SB 3658

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Full Text of SB3658
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	SB3658 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3658
Introduced 2/5/2026, by Sen. Robert F. Martwick
SYNOPSIS AS INTRODUCED:
35 ILCS 5/201
35 ILCS 5/201.3 new
Amends the Illinois Income Tax Act. Amends the Illinois Income Tax Act. Sets forth a schedule of income-based tax rates for individuals, trusts, and estates for taxable years beginning on or after January 1, 2027.
LRB104 19263 HLH 32709 b
A BILL FOR
		SB3658		LRB104 19263 HLH 32709 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 Sections 201, 208, 502, and 901 and by adding
6Sections 201.3 and 234 as follows:
7    (35 ILCS 5/201)
8    Sec. 201. Tax imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount
21    equal to 2 1/2% of the taxpayer's net income for the
22    taxable year.
23        (2) In the case of an individual, trust or estate, for
		SB3658	- 2 -	LRB104 19263 HLH 32709 b
1    taxable years beginning prior to July 1, 1989 and ending
2    after June 30, 1989, an amount equal to the sum of (i) 2
3    1/2% of the taxpayer's net income for the period prior to
4    July 1, 1989, as calculated under Section 202.3, and (ii)
5    3% of the taxpayer's net income for the period after June
6    30, 1989, as calculated under Section 202.3.
7        (3) In the case of an individual, trust or estate, for
8    taxable years beginning after June 30, 1989, and ending
9    prior to January 1, 2011, an amount equal to 3% of the
10    taxpayer's net income for the taxable year.
11        (4) In the case of an individual, trust, or estate,
12    for taxable years beginning prior to January 1, 2011, and
13    ending after December 31, 2010, an amount equal to the sum
14    of (i) 3% of the taxpayer's net income for the period prior
15    to January 1, 2011, as calculated under Section 202.5, and
16    (ii) 5% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (5) In the case of an individual, trust, or estate,
19    for taxable years beginning on or after January 1, 2011,
20    and ending prior to January 1, 2015, an amount equal to 5%
21    of the taxpayer's net income for the taxable year.
22        (5.1) In the case of an individual, trust, or estate,
23    for taxable years beginning prior to January 1, 2015, and
24    ending after December 31, 2014, an amount equal to the sum
25    of (i) 5% of the taxpayer's net income for the period prior
26    to January 1, 2015, as calculated under Section 202.5, and
		SB3658	- 3 -	LRB104 19263 HLH 32709 b
1    (ii) 3.75% of the taxpayer's net income for the period
2    after December 31, 2014, as calculated under Section
3    202.5.
4        (5.2) In the case of an individual, trust, or estate,
5    for taxable years beginning on or after January 1, 2015,
6    and ending prior to July 1, 2017, an amount equal to 3.75%
7    of the taxpayer's net income for the taxable year.
8        (5.3) In the case of an individual, trust, or estate,
9    for taxable years beginning prior to July 1, 2017, and
10    ending after June 30, 2017, an amount equal to the sum of
11    (i) 3.75% of the taxpayer's net income for the period
12    prior to July 1, 2017, as calculated under Section 202.5,
13    and (ii) 4.95% of the taxpayer's net income for the period
14    after June 30, 2017, as calculated under Section 202.5.
15        (5.4) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after July 1, 2017, and 
17    beginning prior to January 1, 2027 an amount equal to
18    4.95% of the taxpayer's net income for the taxable year.
19        (5.5) In the case of an individual, trust, or estate, 
20    for taxable years beginning on or after January 1, 2027, 
21    an amount calculated under the rate structure set forth in 
22    Section 201.3.
23        (6) In the case of a corporation, for taxable years
24    ending prior to July 1, 1989, an amount equal to 4% of the
25    taxpayer's net income for the taxable year.
26        (7) In the case of a corporation, for taxable years
		SB3658	- 4 -	LRB104 19263 HLH 32709 b
1    beginning prior to July 1, 1989 and ending after June 30,
2    1989, an amount equal to the sum of (i) 4% of the
3    taxpayer's net income for the period prior to July 1,
4    1989, as calculated under Section 202.3, and (ii) 4.8% of
5    the taxpayer's net income for the period after June 30,
6    1989, as calculated under Section 202.3.
7        (8) In the case of a corporation, for taxable years
8    beginning after June 30, 1989, and ending prior to January
9    1, 2011, an amount equal to 4.8% of the taxpayer's net
10    income for the taxable year.
11        (9) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2011, and ending after
13    December 31, 2010, an amount equal to the sum of (i) 4.8%
14    of the taxpayer's net income for the period prior to
15    January 1, 2011, as calculated under Section 202.5, and
16    (ii) 7% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (10) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2011, and ending prior to
20    January 1, 2015, an amount equal to 7% of the taxpayer's
21    net income for the taxable year.
22        (11) In the case of a corporation, for taxable years
23    beginning prior to January 1, 2015, and ending after
24    December 31, 2014, an amount equal to the sum of (i) 7% of
25    the taxpayer's net income for the period prior to January
26    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
		SB3658	- 5 -	LRB104 19263 HLH 32709 b
1    of the taxpayer's net income for the period after December
2    31, 2014, as calculated under Section 202.5.
3        (12) In the case of a corporation, for taxable years
4    beginning on or after January 1, 2015, and ending prior to
5    July 1, 2017, an amount equal to 5.25% of the taxpayer's
6    net income for the taxable year.
7        (13) In the case of a corporation, for taxable years
8    beginning prior to July 1, 2017, and ending after June 30,
9    2017, an amount equal to the sum of (i) 5.25% of the
10    taxpayer's net income for the period prior to July 1,
11    2017, as calculated under Section 202.5, and (ii) 7% of
12    the taxpayer's net income for the period after June 30,
13    2017, as calculated under Section 202.5.
14        (14) In the case of a corporation, for taxable years
15    beginning on or after July 1, 2017, an amount equal to 7%
16    of the taxpayer's net income for the taxable year.
17    The rates under this subsection (b) are subject to the
18provisions of Section 201.5.
19    (b-5) Surcharge; sale or exchange of assets, properties,
20and intangibles of organization gaming licensees. For each of
21taxable years 2019 through 2027, a surcharge is imposed on all
22taxpayers on income arising from the sale or exchange of
23capital assets, depreciable business property, real property
24used in the trade or business, and Section 197 intangibles (i)
25of an organization licensee under the Illinois Horse Racing
26Act of 1975 and (ii) of an organization gaming licensee under
		SB3658	- 6 -	LRB104 19263 HLH 32709 b
1the Illinois Gambling Act. The amount of the surcharge is
2equal to the amount of federal income tax liability for the
3taxable year attributable to those sales and exchanges. The
4surcharge imposed shall not apply if:
5        (1) the organization gaming license, organization
6    license, or racetrack property is transferred as a result
7    of any of the following:
8            (A) bankruptcy, a receivership, or a debt
9        adjustment initiated by or against the initial
10        licensee or the substantial owners of the initial
11        licensee;
12            (B) cancellation, revocation, or termination of
13        any such license by the Illinois Gaming Board or the
14        Illinois Racing Board;
15            (C) a determination by the Illinois Gaming Board
16        that transfer of the license is in the best interests
17        of Illinois gaming;
18            (D) the death of an owner of the equity interest in
19        a licensee;
20            (E) the acquisition of a controlling interest in
21        the stock or substantially all of the assets of a
22        publicly traded company;
23            (F) a transfer by a parent company to a wholly
24        owned subsidiary; or
25            (G) the transfer or sale to or by one person to
26        another person where both persons were initial owners
		SB3658	- 7 -	LRB104 19263 HLH 32709 b
1        of the license when the license was issued; or
2        (2) the controlling interest in the organization
3    gaming license, organization license, or racetrack
4    property is transferred in a transaction to lineal
5    descendants in which no gain or loss is recognized or as a
6    result of a transaction in accordance with Section 351 of
7    the Internal Revenue Code in which no gain or loss is
8    recognized; or
9        (3) live horse racing was not conducted in 2010 at a
10    racetrack located within 3 miles of the Mississippi River
11    under a license issued pursuant to the Illinois Horse
12    Racing Act of 1975.
13    The transfer of an organization gaming license,
14organization license, or racetrack property by a person other
15than the initial licensee to receive the organization gaming
16license is not subject to a surcharge. The Department shall
17adopt rules necessary to implement and administer this
18subsection.
19    (c) Personal Property Tax Replacement Income Tax.
20Beginning on July 1, 1979 and thereafter, in addition to such
21income tax, there is also hereby imposed the Personal Property
22Tax Replacement Income Tax measured by net income on every
23corporation (including Subchapter S corporations), partnership
24and trust, for each taxable year ending after June 30, 1979.
25Such taxes are imposed on the privilege of earning or
26receiving income in or as a resident of this State. The
		SB3658	- 8 -	LRB104 19263 HLH 32709 b
1Personal Property Tax Replacement Income Tax shall be in
2addition to the income tax imposed by subsections (a) and (b)
3of this Section and in addition to all other occupation or
4privilege taxes imposed by this State or by any municipal
5corporation or political subdivision thereof.
6    (d) Additional Personal Property Tax Replacement Income
7Tax Rates. The personal property tax replacement income tax
8imposed by this subsection and subsection (c) of this Section
9in the case of a corporation, other than a Subchapter S
10corporation and except as adjusted by subsection (d-1), shall
11be an additional amount equal to 2.85% of such taxpayer's net
12income for the taxable year, except that beginning on January
131, 1981, and thereafter, the rate of 2.85% specified in this
14subsection shall be reduced to 2.5%, and in the case of a
15partnership, trust or a Subchapter S corporation shall be an
16additional amount equal to 1.5% of such taxpayer's net income
17for the taxable year.
18    (d-1) Rate reduction for certain foreign insurers. In the
19case of a foreign insurer, as defined by Section 35A-5 of the
20Illinois Insurance Code, whose state or country of domicile
21imposes on insurers domiciled in Illinois a retaliatory tax
22(excluding any insurer whose premiums from reinsurance assumed
23are 50% or more of its total insurance premiums as determined
24under paragraph (2) of subsection (b) of Section 304, except
25that for purposes of this determination premiums from
26reinsurance do not include premiums from inter-affiliate
		SB3658	- 9 -	LRB104 19263 HLH 32709 b
1reinsurance arrangements), beginning with taxable years ending
2on or after December 31, 1999, the sum of the rates of tax
3imposed by subsections (b) and (d) shall be reduced (but not
4increased) to the rate at which the total amount of tax imposed
5under this Act, net of all credits allowed under this Act,
6shall equal (i) the total amount of tax that would be imposed
7on the foreign insurer's net income allocable to Illinois for
8the taxable year by such foreign insurer's state or country of
9domicile if that net income were subject to all income taxes
10and taxes measured by net income imposed by such foreign
11insurer's state or country of domicile, net of all credits
12allowed or (ii) a rate of zero if no such tax is imposed on
13such income by the foreign insurer's state of domicile. For
14the purposes of this subsection (d-1), an inter-affiliate
15includes a mutual insurer under common management.
16        (1) For the purposes of subsection (d-1), in no event
17    shall the sum of the rates of tax imposed by subsections
18    (b) and (d) be reduced below the rate at which the sum of:
19            (A) the total amount of tax imposed on such
20        foreign insurer under this Act for a taxable year, net
21        of all credits allowed under this Act, plus
22            (B) the privilege tax imposed by Section 409 of
23        the Illinois Insurance Code, the fire insurance
24        company tax imposed by Section 12 of the Fire
25        Investigation Act, and the fire department taxes
26        imposed under Section 11-10-1 of the Illinois
		SB3658	- 10 -	LRB104 19263 HLH 32709 b
1        Municipal Code,
2    equals 1.25% for taxable years ending prior to December
3    31, 2003, or 1.75% for taxable years ending on or after
4    December 31, 2003, of the net taxable premiums written for
5    the taxable year, as described by subsection (1) of
6    Section 409 of the Illinois Insurance Code. This paragraph
7    will in no event increase the rates imposed under
8    subsections (b) and (d).
9        (2) Any reduction in the rates of tax imposed by this
10    subsection shall be applied first against the rates
11    imposed by subsection (b) and only after the tax imposed
12    by subsection (a) net of all credits allowed under this
13    Section other than the credit allowed under subsection (i)
14    has been reduced to zero, against the rates imposed by
15    subsection (d).
16    This subsection (d-1) is exempt from the provisions of
17Section 250.
18    (e) Investment credit. A taxpayer shall be allowed a
19credit against the Personal Property Tax Replacement Income
20Tax for investment in qualified property.
21        (1) A taxpayer shall be allowed a credit equal to .5%
22    of the basis of qualified property placed in service
23    during the taxable year, provided such property is placed
24    in service on or after July 1, 1984. There shall be allowed
25    an additional credit equal to .5% of the basis of
26    qualified property placed in service during the taxable
		SB3658	- 11 -	LRB104 19263 HLH 32709 b
1    year, provided such property is placed in service on or
2    after July 1, 1986, and the taxpayer's base employment
3    within Illinois has increased by 1% or more over the
4    preceding year as determined by the taxpayer's employment
5    records filed with the Illinois Department of Employment
6    Security. Taxpayers who are new to Illinois shall be
7    deemed to have met the 1% growth in base employment for the
8    first year in which they file employment records with the
9    Illinois Department of Employment Security. The provisions
10    added to this Section by Public Act 85-1200 (and restored
11    by Public Act 87-895) shall be construed as declaratory of
12    existing law and not as a new enactment. If, in any year,
13    the increase in base employment within Illinois over the
14    preceding year is less than 1%, the additional credit
15    shall be limited to that percentage times a fraction, the
16    numerator of which is .5% and the denominator of which is
17    1%, but shall not exceed .5%. The investment credit shall
18    not be allowed to the extent that it would reduce a
19    taxpayer's liability in any tax year below zero, nor may
20    any credit for qualified property be allowed for any year
21    other than the year in which the property was placed in
22    service in Illinois. For tax years ending on or after
23    December 31, 1987, and on or before December 31, 1988, the
24    credit shall be allowed for the tax year in which the
25    property is placed in service, or, if the amount of the
26    credit exceeds the tax liability for that year, whether it
		SB3658	- 12 -	LRB104 19263 HLH 32709 b
1    exceeds the original liability or the liability as later
2    amended, such excess may be carried forward and applied to
3    the tax liability of the 5 taxable years following the
4    excess credit years if the taxpayer (i) makes investments
5    which cause the creation of a minimum of 2,000 full-time
6    equivalent jobs in Illinois, (ii) is located in an
7    enterprise zone established pursuant to the Illinois
8    Enterprise Zone Act and (iii) is certified by the
9    Department of Commerce and Community Affairs (now
10    Department of Commerce and Economic Opportunity) as
11    complying with the requirements specified in clause (i)
12    and (ii) by July 1, 1986. The Department of Commerce and
13    Community Affairs (now Department of Commerce and Economic
14    Opportunity) shall notify the Department of Revenue of all
15    such certifications immediately. For tax years ending
16    after December 31, 1988, the credit shall be allowed for
17    the tax year in which the property is placed in service,
18    or, if the amount of the credit exceeds the tax liability
19    for that year, whether it exceeds the original liability
20    or the liability as later amended, such excess may be
21    carried forward and applied to the tax liability of the 5
22    taxable years following the excess credit years. The
23    credit shall be applied to the earliest year for which
24    there is a liability. If there is credit from more than one
25    tax year that is available to offset a liability, earlier
26    credit shall be applied first.
		SB3658	- 13 -	LRB104 19263 HLH 32709 b
1        (2) The term "qualified property" means property
2    which:
3            (A) is tangible, whether new or used, including
4        buildings and structural components of buildings and
5        signs that are real property, but not including land
6        or improvements to real property that are not a
7        structural component of a building such as
8        landscaping, sewer lines, local access roads, fencing,
9        parking lots, and other appurtenances;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (e);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code;
17            (D) is used in Illinois by a taxpayer who is
18        primarily engaged in manufacturing, or in mining coal
19        or fluorite, or in retailing, or was placed in service
20        on or after July 1, 2006 in a River Edge Redevelopment
21        Zone established pursuant to the River Edge
22        Redevelopment Zone Act; and
23            (E) has not previously been used in Illinois in
24        such a manner and by such a person as would qualify for
25        the credit provided by this subsection (e) or
26        subsection (f).
		SB3658	- 14 -	LRB104 19263 HLH 32709 b
1        (3) For purposes of this subsection (e),
2    "manufacturing" means the material staging and production
3    of tangible personal property by procedures commonly
4    regarded as manufacturing, processing, fabrication, or
5    assembling which changes some existing material into new
6    shapes, new qualities, or new combinations. For purposes
7    of this subsection (e) the term "mining" shall have the
8    same meaning as the term "mining" in Section 613(c) of the
9    Internal Revenue Code. For purposes of this subsection
10    (e), the term "retailing" means the sale of tangible
11    personal property for use or consumption and not for
12    resale, or services rendered in conjunction with the sale
13    of tangible personal property for use or consumption and
14    not for resale. For purposes of this subsection (e),
15    "tangible personal property" has the same meaning as when
16    that term is used in the Retailers' Occupation Tax Act,
17    and, for taxable years ending after December 31, 2008,
18    does not include the generation, transmission, or
19    distribution of electricity.
20        (4) The basis of qualified property shall be the basis
21    used to compute the depreciation deduction for federal
22    income tax purposes.
23        (5) If the basis of the property for federal income
24    tax depreciation purposes is increased after it has been
25    placed in service in Illinois by the taxpayer, the amount
26    of such increase shall be deemed property placed in
		SB3658	- 15 -	LRB104 19263 HLH 32709 b
1    service on the date of such increase in basis.
2        (6) The term "placed in service" shall have the same
3    meaning as under Section 46 of the Internal Revenue Code.
4        (7) If during any taxable year, any property ceases to
5    be qualified property in the hands of the taxpayer within
6    48 months after being placed in service, or the situs of
7    any qualified property is moved outside Illinois within 48
8    months after being placed in service, the Personal
9    Property Tax Replacement Income Tax for such taxable year
10    shall be increased. Such increase shall be determined by
11    (i) recomputing the investment credit which would have
12    been allowed for the year in which credit for such
13    property was originally allowed by eliminating such
14    property from such computation and, (ii) subtracting such
15    recomputed credit from the amount of credit previously
16    allowed. For the purposes of this paragraph (7), a
17    reduction of the basis of qualified property resulting
18    from a redetermination of the purchase price shall be
19    deemed a disposition of qualified property to the extent
20    of such reduction.
21        (8) Unless the investment credit is extended by law,
22    the basis of qualified property shall not include costs
23    incurred after December 31, 2018, except for costs
24    incurred pursuant to a binding contract entered into on or
25    before December 31, 2018.
26        (9) Each taxable year ending before December 31, 2000,
		SB3658	- 16 -	LRB104 19263 HLH 32709 b
1    a partnership may elect to pass through to its partners
2    the credits to which the partnership is entitled under
3    this subsection (e) for the taxable year. A partner may
4    use the credit allocated to him or her under this
5    paragraph only against the tax imposed in subsections (c)
6    and (d) of this Section. If the partnership makes that
7    election, those credits shall be allocated among the
8    partners in the partnership in accordance with the rules
9    set forth in Section 704(b) of the Internal Revenue Code,
10    and the rules promulgated under that Section, and the
11    allocated amount of the credits shall be allowed to the
12    partners for that taxable year. The partnership shall make
13    this election on its Personal Property Tax Replacement
14    Income Tax return for that taxable year. The election to
15    pass through the credits shall be irrevocable.
16        For taxable years ending on or after December 31,
17    2000, a partner that qualifies its partnership for a
18    subtraction under subparagraph (I) of paragraph (2) of
19    subsection (d) of Section 203 or a shareholder that
20    qualifies a Subchapter S corporation for a subtraction
21    under subparagraph (S) of paragraph (2) of subsection (b)
22    of Section 203 shall be allowed a credit under this
23    subsection (e) equal to its share of the credit earned
24    under this subsection (e) during the taxable year by the
25    partnership or Subchapter S corporation, determined in
26    accordance with the determination of income and
		SB3658	- 17 -	LRB104 19263 HLH 32709 b
1    distributive share of income under Sections 702 and 704
2    and Subchapter S of the Internal Revenue Code. This
3    paragraph is exempt from the provisions of Section 250.
4    (f) Investment credit; Enterprise Zone; River Edge
5Redevelopment Zone.
6        (1) A taxpayer shall be allowed a credit against the
7    tax imposed by subsections (a) and (b) of this Section for
8    investment in qualified property which is placed in
9    service in an Enterprise Zone created pursuant to the
10    Illinois Enterprise Zone Act or, for property placed in
11    service on or after July 1, 2006, a River Edge
12    Redevelopment Zone established pursuant to the River Edge
13    Redevelopment Zone Act. For partners, shareholders of
14    Subchapter S corporations, and owners of limited liability
15    companies, if the liability company is treated as a
16    partnership for purposes of federal and State income
17    taxation, for taxable years ending before December 31,
18    2023, there shall be allowed a credit under this
19    subsection (f) to be determined in accordance with the
20    determination of income and distributive share of income
21    under Sections 702 and 704 and Subchapter S of the
22    Internal Revenue Code. For taxable years ending on or
23    after December 31, 2023, for partners and shareholders of
24    Subchapter S corporations, the provisions of Section 251
25    shall apply with respect to the credit under this
26    subsection. The credit shall be .5% of the basis for such
		SB3658	- 18 -	LRB104 19263 HLH 32709 b
1    property. The credit shall be available only in the
2    taxable year in which the property is placed in service in
3    the Enterprise Zone or River Edge Redevelopment Zone and
4    shall not be allowed to the extent that it would reduce a
5    taxpayer's liability for the tax imposed by subsections
6    (a) and (b) of this Section to below zero. For tax years
7    ending on or after December 31, 1985, the credit shall be
8    allowed for the tax year in which the property is placed in
9    service, or, if the amount of the credit exceeds the tax
10    liability for that year, whether it exceeds the original
11    liability or the liability as later amended, such excess
12    may be carried forward and applied to the tax liability of
13    the 5 taxable years following the excess credit year. The
14    credit shall be applied to the earliest year for which
15    there is a liability. If there is credit from more than one
16    tax year that is available to offset a liability, the
17    credit accruing first in time shall be applied first.
18        (2) The term qualified property means property which:
19            (A) is tangible, whether new or used, including
20        buildings and structural components of buildings;
21            (B) is depreciable pursuant to Section 167 of the
22        Internal Revenue Code, except that "3-year property"
23        as defined in Section 168(c)(2)(A) of that Code is not
24        eligible for the credit provided by this subsection
25        (f);
26            (C) is acquired by purchase as defined in Section
		SB3658	- 19 -	LRB104 19263 HLH 32709 b
1        179(d) of the Internal Revenue Code;
2            (D) is used in the Enterprise Zone or River Edge
3        Redevelopment Zone by the taxpayer; and
4            (E) has not been previously used in Illinois in
5        such a manner and by such a person as would qualify for
6        the credit provided by this subsection (f) or
7        subsection (e).
8        (3) The basis of qualified property shall be the basis
9    used to compute the depreciation deduction for federal
10    income tax purposes.
11        (4) If the basis of the property for federal income
12    tax depreciation purposes is increased after it has been
13    placed in service in the Enterprise Zone or River Edge
14    Redevelopment Zone by the taxpayer, the amount of such
15    increase shall be deemed property placed in service on the
16    date of such increase in basis.
17        (5) The term "placed in service" shall have the same
18    meaning as under Section 46 of the Internal Revenue Code.
19        (6) If during any taxable year, any property ceases to
20    be qualified property in the hands of the taxpayer within
21    48 months after being placed in service, or the situs of
22    any qualified property is moved outside the Enterprise
23    Zone or River Edge Redevelopment Zone within 48 months
24    after being placed in service, the tax imposed under
25    subsections (a) and (b) of this Section for such taxable
26    year shall be increased. Such increase shall be determined
		SB3658	- 20 -	LRB104 19263 HLH 32709 b
1    by (i) recomputing the investment credit which would have
2    been allowed for the year in which credit for such
3    property was originally allowed by eliminating such
4    property from such computation, and (ii) subtracting such
5    recomputed credit from the amount of credit previously
6    allowed. For the purposes of this paragraph (6), a
7    reduction of the basis of qualified property resulting
8    from a redetermination of the purchase price shall be
9    deemed a disposition of qualified property to the extent
10    of such reduction.
11        (7) There shall be allowed an additional credit equal
12    to 0.5% of the basis of qualified property placed in
13    service during the taxable year in a River Edge
14    Redevelopment Zone, provided such property is placed in
15    service on or after July 1, 2006, and the taxpayer's base
16    employment within Illinois has increased by 1% or more
17    over the preceding year as determined by the taxpayer's
18    employment records filed with the Illinois Department of
19    Employment Security. Taxpayers who are new to Illinois
20    shall be deemed to have met the 1% growth in base
21    employment for the first year in which they file
22    employment records with the Illinois Department of
23    Employment Security. If, in any year, the increase in base
24    employment within Illinois over the preceding year is less
25    than 1%, the additional credit shall be limited to that
26    percentage times a fraction, the numerator of which is
		SB3658	- 21 -	LRB104 19263 HLH 32709 b
1    0.5% and the denominator of which is 1%, but shall not
2    exceed 0.5%.
3        (8) For taxable years beginning on or after January 1,
4    2021, there shall be allowed an Enterprise Zone
5    construction jobs credit against the taxes imposed under
6    subsections (a) and (b) of this Section as provided in
7    Section 13 of the Illinois Enterprise Zone Act.
8        The credit or credits may not reduce the taxpayer's
9    liability to less than zero. If the amount of the credit or
10    credits exceeds the taxpayer's liability, the excess may
11    be carried forward and applied against the taxpayer's
12    liability in succeeding calendar years in the same manner
13    provided under paragraph (4) of Section 211 of this Act.
14    The credit or credits shall be applied to the earliest
15    year for which there is a tax liability. If there are
16    credits from more than one taxable year that are available
17    to offset a liability, the earlier credit shall be applied
18    first.
19        For partners, shareholders of Subchapter S
20    corporations, and owners of limited liability companies,
21    if the liability company is treated as a partnership for
22    the purposes of federal and State income taxation, for
23    taxable years ending before December 31, 2023, there shall
24    be allowed a credit under this Section to be determined in
25    accordance with the determination of income and
26    distributive share of income under Sections 702 and 704
		SB3658	- 22 -	LRB104 19263 HLH 32709 b
1    and Subchapter S of the Internal Revenue Code. For taxable
2    years ending on or after December 31, 2023, for partners
3    and shareholders of Subchapter S corporations, the
4    provisions of Section 251 shall apply with respect to the
5    credit under this subsection.
6        The total aggregate amount of credits awarded under
7    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
8    shall not exceed $20,000,000 in any State fiscal year.
9        This paragraph (8) is exempt from the provisions of
10    Section 250.
11    (g) (Blank).
12    (h) Investment credit; High Impact Business.
13        (1) Subject to subsections (b) and (b-5) of Section
14    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
15    be allowed a credit against the tax imposed by subsections
16    (a) and (b) of this Section for investment in qualified
17    property which is placed in service by a Department of
18    Commerce and Economic Opportunity designated High Impact
19    Business. The credit shall be .5% of the basis for such
20    property. The credit shall not be available (i) until the
21    minimum investments in qualified property set forth in
22    subdivision (a)(3)(A) of Section 5.5 of the Illinois
23    Enterprise Zone Act have been satisfied or (ii) until the
24    time authorized in subsection (b-5) of the Illinois
25    Enterprise Zone Act for entities designated as High Impact
26    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
		SB3658	- 23 -	LRB104 19263 HLH 32709 b
1    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
2    Act, and shall not be allowed to the extent that it would
3    reduce a taxpayer's liability for the tax imposed by
4    subsections (a) and (b) of this Section to below zero. The
5    credit applicable to such investments shall be taken in
6    the taxable year in which such investments have been
7    completed. The credit for additional investments beyond
8    the minimum investment by a designated high impact
9    business authorized under subdivision (a)(3)(A) of Section
10    5.5 of the Illinois Enterprise Zone Act shall be available
11    only in the taxable year in which the property is placed in
12    service and shall not be allowed to the extent that it
13    would reduce a taxpayer's liability for the tax imposed by
14    subsections (a) and (b) of this Section to below zero. For
15    tax years ending on or after December 31, 1987, the credit
16    shall be allowed for the tax year in which the property is
17    placed in service, or, if the amount of the credit exceeds
18    the tax liability for that year, whether it exceeds the
19    original liability or the liability as later amended, such
20    excess may be carried forward and applied to the tax
21    liability of the 5 taxable years following the excess
22    credit year. The credit shall be applied to the earliest
23    year for which there is a liability. If there is credit
24    from more than one tax year that is available to offset a
25    liability, the credit accruing first in time shall be
26    applied first.
		SB3658	- 24 -	LRB104 19263 HLH 32709 b
1        Changes made in this subdivision (h)(1) by Public Act
2    88-670 restore changes made by Public Act 85-1182 and
3    reflect existing law.
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        (h);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code; and
14            (D) is not eligible for the Enterprise Zone
15        Investment Credit provided by subsection (f) of this
16        Section.
17        (3) The basis of qualified property shall be the basis
18    used to compute the depreciation deduction for federal
19    income tax purposes.
20        (4) If the basis of the property for federal income
21    tax depreciation purposes is increased after it has been
22    placed in service in a federally designated Foreign Trade
23    Zone or Sub-Zone located in Illinois by the taxpayer, the
24    amount of such increase shall be deemed property placed in
25    service on the date of such increase in basis.
26        (5) The term "placed in service" shall have the same
		SB3658	- 25 -	LRB104 19263 HLH 32709 b
1    meaning as under Section 46 of the Internal Revenue Code.
2        (6) If during any taxable year ending on or before
3    December 31, 1996, any property ceases to be qualified
4    property in the hands of the taxpayer within 48 months
5    after being placed in service, or the situs of any
6    qualified property is moved outside Illinois within 48
7    months after being placed in service, the tax imposed
8    under subsections (a) and (b) of this Section for such
9    taxable year shall be increased. Such increase shall be
10    determined by (i) recomputing the investment credit which
11    would have been allowed for the year in which credit for
12    such property was originally allowed by eliminating such
13    property from such computation, and (ii) subtracting such
14    recomputed credit from the amount of credit previously
15    allowed. For the purposes of this paragraph (6), a
16    reduction of the basis of qualified property resulting
17    from a redetermination of the purchase price shall be
18    deemed a disposition of qualified property to the extent
19    of such reduction.
20        (7) Beginning with tax years ending after December 31,
21    1996, if a taxpayer qualifies for the credit under this
22    subsection (h) and thereby is granted a tax abatement and
23    the taxpayer relocates its entire facility in violation of
24    the explicit terms and length of the contract under
25    Section 18-183 of the Property Tax Code, the tax imposed
26    under subsections (a) and (b) of this Section shall be
		SB3658	- 26 -	LRB104 19263 HLH 32709 b
1    increased for the taxable year in which the taxpayer
2    relocated its facility by an amount equal to the amount of
3    credit received by the taxpayer under this subsection (h).
4    (h-5) High Impact Business construction jobs credit. For
5taxable years beginning on or after January 1, 2021, there
6shall also be allowed a High Impact Business construction jobs
7credit against the tax imposed under subsections (a) and (b)
8of this Section as provided in subsections (i) and (j) of
9Section 5.5 of the Illinois Enterprise Zone Act.
10    The credit or credits may not reduce the taxpayer's
11liability to less than zero. If the amount of the credit or
12credits exceeds the taxpayer's liability, the excess may be
13carried forward and applied against the taxpayer's liability
14in succeeding calendar years in the manner provided under
15paragraph (4) of Section 211 of this Act. The credit or credits
16shall be applied to the earliest year for which there is a tax
17liability. If there are credits from more than one taxable
18year that are available to offset a liability, the earlier
19credit shall be applied first.
20    For partners, shareholders of Subchapter S corporations,
21and owners of limited liability companies, for taxable years
22ending before December 31, 2023, if the liability company is
23treated as a partnership for the purposes of federal and State
24income taxation, there shall be allowed a credit under this
25Section to be determined in accordance with the determination
26of income and distributive share of income under Sections 702
		SB3658	- 27 -	LRB104 19263 HLH 32709 b
1and 704 and Subchapter S of the Internal Revenue Code. For
2taxable years ending on or after December 31, 2023, for
3partners and shareholders of Subchapter S corporations, the
4provisions of Section 251 shall apply with respect to the
5credit under this subsection.
6    The total aggregate amount of credits awarded under the
7Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
8exceed $20,000,000 in any State fiscal year.
9    This subsection (h-5) is exempt from the provisions of
10Section 250.
11    (i) Credit for Personal Property Tax Replacement Income
12Tax. For tax years ending prior to December 31, 2003, a credit
13shall be allowed against the tax imposed by subsections (a)
14and (b) of this Section for the tax imposed by subsections (c)
15and (d) of this Section. This credit shall be computed by
16multiplying the tax imposed by subsections (c) and (d) of this
17Section by a fraction, the numerator of which is base income
18allocable to Illinois and the denominator of which is Illinois
19base income, and further multiplying the product by the tax
20rate imposed by subsections (a) and (b) of this Section.
21    Any credit earned on or after December 31, 1986 under this
22subsection which is unused in the year the credit is computed
23because it exceeds the tax liability imposed by subsections
24(a) and (b) for that year (whether it exceeds the original
25liability or the liability as later amended) may be carried
26forward and applied to the tax liability imposed by
		SB3658	- 28 -	LRB104 19263 HLH 32709 b
1subsections (a) and (b) of the 5 taxable years following the
2excess credit year, provided that no credit may be carried
3forward to any year ending on or after December 31, 2003. This
4credit shall be applied first to the earliest year for which
5there is a liability. If there is a credit under this
6subsection from more than one tax year that is available to
7offset a liability the earliest credit arising under this
8subsection shall be applied first.
9    If, during any taxable year ending on or after December
1031, 1986, the tax imposed by subsections (c) and (d) of this
11Section for which a taxpayer has claimed a credit under this
12subsection (i) is reduced, the amount of credit for such tax
13shall also be reduced. Such reduction shall be determined by
14recomputing the credit to take into account the reduced tax
15imposed by subsections (c) and (d). If any portion of the
16reduced amount of credit has been carried to a different
17taxable year, an amended return shall be filed for such
18taxable year to reduce the amount of credit claimed.
19    (j) Training expense credit. Beginning with tax years
20ending on or after December 31, 1986 and prior to December 31,
212003, a taxpayer shall be allowed a credit against the tax
22imposed by subsections (a) and (b) under this Section for all
23amounts paid or accrued, on behalf of all persons employed by
24the taxpayer in Illinois or Illinois residents employed
25outside of Illinois by a taxpayer, for educational or
26vocational training in semi-technical or technical fields or
		SB3658	- 29 -	LRB104 19263 HLH 32709 b
1semi-skilled or skilled fields, which were deducted from gross
2income in the computation of taxable income. The credit
3against the tax imposed by subsections (a) and (b) shall be
41.6% of such training expenses. For partners, shareholders of
5subchapter S corporations, and owners of limited liability
6companies, if the liability company is treated as a
7partnership for purposes of federal and State income taxation,
8for taxable years ending before December 31, 2023, there shall
9be allowed a credit under this subsection (j) to be determined
10in accordance with the determination of income and
11distributive share of income under Sections 702 and 704 and
12subchapter S of the Internal Revenue Code. For taxable years
13ending on or after December 31, 2023, for partners and
14shareholders of Subchapter S corporations, the provisions of
15Section 251 shall apply with respect to the credit under this
16subsection.
17    Any credit allowed under this subsection which is unused
18in the year the credit is earned may be carried forward to each
19of the 5 taxable years following the year for which the credit
20is first computed until it is used. This credit shall be
21applied first to the earliest year for which there is a
22liability. If there is a credit under this subsection from
23more than one tax year that is available to offset a liability,
24the earliest credit arising under this subsection shall be
25applied first. No carryforward credit may be claimed in any
26tax year ending on or after December 31, 2003.
		SB3658	- 30 -	LRB104 19263 HLH 32709 b
1    (k) Research and development credit. For tax years ending
2after July 1, 1990 and prior to December 31, 2003, and
3beginning again for tax years ending on or after December 31,
42004, and ending prior to January 1, 2032, a taxpayer shall be
5allowed a credit against the tax imposed by subsections (a)
6and (b) of this Section for increasing research activities in
7this State. The credit allowed against the tax imposed by
8subsections (a) and (b) shall be equal to 6 1/2% of the
9qualifying expenditures for increasing research activities in
10this State. For partners, shareholders of subchapter S
11corporations, and owners of limited liability companies, if
12the liability company is treated as a partnership for purposes
13of federal and State income taxation, for taxable years ending
14before December 31, 2023, there shall be allowed a credit
15under this subsection to be determined in accordance with the
16determination of income and distributive share of income under
17Sections 702 and 704 and subchapter S of the Internal Revenue
18Code. For taxable years ending on or after December 31, 2023,
19for partners and shareholders of Subchapter S corporations,
20the provisions of Section 251 shall apply with respect to the
21credit under this subsection.
22    For purposes of this subsection, "qualifying expenditures"
23means the qualifying expenditures as defined for the federal
24credit for increasing research activities which would be
25allowable under Section 41 of the Internal Revenue Code and
26which are conducted in this State, "qualifying expenditures
		SB3658	- 31 -	LRB104 19263 HLH 32709 b
1for increasing research activities in this State" means the
2excess of qualifying expenditures for the taxable year in
3which incurred over qualifying expenditures for the base
4period, "qualifying expenditures for the base period" means
5the average of the qualifying expenditures for each year in
6the base period, and "base period" means the 3 taxable years
7immediately preceding the taxable year for which the
8determination is being made.
9    Any credit in excess of the tax liability for the taxable
10year may be carried forward. A taxpayer may elect to have the
11unused credit shown on its final completed return carried over
12as a credit against the tax liability for the following 5
13taxable years or until it has been fully used, whichever
14occurs first; provided that no credit earned in a tax year
15ending prior to December 31, 2003 may be carried forward to any
16year ending on or after December 31, 2003.
17    If an unused credit is carried forward to a given year from
182 or more earlier years, that credit arising in the earliest
19year will be applied first against the tax liability for the
20given year. If a tax liability for the given year still
21remains, the credit from the next earliest year will then be
22applied, and so on, until all credits have been used or no tax
23liability for the given year remains. Any remaining unused
24credit or credits then will be carried forward to the next
25following year in which a tax liability is incurred, except
26that no credit can be carried forward to a year which is more
		SB3658	- 32 -	LRB104 19263 HLH 32709 b
1than 5 years after the year in which the expense for which the
2credit is given was incurred.
3    No inference shall be drawn from Public Act 91-644 in
4construing this Section for taxable years beginning before
5January 1, 1999.
6    It is the intent of the General Assembly that the research
7and development credit under this subsection (k) shall apply
8continuously for all tax years ending on or after December 31,
92004 and ending prior to January 1, 2032, including, but not
10limited to, the period beginning on January 1, 2016 and ending
11on July 6, 2017 (the effective date of Public Act 100-22). All
12actions taken in reliance on the continuation of the credit
13under this subsection (k) by any taxpayer are hereby
14validated.
15    (l) Environmental Remediation Tax Credit.
16        (i) For tax years ending after December 31, 1997 and
17    on or before December 31, 2001, a taxpayer shall be
18    allowed a credit against the tax imposed by subsections
19    (a) and (b) of this Section for certain amounts paid for
20    unreimbursed eligible remediation costs, as specified in
21    this subsection. For purposes of this Section,
22    "unreimbursed eligible remediation costs" means costs
23    approved by the Illinois Environmental Protection Agency
24    ("Agency") under Section 58.14 of the Environmental
25    Protection Act that were paid in performing environmental
26    remediation at a site for which a No Further Remediation
		SB3658	- 33 -	LRB104 19263 HLH 32709 b
1    Letter was issued by the Agency and recorded under Section
2    58.10 of the Environmental Protection Act. The credit must
3    be claimed for the taxable year in which Agency approval
4    of the eligible remediation costs is granted. The credit
5    is not available to any taxpayer if the taxpayer or any
6    related party caused or contributed to, in any material
7    respect, a release of regulated substances on, in, or
8    under the site that was identified and addressed by the
9    remedial action pursuant to the Site Remediation Program
10    of the Environmental Protection Act. After the Pollution
11    Control Board rules are adopted pursuant to the Illinois
12    Administrative Procedure Act for the administration and
13    enforcement of Section 58.9 of the Environmental
14    Protection Act, determinations as to credit availability
15    for purposes of this Section shall be made consistent with
16    those rules. For purposes of this Section, "taxpayer"
17    includes a person whose tax attributes the taxpayer has
18    succeeded to under Section 381 of the Internal Revenue
19    Code and "related party" includes the persons disallowed a
20    deduction for losses by paragraphs (b), (c), and (f)(1) of
21    Section 267 of the Internal Revenue Code by virtue of
22    being a related taxpayer, as well as any of its partners.
23    The credit allowed against the tax imposed by subsections
24    (a) and (b) shall be equal to 25% of the unreimbursed
25    eligible remediation costs in excess of $100,000 per site,
26    except that the $100,000 threshold shall not apply to any
		SB3658	- 34 -	LRB104 19263 HLH 32709 b
1    site contained in an enterprise zone as determined by the
2    Department of Commerce and Community Affairs (now
3    Department of Commerce and Economic Opportunity). The
4    total credit allowed shall not exceed $40,000 per year
5    with a maximum total of $150,000 per site. For partners
6    and shareholders of subchapter S corporations, there shall
7    be allowed a credit under this subsection to be determined
8    in accordance with the determination of income and
9    distributive share of income under Sections 702 and 704
10    and subchapter S of the Internal Revenue Code.
11        (ii) A credit allowed under this subsection that is
12    unused in the year the credit is earned may be carried
13    forward to each of the 5 taxable years following the year
14    for which the credit is first earned until it is used. The
15    term "unused credit" does not include any amounts of
16    unreimbursed eligible remediation costs in excess of the
17    maximum credit per site authorized under paragraph (i).
18    This credit shall be applied first to the earliest year
19    for which there is a liability. If there is a credit under
20    this subsection from more than one tax year that is
21    available to offset a liability, the earliest credit
22    arising under this subsection shall be applied first. A
23    credit allowed under this subsection may be sold to a
24    buyer as part of a sale of all or part of the remediation
25    site for which the credit was granted. The purchaser of a
26    remediation site and the tax credit shall succeed to the
		SB3658	- 35 -	LRB104 19263 HLH 32709 b
1    unused credit and remaining carry-forward period of the
2    seller. To perfect the transfer, the assignor shall record
3    the transfer in the chain of title for the site and provide
4    written notice to the Director of the Illinois Department
5    of Revenue of the assignor's intent to sell the
6    remediation site and the amount of the tax credit to be
7    transferred as a portion of the sale. In no event may a
8    credit be transferred to any taxpayer if the taxpayer or a
9    related party would not be eligible under the provisions
10    of subsection (i).
11        (iii) For purposes of this Section, the term "site"
12    shall have the same meaning as under Section 58.2 of the
13    Environmental Protection Act.
14    (m) Education expense credit. Beginning with tax years
15ending after December 31, 1999, a taxpayer who is the
16custodian of one or more qualifying pupils shall be allowed a
17credit against the tax imposed by subsections (a) and (b) of
18this Section for qualified education expenses incurred on
19behalf of the qualifying pupils. The credit shall be equal to
2025% of qualified education expenses, but in no event may the
21total credit under this subsection claimed by a family that is
22the custodian of qualifying pupils exceed (i) $500 for tax
23years ending prior to December 31, 2017, and (ii) $750 for tax
24years ending on or after December 31, 2017. In no event shall a
25credit under this subsection reduce the taxpayer's liability
26under this Act to less than zero. Notwithstanding any other
		SB3658	- 36 -	LRB104 19263 HLH 32709 b
1provision of law, for taxable years beginning on or after
2January 1, 2017, no taxpayer may claim a credit under this
3subsection (m) if the taxpayer's adjusted gross income for the
4taxable year exceeds (i) $500,000, in the case of spouses
5filing a joint federal tax return or (ii) $250,000, in the case
6of all other taxpayers. This subsection is exempt from the
7provisions of Section 250 of this Act.
8    For purposes of this subsection:
9    "Qualifying pupils" means individuals who (i) are
10residents of the State of Illinois, (ii) are under the age of
1121 at the close of the school year for which a credit is
12sought, and (iii) during the school year for which a credit is
13sought were full-time pupils enrolled in a kindergarten
14through twelfth grade education program at any school, as
15defined in this subsection.
16    "Qualified education expense" means the amount incurred on
17behalf of a qualifying pupil in excess of $250 for tuition,
18book fees, and lab fees at the school in which the pupil is
19enrolled during the regular school year.
20    "School" means any public or nonpublic elementary or
21secondary school in Illinois that is in compliance with Title
22VI of the Civil Rights Act of 1964 and attendance at which
23satisfies the requirements of Section 26-1 of the School Code,
24except that nothing shall be construed to require a child to
25attend any particular public or nonpublic school to qualify
26for the credit under this Section.
		SB3658	- 37 -	LRB104 19263 HLH 32709 b
1    "Custodian" means, with respect to qualifying pupils, an
2Illinois resident who is a parent, the parents, a legal
3guardian, or the legal guardians of the qualifying pupils.
4    (n) River Edge Redevelopment Zone site remediation tax
5credit.
6        (i) For tax years ending on or after December 31,
7    2006, a taxpayer shall be allowed a credit against the tax
8    imposed by subsections (a) and (b) of this Section for
9    certain amounts paid for unreimbursed eligible remediation
10    costs, as specified in this subsection. For purposes of
11    this Section, "unreimbursed eligible remediation costs"
12    means costs approved by the Illinois Environmental
13    Protection Agency ("Agency") under Section 58.14a of the
14    Environmental Protection Act that were paid in performing
15    environmental remediation at a site within a River Edge
16    Redevelopment Zone for which a No Further Remediation
17    Letter was issued by the Agency and recorded under Section
18    58.10 of the Environmental Protection Act. The credit must
19    be claimed for the taxable year in which Agency approval
20    of the eligible remediation costs is granted. The credit
21    is not available to any taxpayer if the taxpayer or any
22    related party caused or contributed to, in any material
23    respect, a release of regulated substances on, in, or
24    under the site that was identified and addressed by the
25    remedial action pursuant to the Site Remediation Program
26    of the Environmental Protection Act. Determinations as to
		SB3658	- 38 -	LRB104 19263 HLH 32709 b
1    credit availability for purposes of this Section shall be
2    made consistent with rules adopted by the Pollution
3    Control Board pursuant to the Illinois Administrative
4    Procedure Act for the administration and enforcement of
5    Section 58.9 of the Environmental Protection Act. For
6    purposes of this Section, "taxpayer" includes a person
7    whose tax attributes the taxpayer has succeeded to under
8    Section 381 of the Internal Revenue Code and "related
9    party" includes the persons disallowed a deduction for
10    losses by paragraphs (b), (c), and (f)(1) of Section 267
11    of the Internal Revenue Code by virtue of being a related
12    taxpayer, as well as any of its partners. The credit
13    allowed against the tax imposed by subsections (a) and (b)
14    shall be equal to 25% of the unreimbursed eligible
15    remediation costs in excess of $100,000 per site.
16        (ii) A credit allowed under this subsection that is
17    unused in the year the credit is earned may be carried
18    forward to each of the 5 taxable years following the year
19    for which the credit is first earned until it is used. This
20    credit shall be applied first to the earliest year for
21    which there is a liability. If there is a credit under this
22    subsection from more than one tax year that is available
23    to offset a liability, the earliest credit arising under
24    this subsection shall be applied first. A credit allowed
25    under this subsection may be sold to a buyer as part of a
26    sale of all or part of the remediation site for which the
		SB3658	- 39 -	LRB104 19263 HLH 32709 b
1    credit was granted. The purchaser of a remediation site
2    and the tax credit shall succeed to the unused credit and
3    remaining carry-forward period of the seller. To perfect
4    the transfer, the assignor shall record the transfer in
5    the chain of title for the site and provide written notice
6    to the Director of the Illinois Department of Revenue of
7    the assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (o) For each of taxable years during the Compassionate Use
16of Medical Cannabis Program, a surcharge is imposed on all
17taxpayers on income arising from the sale or exchange of
18capital assets, depreciable business property, real property
19used in the trade or business, and Section 197 intangibles of
20an organization registrant under the Compassionate Use of
21Medical Cannabis Program Act. The amount of the surcharge is
22equal to the amount of federal income tax liability for the
23taxable year attributable to those sales and exchanges. The
24surcharge imposed does not apply if:
25        (1) the medical cannabis cultivation center
26    registration, medical cannabis dispensary registration, or
		SB3658	- 40 -	LRB104 19263 HLH 32709 b
1    the property of a registration is transferred as a result
2    of any of the following:
3            (A) bankruptcy, a receivership, or a debt
4        adjustment initiated by or against the initial
5        registration or the substantial owners of the initial
6        registration;
7            (B) cancellation, revocation, or termination of
8        any registration by the Illinois Department of Public
9        Health;
10            (C) a determination by the Illinois Department of
11        Public Health that transfer of the registration is in
12        the best interests of Illinois qualifying patients as
13        defined by the Compassionate Use of Medical Cannabis
14        Program Act;
15            (D) the death of an owner of the equity interest in
16        a registrant;
17            (E) the acquisition of a controlling interest in
18        the stock or substantially all of the assets of a
19        publicly traded company;
20            (F) a transfer by a parent company to a wholly
21        owned subsidiary; or
22            (G) the transfer or sale to or by one person to
23        another person where both persons were initial owners
24        of the registration when the registration was issued;
25        or
26        (2) the cannabis cultivation center registration,
		SB3658	- 41 -	LRB104 19263 HLH 32709 b
1    medical cannabis dispensary registration, or the
2    controlling interest in a registrant's property is
3    transferred in a transaction to lineal descendants in
4    which no gain or loss is recognized or as a result of a
5    transaction in accordance with Section 351 of the Internal
6    Revenue Code in which no gain or loss is recognized.
7    (p) Pass-through entity tax.
8        (1) For taxable years ending on or after December 31,
9    2021, a partnership (other than a publicly traded
10    partnership under Section 7704 of the Internal Revenue
11    Code) or Subchapter S corporation may elect to apply the
12    provisions of this subsection. A separate election shall
13    be made for each taxable year. Such election shall be made
14    at such time, and in such form and manner as prescribed by
15    the Department, and, once made, is irrevocable.
16        (2) Entity-level tax. A partnership or Subchapter S
17    corporation electing to apply the provisions of this
18    subsection shall be subject to a tax for the privilege of
19    earning or receiving income in this State in an amount
20    equal to 4.95% of the taxpayer's net income for the
21    taxable year.
22        (3) Net income defined.
23            (A) In general. For purposes of paragraph (2), the
24        term net income has the same meaning as defined in
25        Section 202 of this Act, except that, for tax years
26        ending on or after December 31, 2023, a deduction
		SB3658	- 42 -	LRB104 19263 HLH 32709 b
1        shall be allowed in computing base income for
2        distributions to a retired partner to the extent that
3        the partner's distributions are exempt from tax under
4        Section 203(a)(2)(F) of this Act. In addition, the
5        following modifications shall not apply:
6                (i) the standard exemption allowed under
7            Section 204;
8                (ii) the deduction for net losses allowed
9            under Section 207;
10                (iii) in the case of an S corporation, the
11            modification under Section 203(b)(2)(S); and
12                (iv) in the case of a partnership, the
13            modifications under Section 203(d)(2)(H) and
14            Section 203(d)(2)(I).
15            (B) Special rule for tiered partnerships. If a
16        taxpayer making the election under paragraph (1) is a
17        partner of another taxpayer making the election under
18        paragraph (1), net income shall be computed as
19        provided in subparagraph (A), except that the taxpayer
20        shall subtract its distributive share of the net
21        income of the electing partnership (including its
22        distributive share of the net income of the electing
23        partnership derived as a distributive share from
24        electing partnerships in which it is a partner).
25        (4) Credit for entity level tax. Each partner or
26    shareholder of a taxpayer making the election under this
		SB3658	- 43 -	LRB104 19263 HLH 32709 b
1    Section shall be allowed a credit against the tax imposed
2    under subsections (a) and (b) of Section 201 of this Act
3    for the taxable year of the partnership or Subchapter S
4    corporation for which an election is in effect ending
5    within or with the taxable year of the partner or
6    shareholder in an amount equal to 4.95% times the partner
7    or shareholder's distributive share of the net income of
8    the electing partnership or Subchapter S corporation, but
9    not to exceed the partner's or shareholder's share of the
10    tax imposed under paragraph (1) which is actually paid by
11    the partnership or Subchapter S corporation. If the
12    taxpayer is a partnership or Subchapter S corporation that
13    is itself a partner of a partnership making the election
14    under paragraph (1), the credit under this paragraph shall
15    be allowed to the taxpayer's partners or shareholders (or
16    if the partner is a partnership or Subchapter S
17    corporation then its partners or shareholders) in
18    accordance with the determination of income and
19    distributive share of income under Sections 702 and 704
20    and Subchapter S of the Internal Revenue Code. If the
21    amount of the credit allowed under this paragraph exceeds
22    the partner's or shareholder's liability for tax imposed
23    under subsections (a) and (b) of Section 201 of this Act
24    for the taxable year, such excess shall be treated as an
25    overpayment for purposes of Section 909 of this Act.
26        (5) Nonresidents. A nonresident individual who is a
		SB3658	- 44 -	LRB104 19263 HLH 32709 b
1    partner or shareholder of a partnership or Subchapter S
2    corporation for a taxable year for which an election is in
3    effect under paragraph (1) shall not be required to file
4    an income tax return under this Act for such taxable year
5    if the only source of net income of the individual (or the
6    individual and the individual's spouse in the case of a
7    joint return) is from an entity making the election under
8    paragraph (1) and the credit allowed to the partner or
9    shareholder under paragraph (4) equals or exceeds the
10    individual's liability for the tax imposed under
11    subsections (a) and (b) of Section 201 of this Act for the
12    taxable year.
13        (6) Liability for tax. Except as provided in this
14    paragraph, a partnership or Subchapter S making the
15    election under paragraph (1) is liable for the
16    entity-level tax imposed under paragraph (2). If the
17    electing partnership or corporation fails to pay the full
18    amount of tax deemed assessed under paragraph (2), the
19    partners or shareholders shall be liable to pay the tax
20    assessed (including penalties and interest). Each partner
21    or shareholder shall be liable for the unpaid assessment
22    based on the ratio of the partner's or shareholder's share
23    of the net income of the partnership over the total net
24    income of the partnership. If the partnership or
25    Subchapter S corporation fails to pay the tax assessed
26    (including penalties and interest) and thereafter an
		SB3658	- 45 -	LRB104 19263 HLH 32709 b
1    amount of such tax is paid by the partners or
2    shareholders, such amount shall not be collected from the
3    partnership or corporation.
4        (7) Foreign tax. For purposes of the credit allowed
5    under Section 601(b)(3) of this Act, tax paid by a
6    partnership or Subchapter S corporation to another state
7    which, as determined by the Department, is substantially
8    similar to the tax imposed under this subsection, shall be
9    considered tax paid by the partner or shareholder to the
10    extent that the partner's or shareholder's share of the
11    income of the partnership or Subchapter S corporation
12    allocated and apportioned to such other state bears to the
13    total income of the partnership or Subchapter S
14    corporation allocated or apportioned to such other state.
15        (8) Suspension of withholding. The provisions of
16    Section 709.5 of this Act shall not apply to a partnership
17    or Subchapter S corporation for the taxable year for which
18    an election under paragraph (1) is in effect.
19        (9) Requirement to pay estimated tax. For each taxable
20    year for which an election under paragraph (1) is in
21    effect, a partnership or Subchapter S corporation is
22    required to pay estimated tax for such taxable year under
23    Sections 803 and 804 of this Act if the amount payable as
24    estimated tax can reasonably be expected to exceed $500.
25        (10) The provisions of this subsection shall apply
26    only with respect to taxable years for which the
		SB3658	- 46 -	LRB104 19263 HLH 32709 b
1    limitation on individual deductions applies under Section
2    164(b)(6) of the Internal Revenue Code.
3(Source: P.A. 103-9, eff. 6-7-23; 103-396, eff. 1-1-24;
4103-595, eff. 6-26-24; 103-605, eff. 7-1-24; 104-453, eff.
512-12-25.)
6    (35 ILCS 5/201.3 new)
7    Sec. 201.3. Tax rates. In the case of an individual, 
8trust, or estate, for taxable years beginning on or after 
9January 1, 2027, the amount of the tax imposed by subsection 
10(a) of Section 201 of this Act shall be determined according to 
11the following tax rate structure:
12        (1) for taxpayers who do not file a joint return and 
13    have a net income of $500,000 or less:
14            (A) 4.00% of the portion of the taxpayer's net 
15        income that does not exceed $25,000;
16            (B) 4.125% of the portion of the taxpayer's net 
17        income that exceeds $25,000 but does not exceed 
18        $50,000;
19            (C) 4.25% of the portion of the taxpayer's net 
20        income that exceeds $50,000 but does not exceed 
21        $100,000;
22            (D) 4.75% of the portion of the taxpayer's net 
23        income that exceeds $100,000 but does not exceed 
24        $150,000;
25            (E) 4.95% of the portion of the taxpayer's net 
		SB3658	- 47 -	LRB104 19263 HLH 32709 b
1        income that exceeds 150,000 but does not exceed 
2        $250,000;
3            (F) 5.45% of the portion of the taxpayer's net 
4        income that exceeds 250,000 but does not exceed 
5        $375,000;
6            (G) 5.95% of the portion of the taxpayer's net 
7        income that exceeds $375,000 but does not exceed 
8        $500,000; and
9        (2) for taxpayers who do not file a joint return and 
10    have a net income that exceeds $500,000, 6.95% of the 
11    taxpayer's net income;
12        (3) for taxpayers who file a joint return and have a 
13    net income of $1,000,000 or less:
14            (A) 4.00% of the portion of the taxpayer's net 
15        income that does not exceed $50,000;
16            (B) 4.125% of the portion of the taxpayer's net 
17        income that exceeds $50,000 but does not exceed 
18        $100,000;
19            (C) 4.25% of the portion of the taxpayer's net 
20        income that exceeds $100,000 but does not exceed 
21        $200,000;
22            (D) 4.75% of the portion of the taxpayer's net 
23        income that exceeds$200,000 but does not exceed 
24        $300,000;
25            (E) 4.95% of the portion of the taxpayer's net 
26        income that exceeds $300,000 but does not exceed 
		SB3658	- 48 -	LRB104 19263 HLH 32709 b
1        $500,000; and
2            (F) 5.45% of the portion of the taxpayer's net 
3        income that exceeds $500,000 but does not exceed 
4        $750,000; and
5            (G) 5.95% of the portion of the taxpayer's net 
6        income that exceeds $750,000 but does not exceed 
7        $1,000,000; and
8        (4) for taxpayers who file a joint return and have a 
9    net income of more than $1,000,000, 6.95% of the 
10    taxpayer's net income.