SB 3873

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Full Text of SB3873
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	SB3873 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3873
Introduced 2/6/2026, by Sen. Donald P. DeWitte
SYNOPSIS AS INTRODUCED:
35 ILCS 5/201
Amends the Illinois Income Tax Act. Provides that the research and development credit applies on a permanent basis. Effective immediately.
LRB104 19192 HLH 32637 b
A BILL FOR
		SB3873		LRB104 19192 HLH 32637 b
1    AN ACT concerning revenue.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
6    (35 ILCS 5/201)
7    Sec. 201. Tax imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount
20    equal to 2 1/2% of the taxpayer's net income for the
21    taxable year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending
		SB3873	- 2 -	LRB104 19192 HLH 32637 b
1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate,
11    for taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate,
18    for taxable years beginning on or after January 1, 2011,
19    and ending prior to January 1, 2015, an amount equal to 5%
20    of the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period
		SB3873	- 3 -	LRB104 19192 HLH 32637 b
1    after December 31, 2014, as calculated under Section
2    202.5.
3        (5.2) In the case of an individual, trust, or estate,
4    for taxable years beginning on or after January 1, 2015,
5    and ending prior to July 1, 2017, an amount equal to 3.75%
6    of the taxpayer's net income for the taxable year.
7        (5.3) In the case of an individual, trust, or estate,
8    for taxable years beginning prior to July 1, 2017, and
9    ending after June 30, 2017, an amount equal to the sum of
10    (i) 3.75% of the taxpayer's net income for the period
11    prior to July 1, 2017, as calculated under Section 202.5,
12    and (ii) 4.95% of the taxpayer's net income for the period
13    after June 30, 2017, as calculated under Section 202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after July 1, 2017, an
16    amount equal to 4.95% of the taxpayer's net income for the
17    taxable year.
18        (6) In the case of a corporation, for taxable years
19    ending prior to July 1, 1989, an amount equal to 4% of the
20    taxpayer's net income for the taxable year.
21        (7) In the case of a corporation, for taxable years
22    beginning prior to July 1, 1989 and ending after June 30,
23    1989, an amount equal to the sum of (i) 4% of the
24    taxpayer's net income for the period prior to July 1,
25    1989, as calculated under Section 202.3, and (ii) 4.8% of
26    the taxpayer's net income for the period after June 30,
		SB3873	- 4 -	LRB104 19192 HLH 32637 b
1    1989, as calculated under Section 202.3.
2        (8) In the case of a corporation, for taxable years
3    beginning after June 30, 1989, and ending prior to January
4    1, 2011, an amount equal to 4.8% of the taxpayer's net
5    income for the taxable year.
6        (9) In the case of a corporation, for taxable years
7    beginning prior to January 1, 2011, and ending after
8    December 31, 2010, an amount equal to the sum of (i) 4.8%
9    of the taxpayer's net income for the period prior to
10    January 1, 2011, as calculated under Section 202.5, and
11    (ii) 7% of the taxpayer's net income for the period after
12    December 31, 2010, as calculated under Section 202.5.
13        (10) In the case of a corporation, for taxable years
14    beginning on or after January 1, 2011, and ending prior to
15    January 1, 2015, an amount equal to 7% of the taxpayer's
16    net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2015, and ending after
19    December 31, 2014, an amount equal to the sum of (i) 7% of
20    the taxpayer's net income for the period prior to January
21    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
22    of the taxpayer's net income for the period after December
23    31, 2014, as calculated under Section 202.5.
24        (12) In the case of a corporation, for taxable years
25    beginning on or after January 1, 2015, and ending prior to
26    July 1, 2017, an amount equal to 5.25% of the taxpayer's
		SB3873	- 5 -	LRB104 19192 HLH 32637 b
1    net income for the taxable year.
2        (13) In the case of a corporation, for taxable years
3    beginning prior to July 1, 2017, and ending after June 30,
4    2017, an amount equal to the sum of (i) 5.25% of the
5    taxpayer's net income for the period prior to July 1,
6    2017, as calculated under Section 202.5, and (ii) 7% of
7    the taxpayer's net income for the period after June 30,
8    2017, as calculated under Section 202.5.
9        (14) In the case of a corporation, for taxable years
10    beginning on or after July 1, 2017, an amount equal to 7%
11    of the taxpayer's net income for the taxable year.
12    The rates under this subsection (b) are subject to the
13provisions of Section 201.5.
14    (b-5) Surcharge; sale or exchange of assets, properties,
15and intangibles of organization gaming licensees. For each of
16taxable years 2019 through 2027, 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 (i)
20of an organization licensee under the Illinois Horse Racing
21Act of 1975 and (ii) of an organization gaming licensee under
22the Illinois Gambling Act. The amount of the surcharge is
23equal to the amount of federal income tax liability for the
24taxable year attributable to those sales and exchanges. The
25surcharge imposed shall not apply if:
26        (1) the organization gaming license, organization
		SB3873	- 6 -	LRB104 19192 HLH 32637 b
1    license, or racetrack property 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        licensee or the substantial owners of the initial
6        licensee;
7            (B) cancellation, revocation, or termination of
8        any such license by the Illinois Gaming Board or the
9        Illinois Racing Board;
10            (C) a determination by the Illinois Gaming Board
11        that transfer of the license is in the best interests
12        of Illinois gaming;
13            (D) the death of an owner of the equity interest in
14        a licensee;
15            (E) the acquisition of a controlling interest in
16        the stock or substantially all of the assets of a
17        publicly traded company;
18            (F) a transfer by a parent company to a wholly
19        owned subsidiary; or
20            (G) the transfer or sale to or by one person to
21        another person where both persons were initial owners
22        of the license when the license was issued; or
23        (2) the controlling interest in the organization
24    gaming license, organization license, or racetrack
25    property is transferred in a transaction to lineal
26    descendants in which no gain or loss is recognized or as a
		SB3873	- 7 -	LRB104 19192 HLH 32637 b
1    result of a transaction in accordance with Section 351 of
2    the Internal Revenue Code in which no gain or loss is
3    recognized; or
4        (3) live horse racing was not conducted in 2010 at a
5    racetrack located within 3 miles of the Mississippi River
6    under a license issued pursuant to the Illinois Horse
7    Racing Act of 1975.
8    The transfer of an organization gaming license,
9organization license, or racetrack property by a person other
10than the initial licensee to receive the organization gaming
11license is not subject to a surcharge. The Department shall
12adopt rules necessary to implement and administer this
13subsection.
14    (c) Personal Property Tax Replacement Income Tax.
15Beginning on July 1, 1979 and thereafter, in addition to such
16income tax, there is also hereby imposed the Personal Property
17Tax Replacement Income Tax measured by net income on every
18corporation (including Subchapter S corporations), partnership
19and trust, for each taxable year ending after June 30, 1979.
20Such taxes are imposed on the privilege of earning or
21receiving income in or as a resident of this State. The
22Personal Property Tax Replacement Income Tax shall be in
23addition to the income tax imposed by subsections (a) and (b)
24of this Section and in addition to all other occupation or
25privilege taxes imposed by this State or by any municipal
26corporation or political subdivision thereof.
		SB3873	- 8 -	LRB104 19192 HLH 32637 b
1    (d) Additional Personal Property Tax Replacement Income
2Tax Rates. The personal property tax replacement income tax
3imposed by this subsection and subsection (c) of this Section
4in the case of a corporation, other than a Subchapter S
5corporation and except as adjusted by subsection (d-1), shall
6be an additional amount equal to 2.85% of such taxpayer's net
7income for the taxable year, except that beginning on January
81, 1981, and thereafter, the rate of 2.85% specified in this
9subsection shall be reduced to 2.5%, and in the case of a
10partnership, trust or a Subchapter S corporation shall be an
11additional amount equal to 1.5% of such taxpayer's net income
12for the taxable year.
13    (d-1) Rate reduction for certain foreign insurers. In the
14case of a foreign insurer, as defined by Section 35A-5 of the
15Illinois Insurance Code, whose state or country of domicile
16imposes on insurers domiciled in Illinois a retaliatory tax
17(excluding any insurer whose premiums from reinsurance assumed
18are 50% or more of its total insurance premiums as determined
19under paragraph (2) of subsection (b) of Section 304, except
20that for purposes of this determination premiums from
21reinsurance do not include premiums from inter-affiliate
22reinsurance arrangements), beginning with taxable years ending
23on or after December 31, 1999, the sum of the rates of tax
24imposed by subsections (b) and (d) shall be reduced (but not
25increased) to the rate at which the total amount of tax imposed
26under this Act, net of all credits allowed under this Act,
		SB3873	- 9 -	LRB104 19192 HLH 32637 b
1shall equal (i) the total amount of tax that would be imposed
2on the foreign insurer's net income allocable to Illinois for
3the taxable year by such foreign insurer's state or country of
4domicile if that net income were subject to all income taxes
5and taxes measured by net income imposed by such foreign
6insurer's state or country of domicile, net of all credits
7allowed or (ii) a rate of zero if no such tax is imposed on
8such income by the foreign insurer's state of domicile. For
9the purposes of this subsection (d-1), an inter-affiliate
10includes a mutual insurer under common management.
11        (1) For the purposes of subsection (d-1), in no event
12    shall the sum of the rates of tax imposed by subsections
13    (b) and (d) be reduced below the rate at which the sum of:
14            (A) the total amount of tax imposed on such
15        foreign insurer under this Act for a taxable year, net
16        of all credits allowed under this Act, plus
17            (B) the privilege tax imposed by Section 409 of
18        the Illinois Insurance Code, the fire insurance
19        company tax imposed by Section 12 of the Fire
20        Investigation Act, and the fire department taxes
21        imposed under Section 11-10-1 of the Illinois
22        Municipal Code,
23    equals 1.25% for taxable years ending prior to December
24    31, 2003, or 1.75% for taxable years ending on or after
25    December 31, 2003, of the net taxable premiums written for
26    the taxable year, as described by subsection (1) of
		SB3873	- 10 -	LRB104 19192 HLH 32637 b
1    Section 409 of the Illinois Insurance Code. This paragraph
2    will in no event increase the rates imposed under
3    subsections (b) and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates
6    imposed by subsection (b) and only after the tax imposed
7    by subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (e) Investment credit. A taxpayer shall be allowed a
14credit against the Personal Property Tax Replacement Income
15Tax for investment in qualified property.
16        (1) A taxpayer shall be allowed a credit equal to .5%
17    of the basis of qualified property placed in service
18    during the taxable year, provided such property is placed
19    in service on or after July 1, 1984. There shall be allowed
20    an additional credit equal to .5% of the basis of
21    qualified property placed in service during the taxable
22    year, provided such property is placed in service on or
23    after July 1, 1986, and the taxpayer's base employment
24    within Illinois has increased by 1% or more over the
25    preceding year as determined by the taxpayer's employment
26    records filed with the Illinois Department of Employment
		SB3873	- 11 -	LRB104 19192 HLH 32637 b
1    Security. Taxpayers who are new to Illinois shall be
2    deemed to have met the 1% growth in base employment for the
3    first year in which they file employment records with the
4    Illinois Department of Employment Security. The provisions
5    added to this Section by Public Act 85-1200 (and restored
6    by Public Act 87-895) shall be construed as declaratory of
7    existing law and not as a new enactment. If, in any year,
8    the increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit
10    shall be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time
		SB3873	- 12 -	LRB104 19192 HLH 32637 b
1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i)
7    and (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability
15    or the liability as later amended, such excess may be
16    carried forward and applied to the tax liability of the 5
17    taxable years following the excess credit years. The
18    credit shall be applied to the earliest year for which
19    there is a liability. If there is credit from more than one
20    tax year that is available to offset a liability, earlier
21    credit shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land
		SB3873	- 13 -	LRB104 19192 HLH 32637 b
1        or improvements to real property that are not a
2        structural component of a building such as
3        landscaping, sewer lines, local access roads, fencing,
4        parking lots, and other appurtenances;
5            (B) is depreciable pursuant to Section 167 of the
6        Internal Revenue Code, except that "3-year property"
7        as defined in Section 168(c)(2)(A) of that Code is not
8        eligible for the credit provided by this subsection
9        (e);
10            (C) is acquired by purchase as defined in Section
11        179(d) of the Internal Revenue Code;
12            (D) is used in Illinois by a taxpayer who is
13        primarily engaged in manufacturing, or in mining coal
14        or fluorite, or in retailing, or was placed in service
15        on or after July 1, 2006 in a River Edge Redevelopment
16        Zone established pursuant to the River Edge
17        Redevelopment Zone Act; and
18            (E) has not previously been used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (e) or
21        subsection (f).
22        (3) For purposes of this subsection (e),
23    "manufacturing" means the material staging and production
24    of tangible personal property by procedures commonly
25    regarded as manufacturing, processing, fabrication, or
26    assembling which changes some existing material into new
		SB3873	- 14 -	LRB104 19192 HLH 32637 b
1    shapes, new qualities, or new combinations. For purposes
2    of this subsection (e) the term "mining" shall have the
3    same meaning as the term "mining" in Section 613(c) of the
4    Internal Revenue Code. For purposes of this subsection
5    (e), the term "retailing" means the sale of tangible
6    personal property for use or consumption and not for
7    resale, or services rendered in conjunction with the sale
8    of tangible personal property for use or consumption and
9    not for resale. For purposes of this subsection (e),
10    "tangible personal property" has the same meaning as when
11    that term is used in the Retailers' Occupation Tax Act,
12    and, for taxable years ending after December 31, 2008,
13    does not include the generation, transmission, or
14    distribution of electricity.
15        (4) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (5) If the basis of the property for federal income
19    tax depreciation purposes is increased after it has been
20    placed in service in Illinois by the taxpayer, the amount
21    of such increase shall be deemed property placed in
22    service on the date of such increase in basis.
23        (6) The term "placed in service" shall have the same
24    meaning as under Section 46 of the Internal Revenue Code.
25        (7) If during any taxable year, any property ceases to
26    be qualified property in the hands of the taxpayer within
		SB3873	- 15 -	LRB104 19192 HLH 32637 b
1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal
4    Property Tax Replacement Income Tax for such taxable year
5    shall be increased. Such increase shall be determined by
6    (i) recomputing the investment credit which would have
7    been allowed for the year in which credit for such
8    property was originally allowed by eliminating such
9    property from such computation and, (ii) subtracting such
10    recomputed credit from the amount of credit previously
11    allowed. For the purposes of this paragraph (7), a
12    reduction of the basis of qualified property resulting
13    from a redetermination of the purchase price shall be
14    deemed a disposition of qualified property to the extent
15    of such reduction.
16        (8) Unless the investment credit is extended by law,
17    the basis of qualified property shall not include costs
18    incurred after December 31, 2018, except for costs
19    incurred pursuant to a binding contract entered into on or
20    before December 31, 2018.
21        (9) Each taxable year ending before December 31, 2000,
22    a partnership may elect to pass through to its partners
23    the credits to which the partnership is entitled under
24    this subsection (e) for the taxable year. A partner may
25    use the credit allocated to him or her under this
26    paragraph only against the tax imposed in subsections (c)
		SB3873	- 16 -	LRB104 19192 HLH 32637 b
1    and (d) of this Section. If the partnership makes that
2    election, those credits shall be allocated among the
3    partners in the partnership in accordance with the rules
4    set forth in Section 704(b) of the Internal Revenue Code,
5    and the rules promulgated under that Section, and the
6    allocated amount of the credits shall be allowed to the
7    partners for that taxable year. The partnership shall make
8    this election on its Personal Property Tax Replacement
9    Income Tax return for that taxable year. The election to
10    pass through the credits shall be irrevocable.
11        For taxable years ending on or after December 31,
12    2000, a partner that qualifies its partnership for a
13    subtraction under subparagraph (I) of paragraph (2) of
14    subsection (d) of Section 203 or a shareholder that
15    qualifies a Subchapter S corporation for a subtraction
16    under subparagraph (S) of paragraph (2) of subsection (b)
17    of Section 203 shall be allowed a credit under this
18    subsection (e) equal to its share of the credit earned
19    under this subsection (e) during the taxable year by the
20    partnership or Subchapter S corporation, determined in
21    accordance with the determination of income and
22    distributive share of income under Sections 702 and 704
23    and Subchapter S of the Internal Revenue Code. This
24    paragraph is exempt from the provisions of Section 250.
25    (f) Investment credit; Enterprise Zone; River Edge
26Redevelopment Zone.
		SB3873	- 17 -	LRB104 19192 HLH 32637 b
1        (1) A taxpayer shall be allowed a credit against the
2    tax imposed by subsections (a) and (b) of this Section for
3    investment in qualified property which is placed in
4    service in an Enterprise Zone created pursuant to the
5    Illinois Enterprise Zone Act or, for property placed in
6    service on or after July 1, 2006, a River Edge
7    Redevelopment Zone established pursuant to the River Edge
8    Redevelopment Zone Act. For partners, shareholders of
9    Subchapter S corporations, and owners of limited liability
10    companies, if the liability company is treated as a
11    partnership for purposes of federal and State income
12    taxation, for taxable years ending before December 31,
13    2023, there shall be allowed a credit under this
14    subsection (f) to be determined in accordance with the
15    determination of income and distributive share of income
16    under Sections 702 and 704 and Subchapter S of the
17    Internal Revenue Code. For taxable years ending on or
18    after December 31, 2023, for partners and shareholders of
19    Subchapter S corporations, the provisions of Section 251
20    shall apply with respect to the credit under this
21    subsection. The credit shall be .5% of the basis for such
22    property. The credit shall be available only in the
23    taxable year in which the property is placed in service in
24    the Enterprise Zone or River Edge Redevelopment Zone and
25    shall not be allowed to the extent that it would reduce a
26    taxpayer's liability for the tax imposed by subsections
		SB3873	- 18 -	LRB104 19192 HLH 32637 b
1    (a) and (b) of this Section to below zero. For tax years
2    ending on or after December 31, 1985, the credit shall be
3    allowed for the tax year in which the property is placed in
4    service, or, if the amount of the credit exceeds the tax
5    liability for that year, whether it exceeds the original
6    liability or the liability as later amended, such excess
7    may be carried forward and applied to the tax liability of
8    the 5 taxable years following the excess credit year. 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, the
12    credit accruing first in time shall be applied first.
13        (2) The term qualified property means property which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings;
16            (B) is depreciable pursuant to Section 167 of the
17        Internal Revenue Code, except that "3-year property"
18        as defined in Section 168(c)(2)(A) of that Code is not
19        eligible for the credit provided by this subsection
20        (f);
21            (C) is acquired by purchase as defined in Section
22        179(d) of the Internal Revenue Code;
23            (D) is used in the Enterprise Zone or River Edge
24        Redevelopment Zone by the taxpayer; and
25            (E) has not been previously used in Illinois in
26        such a manner and by such a person as would qualify for
		SB3873	- 19 -	LRB104 19192 HLH 32637 b
1        the credit provided by this subsection (f) or
2        subsection (e).
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 the Enterprise Zone or River Edge
9    Redevelopment Zone by the taxpayer, the amount of such
10    increase shall be deemed property placed in service on the
11    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, any property ceases to
15    be qualified property in the hands of the taxpayer within
16    48 months after being placed in service, or the situs of
17    any qualified property is moved outside the Enterprise
18    Zone or River Edge Redevelopment Zone within 48 months
19    after being placed in service, the tax imposed under
20    subsections (a) and (b) of this Section for such taxable
21    year shall be increased. Such increase shall be determined
22    by (i) recomputing the investment credit which would have
23    been allowed for the year in which credit for such
24    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
		SB3873	- 20 -	LRB104 19192 HLH 32637 b
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) There shall be allowed an additional credit equal
7    to 0.5% of the basis of qualified property placed in
8    service during the taxable year in a River Edge
9    Redevelopment Zone, provided such property is placed in
10    service on or after July 1, 2006, and the taxpayer's base
11    employment within Illinois has increased by 1% or more
12    over the preceding year as determined by the taxpayer's
13    employment records filed with the Illinois Department of
14    Employment Security. Taxpayers who are new to Illinois
15    shall be deemed to have met the 1% growth in base
16    employment for the first year in which they file
17    employment records with the Illinois Department of
18    Employment Security. If, in any year, the increase in base
19    employment within Illinois over the preceding year is less
20    than 1%, the additional credit shall be limited to that
21    percentage times a fraction, the numerator of which is
22    0.5% and the denominator of which is 1%, but shall not
23    exceed 0.5%.
24        (8) For taxable years beginning on or after January 1,
25    2021, there shall be allowed an Enterprise Zone
26    construction jobs credit against the taxes imposed under
		SB3873	- 21 -	LRB104 19192 HLH 32637 b
1    subsections (a) and (b) of this Section as provided in
2    Section 13 of the Illinois Enterprise Zone Act.
3        The credit or credits may not reduce the taxpayer's
4    liability to less than zero. If the amount of the credit or
5    credits exceeds the taxpayer's liability, the excess may
6    be carried forward and applied against the taxpayer's
7    liability in succeeding calendar years in the same manner
8    provided under paragraph (4) of Section 211 of this Act.
9    The credit or credits shall be applied to the earliest
10    year for which there is a tax liability. If there are
11    credits from more than one taxable year that are available
12    to offset a liability, the earlier credit shall be applied
13    first.
14        For partners, shareholders of Subchapter S
15    corporations, and owners of limited liability companies,
16    if the liability company is treated as a partnership for
17    the purposes of federal and State income taxation, for
18    taxable years ending before December 31, 2023, there shall
19    be allowed a credit under this Section to be determined in
20    accordance with the determination of income and
21    distributive share of income under Sections 702 and 704
22    and Subchapter S of the Internal Revenue Code. For taxable
23    years ending on or after December 31, 2023, for partners
24    and shareholders of Subchapter S corporations, the
25    provisions of Section 251 shall apply with respect to the
26    credit under this subsection.
		SB3873	- 22 -	LRB104 19192 HLH 32637 b
1        The total aggregate amount of credits awarded under
2    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
3    shall not exceed $20,000,000 in any State fiscal year.
4        This paragraph (8) is exempt from the provisions of
5    Section 250.
6    (g) (Blank).
7    (h) Investment credit; High Impact Business.
8        (1) Subject to subsections (b) and (b-5) of Section
9    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
10    be allowed a credit against the tax imposed by subsections
11    (a) and (b) of this Section for investment in qualified
12    property which is placed in service by a Department of
13    Commerce and Economic Opportunity designated High Impact
14    Business. The credit shall be .5% of the basis for such
15    property. The credit shall not be available (i) until the
16    minimum investments in qualified property set forth in
17    subdivision (a)(3)(A) of Section 5.5 of the Illinois
18    Enterprise Zone Act have been satisfied or (ii) until the
19    time authorized in subsection (b-5) of the Illinois
20    Enterprise Zone Act for entities designated as High Impact
21    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
22    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
23    Act, and shall not be allowed to the extent that it would
24    reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. The
26    credit applicable to such investments shall be taken in
		SB3873	- 23 -	LRB104 19192 HLH 32637 b
1    the taxable year in which such investments have been
2    completed. The credit for additional investments beyond
3    the minimum investment by a designated high impact
4    business authorized under subdivision (a)(3)(A) of Section
5    5.5 of the Illinois Enterprise Zone Act shall be available
6    only in the taxable year in which the property is placed in
7    service and shall not be allowed to the extent that it
8    would reduce a taxpayer's liability for the tax imposed by
9    subsections (a) and (b) of this Section to below zero. For
10    tax years ending on or after December 31, 1987, the credit
11    shall be allowed for the tax year in which the property is
12    placed in service, or, if the amount of the credit exceeds
13    the tax liability for that year, whether it exceeds the
14    original liability or the liability as later amended, such
15    excess may be carried forward and applied to the tax
16    liability of the 5 taxable years following the excess
17    credit year. The credit shall be applied to the earliest
18    year for which there is a liability. If there is credit
19    from more than one tax year that is available to offset a
20    liability, the credit accruing first in time shall be
21    applied first.
22        Changes made in this subdivision (h)(1) by Public Act
23    88-670 restore changes made by Public Act 85-1182 and
24    reflect existing law.
25        (2) The term qualified property means property which:
26            (A) is tangible, whether new or used, including
		SB3873	- 24 -	LRB104 19192 HLH 32637 b
1        buildings and structural components of buildings;
2            (B) is depreciable pursuant to Section 167 of the
3        Internal Revenue Code, except that "3-year property"
4        as defined in Section 168(c)(2)(A) of that Code is not
5        eligible for the credit provided by this subsection
6        (h);
7            (C) is acquired by purchase as defined in Section
8        179(d) of the Internal Revenue Code; and
9            (D) is not eligible for the Enterprise Zone
10        Investment Credit provided by subsection (f) of this
11        Section.
12        (3) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (4) If the basis of the property for federal income
16    tax depreciation purposes is increased after it has been
17    placed in service in a federally designated Foreign Trade
18    Zone or Sub-Zone located in Illinois by the taxpayer, the
19    amount of such increase shall be deemed property placed in
20    service on the date of such increase in basis.
21        (5) The term "placed in service" shall have the same
22    meaning as under Section 46 of the Internal Revenue Code.
23        (6) If during any taxable year ending on or before
24    December 31, 1996, any property ceases to be qualified
25    property in the hands of the taxpayer within 48 months
26    after being placed in service, or the situs of any
		SB3873	- 25 -	LRB104 19192 HLH 32637 b
1    qualified property is moved outside Illinois within 48
2    months after being placed in service, the tax imposed
3    under subsections (a) and (b) of this Section for such
4    taxable year shall be increased. Such increase shall be
5    determined by (i) recomputing the investment credit which
6    would have been allowed for the year in which credit for
7    such property was originally allowed by eliminating such
8    property from such computation, and (ii) subtracting such
9    recomputed credit from the amount of credit previously
10    allowed. For the purposes of this paragraph (6), a
11    reduction of the basis of qualified property resulting
12    from a redetermination of the purchase price shall be
13    deemed a disposition of qualified property to the extent
14    of such reduction.
15        (7) Beginning with tax years ending after December 31,
16    1996, if a taxpayer qualifies for the credit under this
17    subsection (h) and thereby is granted a tax abatement and
18    the taxpayer relocates its entire facility in violation of
19    the explicit terms and length of the contract under
20    Section 18-183 of the Property Tax Code, the tax imposed
21    under subsections (a) and (b) of this Section shall be
22    increased for the taxable year in which the taxpayer
23    relocated its facility by an amount equal to the amount of
24    credit received by the taxpayer under this subsection (h).
25    (h-5) High Impact Business construction jobs credit. For
26taxable years beginning on or after January 1, 2021, there
		SB3873	- 26 -	LRB104 19192 HLH 32637 b
1shall also be allowed a High Impact Business construction jobs
2credit against the tax imposed under subsections (a) and (b)
3of this Section as provided in subsections (i) and (j) of
4Section 5.5 of the Illinois Enterprise Zone Act.
5    The credit or credits may not reduce the taxpayer's
6liability to less than zero. If the amount of the credit or
7credits exceeds the taxpayer's liability, the excess may be
8carried forward and applied against the taxpayer's liability
9in succeeding calendar years in the manner provided under
10paragraph (4) of Section 211 of this Act. The credit or credits
11shall be applied to the earliest year for which there is a tax
12liability. If there are credits from more than one taxable
13year that are available to offset a liability, the earlier
14credit shall be applied first.
15    For partners, shareholders of Subchapter S corporations,
16and owners of limited liability companies, for taxable years
17ending before December 31, 2023, if the liability company is
18treated as a partnership for the purposes of federal and State
19income taxation, there shall be allowed a credit under this
20Section to be determined in accordance with the determination
21of income and distributive share of income under Sections 702
22and 704 and Subchapter S of the Internal Revenue Code. For
23taxable years ending on or after December 31, 2023, for
24partners and shareholders of Subchapter S corporations, the
25provisions of Section 251 shall apply with respect to the
26credit under this subsection.
		SB3873	- 27 -	LRB104 19192 HLH 32637 b
1    The total aggregate amount of credits awarded under the
2Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
3exceed $20,000,000 in any State fiscal year.
4    This subsection (h-5) is exempt from the provisions of
5Section 250.
6    (i) Credit for Personal Property Tax Replacement Income
7Tax. For tax years ending prior to December 31, 2003, a credit
8shall be allowed against the tax imposed by subsections (a)
9and (b) of this Section for the tax imposed by subsections (c)
10and (d) of this Section. This credit shall be computed by
11multiplying the tax imposed by subsections (c) and (d) of this
12Section by a fraction, the numerator of which is base income
13allocable to Illinois and the denominator of which is Illinois
14base income, and further multiplying the product by the tax
15rate imposed by subsections (a) and (b) of this Section.
16    Any credit earned on or after December 31, 1986 under this
17subsection which is unused in the year the credit is computed
18because it exceeds the tax liability imposed by subsections
19(a) and (b) for that year (whether it exceeds the original
20liability or the liability as later amended) may be carried
21forward and applied to the tax liability imposed by
22subsections (a) and (b) of the 5 taxable years following the
23excess credit year, provided that no credit may be carried
24forward to any year ending on or after December 31, 2003. This
25credit shall be applied first to the earliest year for which
26there is a liability. If there is a credit under this
		SB3873	- 28 -	LRB104 19192 HLH 32637 b
1subsection from more than one tax year that is available to
2offset a liability the earliest credit arising under this
3subsection shall be applied first.
4    If, during any taxable year ending on or after December
531, 1986, the tax imposed by subsections (c) and (d) of this
6Section for which a taxpayer has claimed a credit under this
7subsection (i) is reduced, the amount of credit for such tax
8shall also be reduced. Such reduction shall be determined by
9recomputing the credit to take into account the reduced tax
10imposed by subsections (c) and (d). If any portion of the
11reduced amount of credit has been carried to a different
12taxable year, an amended return shall be filed for such
13taxable year to reduce the amount of credit claimed.
14    (j) Training expense credit. Beginning with tax years
15ending on or after December 31, 1986 and prior to December 31,
162003, a taxpayer shall be allowed a credit against the tax
17imposed by subsections (a) and (b) under this Section for all
18amounts paid or accrued, on behalf of all persons employed by
19the taxpayer in Illinois or Illinois residents employed
20outside of Illinois by a taxpayer, for educational or
21vocational training in semi-technical or technical fields or
22semi-skilled or skilled fields, which were deducted from gross
23income in the computation of taxable income. The credit
24against the tax imposed by subsections (a) and (b) shall be
251.6% of such training expenses. For partners, shareholders of
26subchapter S corporations, and owners of limited liability
		SB3873	- 29 -	LRB104 19192 HLH 32637 b
1companies, if the liability company is treated as a
2partnership for purposes of federal and State income taxation,
3for taxable years ending before December 31, 2023, there shall
4be allowed a credit under this subsection (j) to be determined
5in accordance with the determination of income and
6distributive share of income under Sections 702 and 704 and
7subchapter S of the Internal Revenue Code. For taxable years
8ending on or after December 31, 2023, for partners and
9shareholders of Subchapter S corporations, the provisions of
10Section 251 shall apply with respect to the credit under this
11subsection.
12    Any credit allowed under this subsection which is unused
13in the year the credit is earned may be carried forward to each
14of the 5 taxable years following the year for which the credit
15is first computed until it is used. This credit shall be
16applied first to the earliest year for which there is a
17liability. If there is a credit under this subsection from
18more than one tax year that is available to offset a liability,
19the earliest credit arising under this subsection shall be
20applied first. No carryforward credit may be claimed in any
21tax year ending on or after December 31, 2003.
22    (k) Research and development credit. For tax years ending
23after July 1, 1990 and prior to December 31, 2003, and
24beginning again for tax years ending on or after December 31,
252004, [and ending prior to January 1, 2032,] a taxpayer shall be
26allowed a credit against the tax imposed by subsections (a)
		SB3873	- 30 -	LRB104 19192 HLH 32637 b
1and (b) of this Section for increasing research activities in
2this State. The credit allowed against the tax imposed by
3subsections (a) and (b) shall be equal to 6 1/2% of the
4qualifying expenditures for increasing research activities in
5this State. For partners, shareholders of subchapter S
6corporations, and owners of limited liability companies, if
7the liability company is treated as a partnership for purposes
8of federal and State income taxation, for taxable years ending
9before December 31, 2023, there shall be allowed a credit
10under this subsection to be determined in accordance with the
11determination of income and distributive share of income under
12Sections 702 and 704 and subchapter S of the Internal Revenue
13Code. For taxable years ending on or after December 31, 2023,
14for partners and shareholders of Subchapter S corporations,
15the provisions of Section 251 shall apply with respect to the
16credit under this subsection.
17    This subsection (k) is exempt from the provisions of 
18Section 250.
19    For purposes of this subsection, "qualifying expenditures"
20means the qualifying expenditures as defined for the federal
21credit for increasing research activities which would be
22allowable under Section 41 of the Internal Revenue Code and
23which are conducted in this State, "qualifying expenditures
24for increasing research activities in this State" means the
25excess of qualifying expenditures for the taxable year in
26which incurred over qualifying expenditures for the base
		SB3873	- 31 -	LRB104 19192 HLH 32637 b
1period, "qualifying expenditures for the base period" means
2the average of the qualifying expenditures for each year in
3the base period, and "base period" means the 3 taxable years
4immediately preceding the taxable year for which the
5determination is being made.
6    Any credit in excess of the tax liability for the taxable
7year may be carried forward. A taxpayer may elect to have the
8unused credit shown on its final completed return carried over
9as a credit against the tax liability for the following 5
10taxable years or until it has been fully used, whichever
11occurs first; provided that no credit earned in a tax year
12ending prior to December 31, 2003 may be carried forward to any
13year ending on or after December 31, 2003.
14    If an unused credit is carried forward to a given year from
152 or more earlier years, that credit arising in the earliest
16year will be applied first against the tax liability for the
17given year. If a tax liability for the given year still
18remains, the credit from the next earliest year will then be
19applied, and so on, until all credits have been used or no tax
20liability for the given year remains. Any remaining unused
21credit or credits then will be carried forward to the next
22following year in which a tax liability is incurred, except
23that no credit can be carried forward to a year which is more
24than 5 years after the year in which the expense for which the
25credit is given was incurred.
26    No inference shall be drawn from Public Act 91-644 in
		SB3873	- 32 -	LRB104 19192 HLH 32637 b
1construing this Section for taxable years beginning before
2January 1, 1999.
3    It is the intent of the General Assembly that the research
4and development credit under this subsection (k) shall apply
5continuously for all tax years ending on or after December 31,
62004 and ending prior to January 1, 2032, including, but not
7limited to, the period beginning on January 1, 2016 and ending
8on July 6, 2017 (the effective date of Public Act 100-22). All
9actions taken in reliance on the continuation of the credit
10under this subsection (k) by any taxpayer are hereby
11validated.
12    (l) Environmental Remediation Tax Credit.
13        (i) For tax years ending after December 31, 1997 and
14    on or before December 31, 2001, a taxpayer shall be
15    allowed a credit against the tax imposed by subsections
16    (a) and (b) of this Section for certain amounts paid for
17    unreimbursed eligible remediation costs, as specified in
18    this subsection. For purposes of this Section,
19    "unreimbursed eligible remediation costs" means costs
20    approved by the Illinois Environmental Protection Agency
21    ("Agency") under Section 58.14 of the Environmental
22    Protection Act that were paid in performing environmental
23    remediation at a site for which a No Further Remediation
24    Letter was issued by the Agency and recorded under Section
25    58.10 of the Environmental Protection Act. The credit must
26    be claimed for the taxable year in which Agency approval
		SB3873	- 33 -	LRB104 19192 HLH 32637 b
1    of the eligible remediation costs is granted. The credit
2    is not available to any taxpayer if the taxpayer or any
3    related party caused or contributed to, in any material
4    respect, a release of regulated substances on, in, or
5    under the site that was identified and addressed by the
6    remedial action pursuant to the Site Remediation Program
7    of the Environmental Protection Act. After the Pollution
8    Control Board rules are adopted pursuant to the Illinois
9    Administrative Procedure Act for the administration and
10    enforcement of Section 58.9 of the Environmental
11    Protection Act, determinations as to credit availability
12    for purposes of this Section shall be made consistent with
13    those rules. For purposes of this Section, "taxpayer"
14    includes a person whose tax attributes the taxpayer has
15    succeeded to under Section 381 of the Internal Revenue
16    Code and "related party" includes the persons disallowed a
17    deduction for losses by paragraphs (b), (c), and (f)(1) of
18    Section 267 of the Internal Revenue Code by virtue of
19    being a related taxpayer, as well as any of its partners.
20    The credit allowed against the tax imposed by subsections
21    (a) and (b) shall be equal to 25% of the unreimbursed
22    eligible remediation costs in excess of $100,000 per site,
23    except that the $100,000 threshold shall not apply to any
24    site contained in an enterprise zone as determined by the
25    Department of Commerce and Community Affairs (now
26    Department of Commerce and Economic Opportunity). The
		SB3873	- 34 -	LRB104 19192 HLH 32637 b
1    total credit allowed shall not exceed $40,000 per year
2    with a maximum total of $150,000 per site. For partners
3    and shareholders of subchapter S corporations, there shall
4    be allowed a credit under this subsection to be determined
5    in accordance with the determination of income and
6    distributive share of income under Sections 702 and 704
7    and subchapter S of the Internal Revenue Code.
8        (ii) A credit allowed under this subsection that is
9    unused in the year the credit is earned may be carried
10    forward to each of the 5 taxable years following the year
11    for which the credit is first earned until it is used. The
12    term "unused credit" does not include any amounts of
13    unreimbursed eligible remediation costs in excess of the
14    maximum credit per site authorized under paragraph (i).
15    This credit shall be applied first to the earliest year
16    for which there is a liability. If there is a credit under
17    this subsection from more than one tax year that is
18    available to offset a liability, the earliest credit
19    arising under this subsection shall be applied first. A
20    credit allowed under this subsection may be sold to a
21    buyer as part of a sale of all or part of the remediation
22    site for which the credit was granted. The purchaser of a
23    remediation site and the tax credit shall succeed to the
24    unused credit and remaining carry-forward period of the
25    seller. To perfect the transfer, the assignor shall record
26    the transfer in the chain of title for the site and provide
		SB3873	- 35 -	LRB104 19192 HLH 32637 b
1    written notice to the Director of the Illinois Department
2    of Revenue of the assignor's intent to sell the
3    remediation site and the amount of the tax credit to be
4    transferred as a portion of the sale. In no event may a
5    credit be transferred to any taxpayer if the taxpayer or a
6    related party would not be eligible under the provisions
7    of subsection (i).
8        (iii) For purposes of this Section, the term "site"
9    shall have the same meaning as under Section 58.2 of the
10    Environmental Protection Act.
11    (m) Education expense credit. Beginning with tax years
12ending after December 31, 1999, a taxpayer who is the
13custodian of one or more qualifying pupils shall be allowed a
14credit against the tax imposed by subsections (a) and (b) of
15this Section for qualified education expenses incurred on
16behalf of the qualifying pupils. The credit shall be equal to
1725% of qualified education expenses, but in no event may the
18total credit under this subsection claimed by a family that is
19the custodian of qualifying pupils exceed (i) $500 for tax
20years ending prior to December 31, 2017, and (ii) $750 for tax
21years ending on or after December 31, 2017. In no event shall a
22credit under this subsection reduce the taxpayer's liability
23under this Act to less than zero. Notwithstanding any other
24provision of law, for taxable years beginning on or after
25January 1, 2017, no taxpayer may claim a credit under this
26subsection (m) if the taxpayer's adjusted gross income for the
		SB3873	- 36 -	LRB104 19192 HLH 32637 b
1taxable year exceeds (i) $500,000, in the case of spouses
2filing a joint federal tax return or (ii) $250,000, in the case
3of all other taxpayers. This subsection is exempt from the
4provisions of Section 250 of this Act.
5    For purposes of this subsection:
6    "Qualifying pupils" means individuals who (i) are
7residents of the State of Illinois, (ii) are under the age of
821 at the close of the school year for which a credit is
9sought, and (iii) during the school year for which a credit is
10sought were full-time pupils enrolled in a kindergarten
11through twelfth grade education program at any school, as
12defined in this subsection.
13    "Qualified education expense" means the amount incurred on
14behalf of a qualifying pupil in excess of $250 for tuition,
15book fees, and lab fees at the school in which the pupil is
16enrolled during the regular school year.
17    "School" means any public or nonpublic elementary or
18secondary school in Illinois that is in compliance with Title
19VI of the Civil Rights Act of 1964 and attendance at which
20satisfies the requirements of Section 26-1 of the School Code,
21except that nothing shall be construed to require a child to
22attend any particular public or nonpublic school to qualify
23for the credit under this Section.
24    "Custodian" means, with respect to qualifying pupils, an
25Illinois resident who is a parent, the parents, a legal
26guardian, or the legal guardians of the qualifying pupils.
		SB3873	- 37 -	LRB104 19192 HLH 32637 b
1    (n) River Edge Redevelopment Zone site remediation tax
2credit.
3        (i) For tax years ending on or after December 31,
4    2006, a taxpayer shall be allowed a credit against the tax
5    imposed by subsections (a) and (b) of this Section for
6    certain amounts paid for unreimbursed eligible remediation
7    costs, as specified in this subsection. For purposes of
8    this Section, "unreimbursed eligible remediation costs"
9    means costs approved by the Illinois Environmental
10    Protection Agency ("Agency") under Section 58.14a of the
11    Environmental Protection Act that were paid in performing
12    environmental remediation at a site within a River Edge
13    Redevelopment Zone for which a No Further Remediation
14    Letter was issued by the Agency and recorded under Section
15    58.10 of the Environmental Protection Act. The credit must
16    be claimed for the taxable year in which Agency approval
17    of the eligible remediation costs is granted. The credit
18    is not available to any taxpayer if the taxpayer or any
19    related party caused or contributed to, in any material
20    respect, a release of regulated substances on, in, or
21    under the site that was identified and addressed by the
22    remedial action pursuant to the Site Remediation Program
23    of the Environmental Protection Act. Determinations as to
24    credit availability for purposes of this Section shall be
25    made consistent with rules adopted by the Pollution
26    Control Board pursuant to the Illinois Administrative
		SB3873	- 38 -	LRB104 19192 HLH 32637 b
1    Procedure Act for the administration and enforcement of
2    Section 58.9 of the Environmental Protection Act. For
3    purposes of this Section, "taxpayer" includes a person
4    whose tax attributes the taxpayer has succeeded to under
5    Section 381 of the Internal Revenue Code and "related
6    party" includes the persons disallowed a deduction for
7    losses by paragraphs (b), (c), and (f)(1) of Section 267
8    of the Internal Revenue Code by virtue of being a related
9    taxpayer, as well as any of its partners. The credit
10    allowed against the tax imposed by subsections (a) and (b)
11    shall be equal to 25% of the unreimbursed eligible
12    remediation costs in excess of $100,000 per site.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. This
17    credit shall be applied first to the earliest year for
18    which there is a liability. If there is a credit under this
19    subsection from more than one tax year that is available
20    to offset a liability, the earliest credit arising under
21    this subsection shall be applied first. A credit allowed
22    under this subsection may be sold to a buyer as part of a
23    sale of all or part of the remediation site for which the
24    credit was granted. The purchaser of a remediation site
25    and the tax credit shall succeed to the unused credit and
26    remaining carry-forward period of the seller. To perfect
		SB3873	- 39 -	LRB104 19192 HLH 32637 b
1    the transfer, the assignor shall record the transfer in
2    the chain of title for the site and provide written notice
3    to the Director of the Illinois Department of Revenue of
4    the assignor's intent to sell the remediation site and the
5    amount of the tax credit to be transferred as a portion of
6    the sale. In no event may a credit be transferred to any
7    taxpayer if the taxpayer or a related party would not be
8    eligible under the provisions of subsection (i).
9        (iii) For purposes of this Section, the term "site"
10    shall have the same meaning as under Section 58.2 of the
11    Environmental Protection Act.
12    (o) For each of taxable years during the Compassionate Use
13of Medical Cannabis Program, a surcharge is imposed on all
14taxpayers on income arising from the sale or exchange of
15capital assets, depreciable business property, real property
16used in the trade or business, and Section 197 intangibles of
17an organization registrant under the Compassionate Use of
18Medical Cannabis Program Act. The amount of the surcharge is
19equal to the amount of federal income tax liability for the
20taxable year attributable to those sales and exchanges. The
21surcharge imposed does not apply if:
22        (1) the medical cannabis cultivation center
23    registration, medical cannabis dispensary registration, or
24    the property of a registration is transferred as a result
25    of any of the following:
26            (A) bankruptcy, a receivership, or a debt
		SB3873	- 40 -	LRB104 19192 HLH 32637 b
1        adjustment initiated by or against the initial
2        registration or the substantial owners of the initial
3        registration;
4            (B) cancellation, revocation, or termination of
5        any registration by the Illinois Department of Public
6        Health;
7            (C) a determination by the Illinois Department of
8        Public Health that transfer of the registration is in
9        the best interests of Illinois qualifying patients as
10        defined by the Compassionate Use of Medical Cannabis
11        Program Act;
12            (D) the death of an owner of the equity interest in
13        a registrant;
14            (E) the acquisition of a controlling interest in
15        the stock or substantially all of the assets of a
16        publicly traded company;
17            (F) a transfer by a parent company to a wholly
18        owned subsidiary; or
19            (G) the transfer or sale to or by one person to
20        another person where both persons were initial owners
21        of the registration when the registration was issued;
22        or
23        (2) the cannabis cultivation center registration,
24    medical cannabis dispensary registration, or the
25    controlling interest in a registrant's property is
26    transferred in a transaction to lineal descendants in
		SB3873	- 41 -	LRB104 19192 HLH 32637 b
1    which no gain or loss is recognized or as a result of a
2    transaction in accordance with Section 351 of the Internal
3    Revenue Code in which no gain or loss is recognized.
4    (p) Pass-through entity tax.
5        (1) For taxable years ending on or after December 31,
6    2021, a partnership (other than a publicly traded
7    partnership under Section 7704 of the Internal Revenue
8    Code) or Subchapter S corporation may elect to apply the
9    provisions of this subsection. A separate election shall
10    be made for each taxable year. Such election shall be made
11    at such time, and in such form and manner as prescribed by
12    the Department, and, once made, is irrevocable.
13        (2) Entity-level tax. A partnership or Subchapter S
14    corporation electing to apply the provisions of this
15    subsection shall be subject to a tax for the privilege of
16    earning or receiving income in this State in an amount
17    equal to 4.95% of the taxpayer's net income for the
18    taxable year.
19        (3) Net income defined.
20            (A) In general. For purposes of paragraph (2), the
21        term net income has the same meaning as defined in
22        Section 202 of this Act, except that, for tax years
23        ending on or after December 31, 2023, a deduction
24        shall be allowed in computing base income for
25        distributions to a retired partner to the extent that
26        the partner's distributions are exempt from tax under
		SB3873	- 42 -	LRB104 19192 HLH 32637 b
1        Section 203(a)(2)(F) of this Act. In addition, the
2        following modifications shall not apply:
3                (i) the standard exemption allowed under
4            Section 204;
5                (ii) the deduction for net losses allowed
6            under Section 207;
7                (iii) in the case of an S corporation, the
8            modification under Section 203(b)(2)(S); and
9                (iv) in the case of a partnership, the
10            modifications under Section 203(d)(2)(H) and
11            Section 203(d)(2)(I).
12            (B) Special rule for tiered partnerships. If a
13        taxpayer making the election under paragraph (1) is a
14        partner of another taxpayer making the election under
15        paragraph (1), net income shall be computed as
16        provided in subparagraph (A), except that the taxpayer
17        shall subtract its distributive share of the net
18        income of the electing partnership (including its
19        distributive share of the net income of the electing
20        partnership derived as a distributive share from
21        electing partnerships in which it is a partner).
22        (4) Credit for entity level tax. Each partner or
23    shareholder of a taxpayer making the election under this
24    Section shall be allowed a credit against the tax imposed
25    under subsections (a) and (b) of Section 201 of this Act
26    for the taxable year of the partnership or Subchapter S
		SB3873	- 43 -	LRB104 19192 HLH 32637 b
1    corporation for which an election is in effect ending
2    within or with the taxable year of the partner or
3    shareholder in an amount equal to 4.95% times the partner
4    or shareholder's distributive share of the net income of
5    the electing partnership or Subchapter S corporation, but
6    not to exceed the partner's or shareholder's share of the
7    tax imposed under paragraph (1) which is actually paid by
8    the partnership or Subchapter S corporation. If the
9    taxpayer is a partnership or Subchapter S corporation that
10    is itself a partner of a partnership making the election
11    under paragraph (1), the credit under this paragraph shall
12    be allowed to the taxpayer's partners or shareholders (or
13    if the partner is a partnership or Subchapter S
14    corporation then its partners or shareholders) in
15    accordance with the determination of income and
16    distributive share of income under Sections 702 and 704
17    and Subchapter S of the Internal Revenue Code. If the
18    amount of the credit allowed under this paragraph exceeds
19    the partner's or shareholder's liability for tax imposed
20    under subsections (a) and (b) of Section 201 of this Act
21    for the taxable year, such excess shall be treated as an
22    overpayment for purposes of Section 909 of this Act.
23        (5) Nonresidents. A nonresident individual who is a
24    partner or shareholder of a partnership or Subchapter S
25    corporation for a taxable year for which an election is in
26    effect under paragraph (1) shall not be required to file
		SB3873	- 44 -	LRB104 19192 HLH 32637 b
1    an income tax return under this Act for such taxable year
2    if the only source of net income of the individual (or the
3    individual and the individual's spouse in the case of a
4    joint return) is from an entity making the election under
5    paragraph (1) and the credit allowed to the partner or
6    shareholder under paragraph (4) equals or exceeds the
7    individual's liability for the tax imposed under
8    subsections (a) and (b) of Section 201 of this Act for the
9    taxable year.
10        (6) Liability for tax. Except as provided in this
11    paragraph, a partnership or Subchapter S making the
12    election under paragraph (1) is liable for the
13    entity-level tax imposed under paragraph (2). If the
14    electing partnership or corporation fails to pay the full
15    amount of tax deemed assessed under paragraph (2), the
16    partners or shareholders shall be liable to pay the tax
17    assessed (including penalties and interest). Each partner
18    or shareholder shall be liable for the unpaid assessment
19    based on the ratio of the partner's or shareholder's share
20    of the net income of the partnership over the total net
21    income of the partnership. If the partnership or
22    Subchapter S corporation fails to pay the tax assessed
23    (including penalties and interest) and thereafter an
24    amount of such tax is paid by the partners or
25    shareholders, such amount shall not be collected from the
26    partnership or corporation.
		SB3873	- 45 -	LRB104 19192 HLH 32637 b
1        (7) Foreign tax. For purposes of the credit allowed
2    under Section 601(b)(3) of this Act, tax paid by a
3    partnership or Subchapter S corporation to another state
4    which, as determined by the Department, is substantially
5    similar to the tax imposed under this subsection, shall be
6    considered tax paid by the partner or shareholder to the
7    extent that the partner's or shareholder's share of the
8    income of the partnership or Subchapter S corporation
9    allocated and apportioned to such other state bears to the
10    total income of the partnership or Subchapter S
11    corporation allocated or apportioned to such other state.
12        (8) Suspension of withholding. The provisions of
13    Section 709.5 of this Act shall not apply to a partnership
14    or Subchapter S corporation for the taxable year for which
15    an election under paragraph (1) is in effect.
16        (9) Requirement to pay estimated tax. For each taxable
17    year for which an election under paragraph (1) is in
18    effect, a partnership or Subchapter S corporation is
19    required to pay estimated tax for such taxable year under
20    Sections 803 and 804 of this Act if the amount payable as
21    estimated tax can reasonably be expected to exceed $500.
22        (10) The provisions of this subsection shall apply
23    only with respect to taxable years for which the
24    limitation on individual deductions applies under Section
25    164(b)(6) of the Internal Revenue Code.
26(Source: P.A. 103-9, eff. 6-7-23; 103-396, eff. 1-1-24;
		SB3873	- 46 -	LRB104 19192 HLH 32637 b
1103-595, eff. 6-26-24; 103-605, eff. 7-1-24; 104-453, eff.
212-12-25.)
3    Section 99. Effective date. This Act takes effect upon
4becoming law.