license is in the best interests
3        of Illinois gaming;
4            (D) the death of an owner of the equity interest in
5        a licensee;
6            (E) the acquisition of a controlling interest in
7        the stock or substantially all of the assets of a
8        publicly traded company;
9            (F) a transfer by a parent company to a wholly
10        owned subsidiary; or
11            (G) the transfer or sale to or by one person to
12        another person where both persons were initial owners
13        of the license when the license was issued; or
14        (2) the controlling interest in the organization
15    gaming license, organization license, or racetrack
16    property is transferred in a transaction to lineal
17    descendants in which no gain or loss is recognized or as a
18    result of a transaction in accordance with Section 351 of
19    the Internal Revenue Code in which no gain or loss is
20    recognized; or
21        (3) live horse racing was not conducted in 2010 at a
22    racetrack located within 3 miles of the Mississippi River
23    under a license issued pursuant to the Illinois Horse
24    Racing Act of 1975.
25    The transfer of an organization gaming license,
26organization license, or racetrack property by a person other

 

 

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1than the initial licensee to receive the organization gaming
2license is not subject to a surcharge. The Department shall
3adopt rules necessary to implement and administer this
4subsection.
5    (c) Personal Property Tax Replacement Income Tax.
6Beginning on July 1, 1979 and thereafter, in addition to such
7income tax, there is also hereby imposed the Personal Property
8Tax Replacement Income Tax measured by net income on every
9corporation (including Subchapter S corporations), partnership
10and trust, for each taxable year ending after June 30, 1979.
11Such taxes are imposed on the privilege of earning or
12receiving income in or as a resident of this State. The
13Personal Property Tax Replacement Income Tax shall be in
14addition to the income tax imposed by subsections (a) and (b)
15of this Section and in addition to all other occupation or
16privilege taxes imposed by this State or by any municipal
17corporation or political subdivision thereof.
18    (d) Additional Personal Property Tax Replacement Income
19Tax Rates. The personal property tax replacement income tax
20imposed by this subsection and subsection (c) of this Section
21in the case of a corporation, other than a Subchapter S
22corporation and except as adjusted by subsection (d-1), shall
23be an additional amount equal to 2.85% of such taxpayer's net
24income for the taxable year, except that beginning on January
251, 1981, and thereafter, the rate of 2.85% specified in this
26subsection shall be reduced to 2.5%, and in the case of a

 

 

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1partnership, trust or a Subchapter S corporation shall be an
2additional amount equal to 1.5% of such taxpayer's net income
3for the taxable year.
4    (d-1) Rate reduction for certain foreign insurers. In the
5case of a foreign insurer, as defined by Section 35A-5 of the
6Illinois Insurance Code, whose state or country of domicile
7imposes on insurers domiciled in Illinois a retaliatory tax
8(excluding any insurer whose premiums from reinsurance assumed
9are 50% or more of its total insurance premiums as determined
10under paragraph (2) of subsection (b) of Section 304, except
11that for purposes of this determination premiums from
12reinsurance do not include premiums from inter-affiliate
13reinsurance arrangements), beginning with taxable years ending
14on or after December 31, 1999, the sum of the rates of tax
15imposed by subsections (b) and (d) shall be reduced (but not
16increased) to the rate at which the total amount of tax imposed
17under this Act, net of all credits allowed under this Act,
18shall equal (i) the total amount of tax that would be imposed
19on the foreign insurer's net income allocable to Illinois for
20the taxable year by such foreign insurer's state or country of
21domicile if that net income were subject to all income taxes
22and taxes measured by net income imposed by such foreign
23insurer's state or country of domicile, net of all credits
24allowed or (ii) a rate of zero if no such tax is imposed on
25such income by the foreign insurer's state of domicile. For
26the purposes of this subsection (d-1), an inter-affiliate

 

 

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

 

 

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1    subsection (d).
2    This subsection (d-1) is exempt from the provisions of
3Section 250.
4    (e) Investment credit. A taxpayer shall be allowed a
5credit against the Personal Property Tax Replacement Income
6Tax for investment in qualified property.
7        (1) A taxpayer shall be allowed a credit equal to .5%
8    of the basis of qualified property placed in service
9    during the taxable year, provided such property is placed
10    in service on or after July 1, 1984. There shall be allowed
11    an additional credit equal to .5% of the basis of
12    qualified property placed in service during the taxable
13    year, provided such property is placed in service on or
14    after July 1, 1986, and the taxpayer's base employment
15    within Illinois has increased by 1% or more over the
16    preceding year as determined by the taxpayer's employment
17    records filed with the Illinois Department of Employment
18    Security. Taxpayers who are new to Illinois shall be
19    deemed to have met the 1% growth in base employment for the
20    first year in which they file employment records with the
21    Illinois Department of Employment Security. The provisions
22    added to this Section by Public Act 85-1200 (and restored
23    by Public Act 87-895) shall be construed as declaratory of
24    existing law and not as a new enactment. If, in any year,
25    the increase in base employment within Illinois over the
26    preceding year is less than 1%, the additional credit

 

 

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1    shall be limited to that percentage times a fraction, the
2    numerator of which is .5% and the denominator of which is
3    1%, but shall not exceed .5%. The investment credit shall
4    not be allowed to the extent that it would reduce a
5    taxpayer's liability in any tax year below zero, nor may
6    any credit for qualified property be allowed for any year
7    other than the year in which the property was placed in
8    service in Illinois. For tax years ending on or after
9    December 31, 1987, and on or before December 31, 1988, the
10    credit shall be allowed for the tax year in which the
11    property is placed in service, or, if the amount of the
12    credit exceeds the tax liability for that year, whether it
13    exceeds the original liability or the liability as later
14    amended, such excess may be carried forward and applied to
15    the tax liability of the 5 taxable years following the
16    excess credit years if the taxpayer (i) makes investments
17    which cause the creation of a minimum of 2,000 full-time
18    equivalent jobs in Illinois, (ii) is located in an
19    enterprise zone established pursuant to the Illinois
20    Enterprise Zone Act and (iii) is certified by the
21    Department of Commerce and Community Affairs (now
22    Department of Commerce and Economic Opportunity) as
23    complying with the requirements specified in clause (i)
24    and (ii) by July 1, 1986. The Department of Commerce and
25    Community Affairs (now Department of Commerce and Economic
26    Opportunity) shall notify the Department of Revenue of all

 

 

SB3474- 14 -LRB103 36904 HLH 67017 b

1    such certifications immediately. For tax years ending
2    after December 31, 1988, the credit shall be allowed for
3    the tax year in which the property is placed in service,
4    or, if the amount of the credit exceeds the tax liability
5    for that year, whether it exceeds the original liability
6    or the liability as later amended, such excess may be
7    carried forward and applied to the tax liability of the 5
8    taxable years following the excess credit years. The
9    credit shall be applied to the earliest year for which
10    there is a liability. If there is credit from more than one
11    tax year that is available to offset a liability, earlier
12    credit shall be applied first.
13        (2) The term "qualified property" means property
14    which:
15            (A) is tangible, whether new or used, including
16        buildings and structural components of buildings and
17        signs that are real property, but not including land
18        or improvements to real property that are not a
19        structural component of a building such as
20        landscaping, sewer lines, local access roads, fencing,
21        parking lots, and other appurtenances;
22            (B) is depreciable pursuant to Section 167 of the
23        Internal Revenue Code, except that "3-year property"
24        as defined in Section 168(c)(2)(A) of that Code is not
25        eligible for the credit provided by this subsection
26        (e);

 

 

SB3474- 15 -LRB103 36904 HLH 67017 b

1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code;
3            (D) is used in Illinois by a taxpayer who is
4        primarily engaged in manufacturing, or in mining coal
5        or fluorite, or in retailing, or was placed in service
6        on or after July 1, 2006 in a River Edge Redevelopment
7        Zone established pursuant to the River Edge
8        Redevelopment Zone Act; and
9            (E) has not previously been used in Illinois in
10        such a manner and by such a person as would qualify for
11        the credit provided by this subsection (e) or
12        subsection (f).
13        (3) For purposes of this subsection (e),
14    "manufacturing" means the material staging and production
15    of tangible personal property by procedures commonly
16    regarded as manufacturing, processing, fabrication, or
17    assembling which changes some existing material into new
18    shapes, new qualities, or new combinations. For purposes
19    of this subsection (e) the term "mining" shall have the
20    same meaning as the term "mining" in Section 613(c) of the
21    Internal Revenue Code. For purposes of this subsection
22    (e), the term "retailing" means the sale of tangible
23    personal property for use or consumption and not for
24    resale, or services rendered in conjunction with the sale
25    of tangible personal property for use or consumption and
26    not for resale. For purposes of this subsection (e),

 

 

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1    "tangible personal property" has the same meaning as when
2    that term is used in the Retailers' Occupation Tax Act,
3    and, for taxable years ending after December 31, 2008,
4    does not include the generation, transmission, or
5    distribution of electricity.
6        (4) The basis of qualified property shall be the basis
7    used to compute the depreciation deduction for federal
8    income tax purposes.
9        (5) If the basis of the property for federal income
10    tax depreciation purposes is increased after it has been
11    placed in service in Illinois by the taxpayer, the amount
12    of such increase shall be deemed property placed in
13    service on the date of such increase in basis.
14        (6) The term "placed in service" shall have the same
15    meaning as under Section 46 of the Internal Revenue Code.
16        (7) If during any taxable year, any property ceases to
17    be qualified property in the hands of the taxpayer within
18    48 months after being placed in service, or the situs of
19    any qualified property is moved outside Illinois within 48
20    months after being placed in service, the Personal
21    Property Tax Replacement Income Tax for such taxable year
22    shall be increased. Such increase shall be determined by
23    (i) recomputing the investment credit which would have
24    been allowed for the year in which credit for such
25    property was originally allowed by eliminating such
26    property from such computation and, (ii) subtracting such

 

 

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

 

 

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1    pass through the credits shall be irrevocable.
2        For taxable years ending on or after December 31,
3    2000, a partner that qualifies its partnership for a
4    subtraction under subparagraph (I) of paragraph (2) of
5    subsection (d) of Section 203 or a shareholder that
6    qualifies a Subchapter S corporation for a subtraction
7    under subparagraph (S) of paragraph (2) of subsection (b)
8    of Section 203 shall be allowed a credit under this
9    subsection (e) equal to its share of the credit earned
10    under this subsection (e) during the taxable year by the
11    partnership or Subchapter S corporation, determined in
12    accordance with the determination of income and
13    distributive share of income under Sections 702 and 704
14    and Subchapter S of the Internal Revenue Code. This
15    paragraph is exempt from the provisions of Section 250.
16    (f) Investment credit; Enterprise Zone; River Edge
17Redevelopment Zone.
18        (1) A taxpayer shall be allowed a credit against the
19    tax imposed by subsections (a) and (b) of this Section for
20    investment in qualified property which is placed in
21    service in an Enterprise Zone created pursuant to the
22    Illinois Enterprise Zone Act or, for property placed in
23    service on or after July 1, 2006, a River Edge
24    Redevelopment Zone established pursuant to the River Edge
25    Redevelopment Zone Act. For partners, shareholders of
26    Subchapter S corporations, and owners of limited liability

 

 

SB3474- 19 -LRB103 36904 HLH 67017 b

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

 

 

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1    there is a liability. If there is credit from more than one
2    tax year that is available to offset a liability, the
3    credit accruing first in time shall be applied first.
4        (2) The term qualified property means property which:
5            (A) is tangible, whether new or used, including
6        buildings and structural components of buildings;
7            (B) is depreciable pursuant to Section 167 of the
8        Internal Revenue Code, except that "3-year property"
9        as defined in Section 168(c)(2)(A) of that Code is not
10        eligible for the credit provided by this subsection
11        (f);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code;
14            (D) is used in the Enterprise Zone or River Edge
15        Redevelopment Zone by the taxpayer; and
16            (E) has not been previously used in Illinois in
17        such a manner and by such a person as would qualify for
18        the credit provided by this subsection (f) or
19        subsection (e).
20        (3) The basis of qualified property shall be the basis
21    used to compute the depreciation deduction for federal
22    income tax purposes.
23        (4) If the basis of the property for federal income
24    tax depreciation purposes is increased after it has been
25    placed in service in the Enterprise Zone or River Edge
26    Redevelopment Zone by the taxpayer, the amount of such

 

 

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1    increase shall be deemed property placed in service on the
2    date of such increase in basis.
3        (5) The term "placed in service" shall have the same
4    meaning as under Section 46 of the Internal Revenue Code.
5        (6) If during any taxable year, any property ceases to
6    be qualified property in the hands of the taxpayer within
7    48 months after being placed in service, or the situs of
8    any qualified property is moved outside the Enterprise
9    Zone or River Edge Redevelopment Zone within 48 months
10    after being placed in service, the tax imposed under
11    subsections (a) and (b) of this Section for such taxable
12    year shall be increased. Such increase shall be determined
13    by (i) recomputing the investment credit which would have
14    been allowed for the year in which credit for such
15    property was originally allowed by eliminating such
16    property from such computation, and (ii) subtracting such
17    recomputed credit from the amount of credit previously
18    allowed. For the purposes of this paragraph (6), a
19    reduction of the basis of qualified property resulting
20    from a redetermination of the purchase price shall be
21    deemed a disposition of qualified property to the extent
22    of such reduction.
23        (7) There shall be allowed an additional credit equal
24    to 0.5% of the basis of qualified property placed in
25    service during the taxable year in a River Edge
26    Redevelopment Zone, provided such property is placed in

 

 

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1    service on or after July 1, 2006, and the taxpayer's base
2    employment within Illinois has increased by 1% or more
3    over the preceding year as determined by the taxpayer's
4    employment records filed with the Illinois Department of
5    Employment Security. Taxpayers who are new to Illinois
6    shall be deemed to have met the 1% growth in base
7    employment for the first year in which they file
8    employment records with the Illinois Department of
9    Employment Security. If, in any year, the increase in base
10    employment within Illinois over the preceding year is less
11    than 1%, the additional credit shall be limited to that
12    percentage times a fraction, the numerator of which is
13    0.5% and the denominator of which is 1%, but shall not
14    exceed 0.5%.
15        (8) For taxable years beginning on or after January 1,
16    2021, there shall be allowed an Enterprise Zone
17    construction jobs credit against the taxes imposed under
18    subsections (a) and (b) of this Section as provided in
19    Section 13 of the Illinois Enterprise Zone Act.
20        The credit or credits may not reduce the taxpayer's
21    liability to less than zero. If the amount of the credit or
22    credits exceeds the taxpayer's liability, the excess may
23    be carried forward and applied against the taxpayer's
24    liability in succeeding calendar years in the same manner
25    provided under paragraph (4) of Section 211 of this Act.
26    The credit or credits shall be applied to the earliest

 

 

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

 

 

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

 

 

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1    tax years ending on or after December 31, 1987, the credit
2    shall be allowed for the tax year in which the property is
3    placed in service, or, if the amount of the credit exceeds
4    the tax liability for that year, whether it exceeds the
5    original liability or the liability as later amended, such
6    excess may be carried forward and applied to the tax
7    liability of the 5 taxable years following the excess
8    credit year. The credit shall be applied to the earliest
9    year for which there is a liability. If there is credit
10    from more than one tax year that is available to offset a
11    liability, the credit accruing first in time shall be
12    applied first.
13        Changes made in this subdivision (h)(1) by Public Act
14    88-670 restore changes made by Public Act 85-1182 and
15    reflect existing law.
16        (2) The term qualified property means property which:
17            (A) is tangible, whether new or used, including
18        buildings and structural components of buildings;
19            (B) is depreciable pursuant to Section 167 of the
20        Internal Revenue Code, except that "3-year property"
21        as defined in Section 168(c)(2)(A) of that Code is not
22        eligible for the credit provided by this subsection
23        (h);
24            (C) is acquired by purchase as defined in Section
25        179(d) of the Internal Revenue Code; and
26            (D) is not eligible for the Enterprise Zone

 

 

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

 

 

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

 

 

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1paragraph (4) of Section 211 of this Act. The credit or credits
2shall be applied to the earliest year for which there is a tax
3liability. If there are credits from more than one taxable
4year that are available to offset a liability, the earlier
5credit shall be applied first.
6    For partners, shareholders of Subchapter S corporations,
7and owners of limited liability companies, for taxable years
8ending before December 31, 2023, if the liability company is
9treated as a partnership for the purposes of federal and State
10income taxation, there shall be allowed a credit under this
11Section to be determined in accordance with the determination
12of income and distributive share of income under Sections 702
13and 704 and Subchapter S of the Internal Revenue Code. For
14taxable years ending on or after December 31, 2023, for
15partners and shareholders of Subchapter S corporations, the
16provisions of Section 251 shall apply with respect to the
17credit under this subsection.
18    The total aggregate amount of credits awarded under the
19Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
20exceed $20,000,000 in any State fiscal year.
21    This subsection (h-5) is exempt from the provisions of
22Section 250.
23    (i) Credit for Personal Property Tax Replacement Income
24Tax. For tax years ending prior to December 31, 2003, a credit
25shall be allowed against the tax imposed by subsections (a)
26and (b) of this Section for the tax imposed by subsections (c)

 

 

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1and (d) of this Section. This credit shall be computed by
2multiplying the tax imposed by subsections (c) and (d) of this
3Section by a fraction, the numerator of which is base income
4allocable to Illinois and the denominator of which is Illinois
5base income, and further multiplying the product by the tax
6rate imposed by subsections (a) and (b) of this Section.
7    Any credit earned on or after December 31, 1986 under this
8subsection which is unused in the year the credit is computed
9because it exceeds the tax liability imposed by subsections
10(a) and (b) for that year (whether it exceeds the original
11liability or the liability as later amended) may be carried
12forward and applied to the tax liability imposed by
13subsections (a) and (b) of the 5 taxable years following the
14excess credit year, provided that no credit may be carried
15forward to any year ending on or after December 31, 2003. This
16credit shall be applied first to the earliest year for which
17there is a liability. If there is a credit under this
18subsection from more than one tax year that is available to
19offset a liability the earliest credit arising under this
20subsection shall be applied first.
21    If, during any taxable year ending on or after December
2231, 1986, the tax imposed by subsections (c) and (d) of this
23Section for which a taxpayer has claimed a credit under this
24subsection (i) is reduced, the amount of credit for such tax
25shall also be reduced. Such reduction shall be determined by
26recomputing the credit to take into account the reduced tax

 

 

SB3474- 30 -LRB103 36904 HLH 67017 b

1imposed by subsections (c) and (d). If any portion of the
2reduced amount of credit has been carried to a different
3taxable year, an amended return shall be filed for such
4taxable year to reduce the amount of credit claimed.
5    (j) Training expense credit. Beginning with tax years
6ending on or after December 31, 1986 and prior to December 31,
72003, a taxpayer shall be allowed a credit against the tax
8imposed by subsections (a) and (b) under this Section for all
9amounts paid or accrued, on behalf of all persons employed by
10the taxpayer in Illinois or Illinois residents employed
11outside of Illinois by a taxpayer, for educational or
12vocational training in semi-technical or technical fields or
13semi-skilled or skilled fields, which were deducted from gross
14income in the computation of taxable income. The credit
15against the tax imposed by subsections (a) and (b) shall be
161.6% of such training expenses. For partners, shareholders of
17subchapter S corporations, and owners of limited liability
18companies, if the liability company is treated as a
19partnership for purposes of federal and State income taxation,
20for taxable years ending before December 31, 2023, there shall
21be allowed a credit under this subsection (j) to be determined
22in accordance with the determination of income and
23distributive share of income under Sections 702 and 704 and
24subchapter S of the Internal Revenue Code. For taxable years
25ending on or after December 31, 2023, for partners and
26shareholders of Subchapter S corporations, the provisions of

 

 

SB3474- 31 -LRB103 36904 HLH 67017 b

1Section 251 shall apply with respect to the credit under this
2subsection.
3    Any credit allowed under this subsection which is unused
4in the year the credit is earned may be carried forward to each
5of the 5 taxable years following the year for which the credit
6is first computed until it is used. This credit shall be
7applied first to the earliest year for which there is a
8liability. If there is a credit under this subsection from
9more than one tax year that is available to offset a liability,
10the earliest credit arising under this subsection shall be
11applied first. No carryforward credit may be claimed in any
12tax year ending on or after December 31, 2003.
13    (k) Research and development credit. For tax years ending
14after July 1, 1990 and prior to December 31, 2003, and
15beginning again for tax years ending on or after December 31,
162004, and ending prior to January 1, 2037 January 1, 2027, a
17taxpayer shall be allowed a credit against the tax imposed by
18subsections (a) and (b) of this Section for increasing
19research activities in this State. The credit allowed against
20the tax imposed by subsections (a) and (b) shall be equal to 6
211/2% of the qualifying expenditures for increasing research
22activities in this State. For partners, shareholders of
23subchapter S corporations, and owners of limited liability
24companies, if the liability company is treated as a
25partnership for purposes of federal and State income taxation,
26for taxable years ending before December 31, 2023, there shall

 

 

SB3474- 32 -LRB103 36904 HLH 67017 b

1be allowed a credit under this subsection to be determined in
2accordance with the determination of income and distributive
3share of income under Sections 702 and 704 and subchapter S of
4the Internal Revenue Code. For taxable years ending on or
5after December 31, 2023, for partners and shareholders of
6Subchapter S corporations, the provisions of Section 251 shall
7apply with respect to the credit under this subsection.
8    As used in For purposes of this subsection: ,
9    "Base period" means the 3 taxable years immediately
10preceding the taxable year for which the determination is
11being made.
12    "Qualifying "qualifying expenditures" means the qualifying
13expenditures as defined for the federal credit for increasing
14research activities which would be allowable under Section 41
15of the Internal Revenue Code and which are conducted in this
16State. ,
17    "Qualifying "qualifying expenditures for increasing
18research activities in this State" means the excess of
19qualifying expenditures for the taxable year in which incurred
20over qualifying expenditures for the base period. ,
21    "Qualifying "qualifying expenditures for the base period"
22means the average of the qualifying expenditures for each year
23in the base period. , and "base period" means the 3 taxable
24years immediately preceding the taxable year for which the
25determination is being made.
26    Any credit in excess of the tax liability for the taxable

 

 

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1year may be carried forward. A taxpayer may elect to have the
2unused credit shown on its final completed return carried over
3as a credit against the tax liability for the following 5
4taxable years or until it has been fully used, whichever
5occurs first; provided that no credit earned in a tax year
6ending prior to December 31, 2003 may be carried forward to any
7year ending on or after December 31, 2003.
8    If an unused credit is carried forward to a given year from
92 or more earlier years, that credit arising in the earliest
10year will be applied first against the tax liability for the
11given year. If a tax liability for the given year still
12remains, the credit from the next earliest year will then be
13applied, and so on, until all credits have been used or no tax
14liability for the given year remains. Any remaining unused
15credit or credits then will be carried forward to the next
16following year in which a tax liability is incurred, except
17that no credit can be carried forward to a year which is more
18than 5 years after the year in which the expense for which the
19credit is given was incurred.
20    No inference shall be drawn from Public Act 91-644 in
21construing this Section for taxable years beginning before
22January 1, 1999.
23    It is the intent of the General Assembly that the research
24and development credit under this subsection (k) shall apply
25continuously for all tax years ending on or after December 31,
262004 and ending prior to January 1, 2027, including, but not

 

 

SB3474- 34 -LRB103 36904 HLH 67017 b

1limited to, the period beginning on January 1, 2016 and ending
2on July 6, 2017 (the effective date of Public Act 100-22). All
3actions taken in reliance on the continuation of the credit
4under this subsection (k) by any taxpayer are hereby
5validated.
6    (l) Environmental Remediation Tax Credit.
7        (i) For tax years ending after December 31, 1997 and
8    on or before December 31, 2001, a taxpayer shall be
9    allowed a credit against the tax imposed by subsections
10    (a) and (b) of this Section for certain amounts paid for
11    unreimbursed eligible remediation costs, as specified in
12    this subsection. For purposes of this Section,
13    "unreimbursed eligible remediation costs" means costs
14    approved by the Illinois Environmental Protection Agency
15    ("Agency") under Section 58.14 of the Environmental
16    Protection Act that were paid in performing environmental
17    remediation at a site for which a No Further Remediation
18    Letter was issued by the Agency and recorded under Section
19    58.10 of the Environmental Protection Act. The credit must
20    be claimed for the taxable year in which Agency approval
21    of the eligible remediation costs is granted. The credit
22    is not available to any taxpayer if the taxpayer or any
23    related party caused or contributed to, in any material
24    respect, a release of regulated substances on, in, or
25    under the site that was identified and addressed by the
26    remedial action pursuant to the Site Remediation Program

 

 

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1    of the Environmental Protection Act. After the Pollution
2    Control Board rules are adopted pursuant to the Illinois
3    Administrative Procedure Act for the administration and
4    enforcement of Section 58.9 of the Environmental
5    Protection Act, determinations as to credit availability
6    for purposes of this Section shall be made consistent with
7    those rules. For purposes of this Section, "taxpayer"
8    includes a person whose tax attributes the taxpayer has
9    succeeded to under Section 381 of the Internal Revenue
10    Code and "related party" includes the persons disallowed a
11    deduction for losses by paragraphs (b), (c), and (f)(1) of
12    Section 267 of the Internal Revenue Code by virtue of
13    being a related taxpayer, as well as any of its partners.
14    The credit allowed against the tax imposed by subsections
15    (a) and (b) shall be equal to 25% of the unreimbursed
16    eligible remediation costs in excess of $100,000 per site,
17    except that the $100,000 threshold shall not apply to any
18    site contained in an enterprise zone as determined by the
19    Department of Commerce and Community Affairs (now
20    Department of Commerce and Economic Opportunity). The
21    total credit allowed shall not exceed $40,000 per year
22    with a maximum total of $150,000 per site. For partners
23    and shareholders of subchapter S corporations, there shall
24    be allowed a credit under this subsection to be determined
25    in accordance with the determination of income and
26    distributive share of income under Sections 702 and 704

 

 

SB3474- 36 -LRB103 36904 HLH 67017 b

1    and subchapter S of the Internal Revenue Code.
2        (ii) A credit allowed under this subsection that is
3    unused in the year the credit is earned may be carried
4    forward to each of the 5 taxable years following the year
5    for which the credit is first earned until it is used. The
6    term "unused credit" does not include any amounts of
7    unreimbursed eligible remediation costs in excess of the
8    maximum credit per site authorized under paragraph (i).
9    This credit shall be applied first to the earliest year
10    for which there is a liability. If there is a credit under
11    this subsection from more than one tax year that is
12    available to offset a liability, the earliest credit
13    arising under this subsection shall be applied first. A
14    credit allowed under this subsection may be sold to a
15    buyer as part of a sale of all or part of the remediation
16    site for which the credit was granted. The purchaser of a
17    remediation site and the tax credit shall succeed to the
18    unused credit and remaining carry-forward period of the
19    seller. To perfect the transfer, the assignor shall record
20    the transfer in the chain of title for the site and provide
21    written notice to the Director of the Illinois Department
22    of Revenue of the assignor's intent to sell the
23    remediation site and the amount of the tax credit to be
24    transferred as a portion of the sale. In no event may a
25    credit be transferred to any taxpayer if the taxpayer or a
26    related party would not be eligible under the provisions

 

 

SB3474- 37 -LRB103 36904 HLH 67017 b

1    of subsection (i).
2        (iii) For purposes of this Section, the term "site"
3    shall have the same meaning as under Section 58.2 of the
4    Environmental Protection Act.
5    (m) Education expense credit. Beginning with tax years
6ending after December 31, 1999, a taxpayer who is the
7custodian of one or more qualifying pupils shall be allowed a
8credit against the tax imposed by subsections (a) and (b) of
9this Section for qualified education expenses incurred on
10behalf of the qualifying pupils. The credit shall be equal to
1125% of qualified education expenses, but in no event may the
12total credit under this subsection claimed by a family that is
13the custodian of qualifying pupils exceed (i) $500 for tax
14years ending prior to December 31, 2017, and (ii) $750 for tax
15years ending on or after December 31, 2017. In no event shall a
16credit under this subsection reduce the taxpayer's liability
17under this Act to less than zero. Notwithstanding any other
18provision of law, for taxable years beginning on or after
19January 1, 2017, no taxpayer may claim a credit under this
20subsection (m) if the taxpayer's adjusted gross income for the
21taxable year exceeds (i) $500,000, in the case of spouses
22filing a joint federal tax return or (ii) $250,000, in the case
23of all other taxpayers. This subsection is exempt from the
24provisions of Section 250 of this Act.
25    For purposes of this subsection:
26    "Qualifying pupils" means individuals who (i) are

 

 

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1residents of the State of Illinois, (ii) are under the age of
221 at the close of the school year for which a credit is
3sought, and (iii) during the school year for which a credit is
4sought were full-time pupils enrolled in a kindergarten
5through twelfth grade education program at any school, as
6defined in this subsection.
7    "Qualified education expense" means the amount incurred on
8behalf of a qualifying pupil in excess of $250 for tuition,
9book fees, and lab fees at the school in which the pupil is
10enrolled during the regular school year.
11    "School" means any public or nonpublic elementary or
12secondary school in Illinois that is in compliance with Title
13VI of the Civil Rights Act of 1964 and attendance at which
14satisfies the requirements of Section 26-1 of the School Code,
15except that nothing shall be construed to require a child to
16attend any particular public or nonpublic school to qualify
17for the credit under this Section.
18    "Custodian" means, with respect to qualifying pupils, an
19Illinois resident who is a parent, the parents, a legal
20guardian, or the legal guardians of the qualifying pupils.
21    (n) River Edge Redevelopment Zone site remediation tax
22credit.
23        (i) For tax years ending on or after December 31,
24    2006, a taxpayer shall be allowed a credit against the tax
25    imposed by subsections (a) and (b) of this Section for
26    certain amounts paid for unreimbursed eligible remediation

 

 

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1    costs, as specified in this subsection. For purposes of
2    this Section, "unreimbursed eligible remediation costs"
3    means costs approved by the Illinois Environmental
4    Protection Agency ("Agency") under Section 58.14a of the
5    Environmental Protection Act that were paid in performing
6    environmental remediation at a site within a River Edge
7    Redevelopment Zone 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. Determinations as to
18    credit availability for purposes of this Section shall be
19    made consistent with rules adopted by the Pollution
20    Control Board pursuant to the Illinois Administrative
21    Procedure Act for the administration and enforcement of
22    Section 58.9 of the Environmental Protection Act. For
23    purposes of this Section, "taxpayer" includes a person
24    whose tax attributes the taxpayer has succeeded to under
25    Section 381 of the Internal Revenue Code and "related
26    party" includes the persons disallowed a deduction for

 

 

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1    losses by paragraphs (b), (c), and (f)(1) of Section 267
2    of the Internal Revenue Code by virtue of being a related
3    taxpayer, as well as any of its partners. The credit
4    allowed against the tax imposed by subsections (a) and (b)
5    shall be equal to 25% of the unreimbursed eligible
6    remediation costs in excess of $100,000 per site.
7        (ii) A credit allowed under this subsection that is
8    unused in the year the credit is earned may be carried
9    forward to each of the 5 taxable years following the year
10    for which the credit is first earned until it is used. This
11    credit shall be applied first to the earliest year for
12    which there is a liability. If there is a credit under this
13    subsection from more than one tax year that is available
14    to offset a liability, the earliest credit arising under
15    this subsection shall be applied first. A credit allowed
16    under this subsection may be sold to a buyer as part of a
17    sale of all or part of the remediation site for which the
18    credit was granted. The purchaser of a remediation site
19    and the tax credit shall succeed to the unused credit and
20    remaining carry-forward period of the seller. To perfect
21    the transfer, the assignor shall record the transfer in
22    the chain of title for the site and provide written notice
23    to the Director of the Illinois Department of Revenue of
24    the assignor's intent to sell the remediation site and the
25    amount of the tax credit to be transferred as a portion of
26    the sale. In no event may a credit be transferred to any

 

 

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1    taxpayer if the taxpayer or a related party would not be
2    eligible under the provisions of subsection (i).
3        (iii) For purposes of this Section, the term "site"
4    shall have the same meaning as under Section 58.2 of the
5    Environmental Protection Act.
6    (o) For each of taxable years during the Compassionate Use
7of Medical Cannabis Program, a surcharge is imposed on all
8taxpayers on income arising from the sale or exchange of
9capital assets, depreciable business property, real property
10used in the trade or business, and Section 197 intangibles of
11an organization registrant under the Compassionate Use of
12Medical Cannabis Program Act. The amount of the surcharge is
13equal to the amount of federal income tax liability for the
14taxable year attributable to those sales and exchanges. The
15surcharge imposed does not apply if:
16        (1) the medical cannabis cultivation center
17    registration, medical cannabis dispensary registration, or
18    the property of a registration is transferred as a result
19    of any of the following:
20            (A) bankruptcy, a receivership, or a debt
21        adjustment initiated by or against the initial
22        registration or the substantial owners of the initial
23        registration;
24            (B) cancellation, revocation, or termination of
25        any registration by the Illinois Department of Public
26        Health;

 

 

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1            (C) a determination by the Illinois Department of
2        Public Health that transfer of the registration is in
3        the best interests of Illinois qualifying patients as
4        defined by the Compassionate Use of Medical Cannabis
5        Program Act;
6            (D) the death of an owner of the equity interest in
7        a registrant;
8            (E) the acquisition of a controlling interest in
9        the stock or substantially all of the assets of a
10        publicly traded company;
11            (F) a transfer by a parent company to a wholly
12        owned subsidiary; or
13            (G) the transfer or sale to or by one person to
14        another person where both persons were initial owners
15        of the registration when the registration was issued;
16        or
17        (2) the cannabis cultivation center registration,
18    medical cannabis dispensary registration, or the
19    controlling interest in a registrant's property is
20    transferred in a transaction to lineal descendants in
21    which no gain or loss is recognized or as a result of a
22    transaction in accordance with Section 351 of the Internal
23    Revenue Code in which no gain or loss is recognized.
24    (p) Pass-through entity tax.
25        (1) For taxable years ending on or after December 31,
26    2021 and beginning prior to January 1, 2026, a partnership

 

 

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1    (other than a publicly traded partnership under Section
2    7704 of the Internal Revenue Code) or Subchapter S
3    corporation may elect to apply the provisions of this
4    subsection. A separate election shall be made for each
5    taxable year. Such election shall be made at such time,
6    and in such form and manner as prescribed by the
7    Department, and, once made, is irrevocable.
8        (2) Entity-level tax. A partnership or Subchapter S
9    corporation electing to apply the provisions of this
10    subsection shall be subject to a tax for the privilege of
11    earning or receiving income in this State in an amount
12    equal to 4.95% of the taxpayer's net income for the
13    taxable year.
14        (3) Net income defined.
15            (A) In general. For purposes of paragraph (2), the
16        term net income has the same meaning as defined in
17        Section 202 of this Act, except that, for tax years
18        ending on or after December 31, 2023, a deduction
19        shall be allowed in computing base income for
20        distributions to a retired partner to the extent that
21        the partner's distributions are exempt from tax under
22        Section 203(a)(2)(F) of this Act. In addition, the
23        following modifications shall not apply:
24                (i) the standard exemption allowed under
25            Section 204;
26                (ii) the deduction for net losses allowed

 

 

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1            under Section 207;
2                (iii) in the case of an S corporation, the
3            modification under Section 203(b)(2)(S); and
4                (iv) in the case of a partnership, the
5            modifications under Section 203(d)(2)(H) and
6            Section 203(d)(2)(I).
7            (B) Special rule for tiered partnerships. If a
8        taxpayer making the election under paragraph (1) is a
9        partner of another taxpayer making the election under
10        paragraph (1), net income shall be computed as
11        provided in subparagraph (A), except that the taxpayer
12        shall subtract its distributive share of the net
13        income of the electing partnership (including its
14        distributive share of the net income of the electing
15        partnership derived as a distributive share from
16        electing partnerships in which it is a partner).
17        (4) Credit for entity level tax. Each partner or
18    shareholder of a taxpayer making the election under this
19    Section shall be allowed a credit against the tax imposed
20    under subsections (a) and (b) of Section 201 of this Act
21    for the taxable year of the partnership or Subchapter S
22    corporation for which an election is in effect ending
23    within or with the taxable year of the partner or
24    shareholder in an amount equal to 4.95% times the partner
25    or shareholder's distributive share of the net income of
26    the electing partnership or Subchapter S corporation, but

 

 

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1    not to exceed the partner's or shareholder's share of the
2    tax imposed under paragraph (1) which is actually paid by
3    the partnership or Subchapter S corporation. If the
4    taxpayer is a partnership or Subchapter S corporation that
5    is itself a partner of a partnership making the election
6    under paragraph (1), the credit under this paragraph shall
7    be allowed to the taxpayer's partners or shareholders (or
8    if the partner is a partnership or Subchapter S
9    corporation then its partners or shareholders) in
10    accordance with the determination of income and
11    distributive share of income under Sections 702 and 704
12    and Subchapter S of the Internal Revenue Code. If the
13    amount of the credit allowed under this paragraph exceeds
14    the partner's or shareholder's liability for tax imposed
15    under subsections (a) and (b) of Section 201 of this Act
16    for the taxable year, such excess shall be treated as an
17    overpayment for purposes of Section 909 of this Act.
18        (5) Nonresidents. A nonresident individual who is a
19    partner or shareholder of a partnership or Subchapter S
20    corporation for a taxable year for which an election is in
21    effect under paragraph (1) shall not be required to file
22    an income tax return under this Act for such taxable year
23    if the only source of net income of the individual (or the
24    individual and the individual's spouse in the case of a
25    joint return) is from an entity making the election under
26    paragraph (1) and the credit allowed to the partner or

 

 

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1    shareholder under paragraph (4) equals or exceeds the
2    individual's liability for the tax imposed under
3    subsections (a) and (b) of Section 201 of this Act for the
4    taxable year.
5        (6) Liability for tax. Except as provided in this
6    paragraph, a partnership or Subchapter S making the
7    election under paragraph (1) is liable for the
8    entity-level tax imposed under paragraph (2). If the
9    electing partnership or corporation fails to pay the full
10    amount of tax deemed assessed under paragraph (2), the
11    partners or shareholders shall be liable to pay the tax
12    assessed (including penalties and interest). Each partner
13    or shareholder shall be liable for the unpaid assessment
14    based on the ratio of the partner's or shareholder's share
15    of the net income of the partnership over the total net
16    income of the partnership. If the partnership or
17    Subchapter S corporation fails to pay the tax assessed
18    (including penalties and interest) and thereafter an
19    amount of such tax is paid by the partners or
20    shareholders, such amount shall not be collected from the
21    partnership or corporation.
22        (7) Foreign tax. For purposes of the credit allowed
23    under Section 601(b)(3) of this Act, tax paid by a
24    partnership or Subchapter S corporation to another state
25    which, as determined by the Department, is substantially
26    similar to the tax imposed under this subsection, shall be

 

 

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1    considered tax paid by the partner or shareholder to the
2    extent that the partner's or shareholder's share of the
3    income of the partnership or Subchapter S corporation
4    allocated and apportioned to such other state bears to the
5    total income of the partnership or Subchapter S
6    corporation allocated or apportioned to such other state.
7        (8) Suspension of withholding. The provisions of
8    Section 709.5 of this Act shall not apply to a partnership
9    or Subchapter S corporation for the taxable year for which
10    an election under paragraph (1) is in effect.
11        (9) Requirement to pay estimated tax. For each taxable
12    year for which an election under paragraph (1) is in
13    effect, a partnership or Subchapter S corporation is
14    required to pay estimated tax for such taxable year under
15    Sections 803 and 804 of this Act if the amount payable as
16    estimated tax can reasonably be expected to exceed $500.
17        (10) The provisions of this subsection shall apply
18    only with respect to taxable years for which the
19    limitation on individual deductions applies under Section
20    164(b)(6) of the Internal Revenue Code.
21(Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21;
22103-9, eff. 6-7-23; 103-396, eff. 1-1-24; revised 12-12-23.)
 
23    (35 ILCS 5/241 new)
24    Sec. 241. Quantum information science research and
25development tax credit.

 

 

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1    (a) For tax years ending on or after December 31, 2025, a
2taxpayer who qualifies for a quantum information science
3research and development tax credit pursuant to Section
4605-1115 of the Department of Commerce and Economic
5Opportunity Law of the Civil Administrative Code of Illinois,
6is entitled to a credit against the tax imposed by subsections
7(a) and (b) of Section 201 of this Act as provided in that
8Section.
9    (b) For partners and shareholders of subchapter S
10corporations, the credit under this Section shall be
11determined in accordance with Section 251.
12    (c) In no event shall a taxpayer be allowed both a credit
13under this Section for qualifying quantum information science
14expenditures and the research and development credit provided
15under subsection (k) of Section 201 for the same expenditures.
16    (d) Any credit awarded under this Section in excess of the
17taxpayer's tax liability for the taxable year may be carried
18forward. A taxpayer may elect to have the unused credit shown
19on its final completed return carried over as a credit against
20the tax liability for the following 5 taxable years or until
21the credit has been fully used, whichever occurs first. If a
22tax liability for the given year still remains, the credit
23from the next earliest year will then be applied, and so on,
24until all credits have been used or no tax liability for the
25given year remains. Any remaining unused credit or credits
26then will be carried forward to the next following year in

 

 

SB3474- 49 -LRB103 36904 HLH 67017 b

1which a tax liability is incurred, except that no credit can be
2carried forward to a year which is more than 5 years after the
3year in which the expense for which the credit is given was
4incurred.
5    (e) This Section is exempt from the provisions of Section
6250 of this Act.
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.