SB 3420

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Full Text of SB3420
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	SB3420 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3420
Introduced 2/4/2026, by Sen. Javier L. Cervantes
SYNOPSIS AS INTRODUCED:
35 ILCS 5/210.5
35 ILCS 5/210.10 new
Amends the Illinois Income Tax Act. Provides that the tax credit for employee child care shall be (i) 30% of the start-up costs expended by the corporate taxpayer to provide a child care facility for the children of its employees and (ii) 10% (currently, 5%) of the annual amount paid by the corporate taxpayer in providing the child care facility for the children of its employees. Creates an income tax credit for corporate taxpayers that are qualified small businesses in an amount equal to 10% of the federal tax credit claimed by the taxpayer for the taxable year for qualified child care expenditures. Effective immediately.
LRB104 18892 HLH 32337 b
A BILL FOR
		SB3420		LRB104 18892 HLH 32337 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 210.5 and by adding Section 210.10 as
6follows:
7    (35 ILCS 5/210.5)
8    Sec. 210.5. Tax credit for employee child care.
9    (a) Each corporate taxpayer is entitled to a credit
10against the tax imposed by subsections (a) and (b) of Section
11201 in an amount equal to (i) for taxable years ending on or
12after December 31, 2000 and on or before December 31, 2004, [and]
13for taxable years ending on or after December 31, 2007, and for 
14taxable years ending on or after December 31, 2026, 30% of the
15start-up costs expended by the corporate taxpayer to provide a
16child care facility for the children of its employees, [and]
17(ii) for taxable years ending on or after December 31, 2000 and 
18on or before December 31, 2025, 5% of the annual amount paid by
19the corporate taxpayer in providing the child care facility
20for the children of its employees, and (iii) for taxable years 
21ending after December 31, 2025, 10% of the annual amount paid 
22by the corporate taxpayer in providing the child care facility 
23for the children of its employees. The provisions of Section
		SB3420	- 2 -	LRB104 18892 HLH 32337 b
1250 do not apply to the credits allowed under this Section. If
2the 5% credit authorized under item (ii) of this subsection is
3claimed, the 5% credit authorized under Section 210 cannot
4also be claimed.
5    To receive the tax credit under this Section a corporate
6taxpayer may either independently provide and operate a child
7care facility for the children of its employees or it may join
8in a partnership with one or more other corporations to
9jointly provide and operate a child care facility for the
10children of employees of the corporations in the partnership.
11    (b) The tax credit may not reduce the taxpayer's liability
12to less than zero. If the amount of the tax credit exceeds the
13tax liability for the year, the excess may be carried forward
14and applied to the tax liability of the 5 taxable years
15following the excess credit year. The credit must be applied
16to the earliest year for which there is a tax liability. If
17there are credits from more than one tax year that are
18available to offset a liability, then the earlier credit must
19be applied first.
20    (c) As used in this Section, "start-up costs" means
21planning, site-preparation, construction, renovation, or
22acquisition of a child care facility. As used in this Section,
23"child care facility" is limited to a child care facility
24located in Illinois.
25    (d) A corporate taxpayer claiming the credit provided by
26this Section shall maintain and record such information as the
		SB3420	- 3 -	LRB104 18892 HLH 32337 b
1Department may require by rule regarding the child care
2facility for which the credit is claimed.
3(Source: P.A. 95-648, eff. 10-11-07.)
4    (35 ILCS 5/210.10 new)
5    Sec. 210.10. Federal enhanced tax credit for 
6employer-provided child care.
7    (a) For taxable years beginning on or after January 1, 
82026, each corporate taxpayer that is a qualified small 
9business is entitled to a credit against the tax imposed by 
10subsections (a) and (b) of Section 201 in an amount equal to 
1110% of the federal tax credit claimed by the corporate 
12taxpayer for the taxable year for qualified child care 
13expenditures under Section 45F of the Internal Revenue Code.
14    (b) A taxpayer may not claim both the credit under Section 
15210.5 of this Act and the credit under this Section for the 
16same expenditure.
17    (c) In no event shall a credit under this Section reduce 
18the taxpayer's liability to less than zero. If the amount of 
19the tax credit exceeds the tax liability for the year, the 
20excess may be carried forward and applied to the tax liability 
21of the 5 taxable years following the excess credit year. The 
22credit must be applied to the earliest year for which there is 
23a tax liability. If there are credits from more than one tax 
24year that are available to offset a liability, then the 
25earlier credit must be applied first.
		SB3420	- 4 -	LRB104 18892 HLH 32337 b
1    (d) The Department shall adopt rules necessary to 
2implement and administer this Section.
3    (e) This Section is exempt from the provisions of Section 
4250 of this Act.
5    (f) As used in this Section:
6    "Qualified child care expenditure" means an expenditure 
7that is paid or incurred:
8        (1) to acquire, construct, rehabilitate, or expand 
9    property:
10            (A) that is to be used by the Illinois taxpayer as 
11        part of a qualified child care facility in Illinois;
12            (B) with respect to which a deduction for 
13        depreciation (or amortization in lieu of depreciation) 
14        is allowable; and
15            (C) that does not constitute part of the principal 
16        residence of the taxpayer or any employee of the 
17        taxpayer;
18        (2) for the operating costs of a qualified child care 
19    facility of the taxpayer, including costs related to the 
20    training of employees, costs for scholarship programs, and 
21    the costs of providing increased compensation to employees 
22    with higher levels of child care training; or
23        (3) under a contract with a qualified child care 
24    facility to provide child care services to employees of 
25    the taxpayer, or under a contract with an intermediate 
26    entity that contracts with one or more qualified child 
		SB3420	- 5 -	LRB104 18892 HLH 32337 b
1    care facilities to provide those child care services.
2    "Qualified child care expenditures" does not include 
3expenses in excess of the fair market value of the care.
4    "Qualified child care facility" has the same meaning given 
5to that term in Section 45F of the federal Internal Revenue 
6Code.
7    "Qualified small business" has the same meaning given to 
8that term in Section 45F of the Internal Revenue Code.
9    Section 99. Effective date. This Act takes effect upon
10becoming law.