100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB0460

 

Introduced , by Rep. David McSweeney

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201

    Amends the Illinois Income Tax Act. Reduces the income tax rate for corporations to 2.625% for taxable years beginning on or after January 1, 2017 (currently, the rate is 5.25% for taxable years beginning prior to January 1, 2025 and 4.8% for taxable years beginning on or after January 1, 2025). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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)  (from Ch. 120, par. 2-201)
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 equal
20    to 2 1/2% of the taxpayer's net income for the taxable
21    year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending

 

 

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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, for
11    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, for
18    taxable years beginning on or after January 1, 2011, and
19    ending prior to January 1, 2015, an amount equal to 5% of
20    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

 

 

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1    after December 31, 2014, as calculated under Section 202.5.
2        (5.2) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2015,
4    and ending prior to January 1, 2025, an amount equal to
5    3.75% of the taxpayer's net income for the taxable year.
6        (5.3) In the case of an individual, trust, or estate,
7    for taxable years beginning prior to January 1, 2025, and
8    ending after December 31, 2024, an amount equal to the sum
9    of (i) 3.75% of the taxpayer's net income for the period
10    prior to January 1, 2025, as calculated under Section
11    202.5, and (ii) 3.25% of the taxpayer's net income for the
12    period after December 31, 2024, as calculated under Section
13    202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after January 1, 2025, an
16    amount equal to 3.25% 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, 1989,
25    as calculated under Section 202.3, and (ii) 4.8% of the
26    taxpayer's net income for the period after June 30, 1989,

 

 

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1    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    January 1, 2017 January 1, 2025, an amount equal to 5.25%

 

 

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1    of the taxpayer's net income for the taxable year.
2        (13) In the case of a corporation, for taxable years
3    beginning prior to January 1, 2017 January 1, 2025, and
4    ending after December 31, 2016 December 31, 2024, an amount
5    equal to the sum of (i) 5.25% of the taxpayer's net income
6    for the period prior to January 1, 2017 January 1, 2025, as
7    calculated under Section 202.5, and (ii) 2.625% 4.8% of the
8    taxpayer's net income for the period after December 31,
9    2016 December 31, 2024, as calculated under Section 202.5.
10        (14) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2017 January 1, 2025, an
12    amount equal to 2.625% 4.8% of the taxpayer's net income
13    for the taxable year.
14    The rates under this subsection (b) are subject to the
15provisions of Section 201.5.
16    (c) Personal Property Tax Replacement Income Tax.
17Beginning on July 1, 1979 and thereafter, in addition to such
18income tax, there is also hereby imposed the Personal Property
19Tax Replacement Income Tax measured by net income on every
20corporation (including Subchapter S corporations), partnership
21and trust, for each taxable year ending after June 30, 1979.
22Such taxes are imposed on the privilege of earning or receiving
23income in or as a resident of this State. The Personal Property
24Tax Replacement Income Tax shall be in addition to the income
25tax imposed by subsections (a) and (b) of this Section and in
26addition to all other occupation or privilege taxes imposed by

 

 

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1this State or by any municipal corporation or political
2subdivision thereof.
3    (d) Additional Personal Property Tax Replacement Income
4Tax Rates. The personal property tax replacement income tax
5imposed by this subsection and subsection (c) of this Section
6in the case of a corporation, other than a Subchapter S
7corporation and except as adjusted by subsection (d-1), shall
8be an additional amount equal to 2.85% of such taxpayer's net
9income for the taxable year, except that beginning on January
101, 1981, and thereafter, the rate of 2.85% specified in this
11subsection shall be reduced to 2.5%, and in the case of a
12partnership, trust or a Subchapter S corporation shall be an
13additional amount equal to 1.5% of such taxpayer's net income
14for the taxable year.
15    (d-1) Rate reduction for certain foreign insurers. In the
16case of a foreign insurer, as defined by Section 35A-5 of the
17Illinois Insurance Code, whose state or country of domicile
18imposes on insurers domiciled in Illinois a retaliatory tax
19(excluding any insurer whose premiums from reinsurance assumed
20are 50% or more of its total insurance premiums as determined
21under paragraph (2) of subsection (b) of Section 304, except
22that for purposes of this determination premiums from
23reinsurance do not include premiums from inter-affiliate
24reinsurance arrangements), beginning with taxable years ending
25on or after December 31, 1999, the sum of the rates of tax
26imposed by subsections (b) and (d) shall be reduced (but not

 

 

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1increased) to the rate at which the total amount of tax imposed
2under this Act, net of all credits allowed under this Act,
3shall equal (i) the total amount of tax that would be imposed
4on the foreign insurer's net income allocable to Illinois for
5the taxable year by such foreign insurer's state or country of
6domicile if that net income were subject to all income taxes
7and taxes measured by net income imposed by such foreign
8insurer's state or country of domicile, net of all credits
9allowed or (ii) a rate of zero if no such tax is imposed on such
10income by the foreign insurer's state of domicile. For the
11purposes of this subsection (d-1), an inter-affiliate includes
12a mutual insurer under common management.
13        (1) For the purposes of subsection (d-1), in no event
14    shall the sum of the rates of tax imposed by subsections
15    (b) and (d) be reduced below the rate at which the sum of:
16            (A) the total amount of tax imposed on such foreign
17        insurer under this Act for a taxable year, net of all
18        credits allowed under this Act, plus
19            (B) the privilege tax imposed by Section 409 of the
20        Illinois Insurance Code, the fire insurance company
21        tax imposed by Section 12 of the Fire Investigation
22        Act, and the fire department taxes imposed under
23        Section 11-10-1 of the Illinois Municipal Code,
24    equals 1.25% for taxable years ending prior to December 31,
25    2003, or 1.75% for taxable years ending on or after
26    December 31, 2003, of the net taxable premiums written for

 

 

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1    the taxable year, as described by subsection (1) of Section
2    409 of the Illinois Insurance Code. This paragraph will in
3    no event increase the rates imposed under subsections (b)
4    and (d).
5        (2) Any reduction in the rates of tax imposed by this
6    subsection shall be applied first against the rates imposed
7    by subsection (b) and only after the tax imposed by
8    subsection (a) net of all credits allowed under this
9    Section other than the credit allowed under subsection (i)
10    has been reduced to zero, against the rates imposed by
11    subsection (d).
12    This subsection (d-1) is exempt from the provisions of
13Section 250.
14    (e) Investment credit. A taxpayer shall be allowed a credit
15against the Personal Property Tax Replacement Income Tax for
16investment in qualified property.
17        (1) A taxpayer shall be allowed a credit equal to .5%
18    of the basis of qualified property placed in service during
19    the taxable year, provided such property is placed in
20    service on or after July 1, 1984. There shall be allowed an
21    additional credit equal to .5% of the basis of qualified
22    property placed in service during the taxable year,
23    provided such property is placed in service on or after
24    July 1, 1986, and the taxpayer's base employment within
25    Illinois has increased by 1% or more over the preceding
26    year as determined by the taxpayer's employment records

 

 

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1    filed with the Illinois Department of Employment Security.
2    Taxpayers who are new to Illinois shall be deemed to have
3    met the 1% growth in base employment for the first year in
4    which they file employment records with the Illinois
5    Department of Employment Security. The provisions added to
6    this Section by Public Act 85-1200 (and restored by Public
7    Act 87-895) shall be construed as declaratory of existing
8    law and not as a new enactment. If, in any year, the
9    increase in base employment within Illinois over the
10    preceding year is less than 1%, the additional credit shall
11    be limited to that percentage times a fraction, the
12    numerator of which is .5% and the denominator of which is
13    1%, but shall not exceed .5%. The investment credit shall
14    not be allowed to the extent that it would reduce a
15    taxpayer's liability in any tax year below zero, nor may
16    any credit for qualified property be allowed for any year
17    other than the year in which the property was placed in
18    service in Illinois. For tax years ending on or after
19    December 31, 1987, and on or before December 31, 1988, the
20    credit shall be allowed for the tax year in which the
21    property is placed in service, or, if the amount of the
22    credit exceeds the tax liability for that year, whether it
23    exceeds the original liability or the liability as later
24    amended, such excess may be carried forward and applied to
25    the tax liability of the 5 taxable years following the
26    excess credit years if the taxpayer (i) makes investments

 

 

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1    which cause the creation of a minimum of 2,000 full-time
2    equivalent jobs in Illinois, (ii) is located in an
3    enterprise zone established pursuant to the Illinois
4    Enterprise Zone Act and (iii) is certified by the
5    Department of Commerce and Community Affairs (now
6    Department of Commerce and Economic Opportunity) as
7    complying with the requirements specified in clause (i) and
8    (ii) by July 1, 1986. The Department of Commerce and
9    Community Affairs (now Department of Commerce and Economic
10    Opportunity) shall notify the Department of Revenue of all
11    such certifications immediately. For tax years ending
12    after December 31, 1988, the credit shall be allowed for
13    the tax year in which the property is placed in service,
14    or, if the amount of the credit exceeds the tax liability
15    for that year, whether it exceeds the original liability or
16    the liability as later amended, such excess may be carried
17    forward and applied to the tax liability of the 5 taxable
18    years following the excess credit years. The credit shall
19    be applied to the earliest year for which there is a
20    liability. If there is credit from more than one tax year
21    that is available to offset a liability, earlier credit
22    shall be applied first.
23        (2) The term "qualified property" means property
24    which:
25            (A) is tangible, whether new or used, including
26        buildings and structural components of buildings and

 

 

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1        signs that are real property, but not including land or
2        improvements to real property that are not a structural
3        component of a building such as landscaping, sewer
4        lines, local access roads, fencing, parking lots, and
5        other appurtenances;
6            (B) is depreciable pursuant to Section 167 of the
7        Internal Revenue Code, except that "3-year property"
8        as defined in Section 168(c)(2)(A) of that Code is not
9        eligible for the credit provided by this subsection
10        (e);
11            (C) is acquired by purchase as defined in Section
12        179(d) of the Internal Revenue Code;
13            (D) is used in Illinois by a taxpayer who is
14        primarily engaged in manufacturing, or in mining coal
15        or fluorite, or in retailing, or was placed in service
16        on or after July 1, 2006 in a River Edge Redevelopment
17        Zone established pursuant to the River Edge
18        Redevelopment Zone Act; and
19            (E) has not previously been used in Illinois in
20        such a manner and by such a person as would qualify for
21        the credit provided by this subsection (e) or
22        subsection (f).
23        (3) For purposes of this subsection (e),
24    "manufacturing" means the material staging and production
25    of tangible personal property by procedures commonly
26    regarded as manufacturing, processing, fabrication, or

 

 

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1    assembling which changes some existing material into new
2    shapes, new qualities, or new combinations. For purposes of
3    this subsection (e) the term "mining" shall have the same
4    meaning as the term "mining" in Section 613(c) of the
5    Internal Revenue Code. For purposes of this subsection (e),
6    the term "retailing" means the sale of tangible personal
7    property for use or consumption and not for resale, or
8    services rendered in conjunction with the sale of tangible
9    personal property for use or consumption and not for
10    resale. For purposes of this subsection (e), "tangible
11    personal property" has the same meaning as when that term
12    is used in the Retailers' Occupation Tax Act, and, for
13    taxable years ending after December 31, 2008, does not
14    include the generation, transmission, or distribution of
15    electricity.
16        (4) The basis of qualified property shall be the basis
17    used to compute the depreciation deduction for federal
18    income tax purposes.
19        (5) If the basis of the property for federal income tax
20    depreciation purposes is increased after it has been placed
21    in service in Illinois by the taxpayer, the amount of such
22    increase shall be deemed property placed in service on the
23    date of such increase in basis.
24        (6) The term "placed in service" shall have the same
25    meaning as under Section 46 of the Internal Revenue Code.
26        (7) If during any taxable year, any property ceases to

 

 

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1    be qualified property in the hands of the taxpayer within
2    48 months after being placed in service, or the situs of
3    any qualified property is moved outside Illinois within 48
4    months after being placed in service, the Personal Property
5    Tax Replacement Income Tax for such taxable year shall be
6    increased. Such increase shall be determined by (i)
7    recomputing the investment credit which would have been
8    allowed for the year in which credit for such property was
9    originally allowed by eliminating such property from such
10    computation and, (ii) subtracting such recomputed credit
11    from the amount of credit previously allowed. For the
12    purposes of this paragraph (7), a reduction of the basis of
13    qualified property resulting from a redetermination of the
14    purchase price shall be deemed a disposition of qualified
15    property to the extent 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 incurred
19    pursuant to a binding contract entered into on or before
20    December 31, 2018.
21        (9) Each taxable year ending before December 31, 2000,
22    a partnership may elect to pass through to its partners the
23    credits to which the partnership is entitled under this
24    subsection (e) for the taxable year. A partner may use the
25    credit allocated to him or her under this paragraph only
26    against the tax imposed in subsections (c) and (d) of this

 

 

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1    Section. If the partnership makes that election, those
2    credits shall be allocated among the partners in the
3    partnership in accordance with the rules set forth in
4    Section 704(b) of the Internal Revenue Code, and the rules
5    promulgated under that Section, and the allocated amount of
6    the credits shall be allowed to the partners for that
7    taxable year. The partnership shall make this election on
8    its Personal Property Tax Replacement Income Tax return for
9    that taxable year. The election to pass through the credits
10    shall be irrevocable.
11        For taxable years ending on or after December 31, 2000,
12    a partner that qualifies its partnership for a subtraction
13    under subparagraph (I) of paragraph (2) of subsection (d)
14    of Section 203 or a shareholder that qualifies a Subchapter
15    S corporation for a subtraction under subparagraph (S) of
16    paragraph (2) of subsection (b) of Section 203 shall be
17    allowed a credit under this subsection (e) equal to its
18    share of the credit earned under this subsection (e) during
19    the taxable year by the partnership or Subchapter S
20    corporation, determined in accordance with the
21    determination of income and distributive share of income
22    under Sections 702 and 704 and Subchapter S of the Internal
23    Revenue Code. This paragraph is exempt from the provisions
24    of Section 250.
25    (f) Investment credit; Enterprise Zone; River Edge
26Redevelopment Zone.

 

 

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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 service
4    in an Enterprise Zone created pursuant to the Illinois
5    Enterprise Zone Act or, for property placed in service on
6    or after July 1, 2006, a River Edge Redevelopment Zone
7    established pursuant to the River Edge Redevelopment Zone
8    Act. For partners, shareholders of Subchapter S
9    corporations, and owners of limited liability companies,
10    if the liability company is treated as a partnership for
11    purposes of federal and State income taxation, there shall
12    be allowed a credit under this subsection (f) to be
13    determined in accordance with the determination of income
14    and distributive share of income under Sections 702 and 704
15    and Subchapter S of the Internal Revenue Code. The credit
16    shall be .5% of the basis for such property. The credit
17    shall be available only in the taxable year in which the
18    property is placed in service in the Enterprise Zone or
19    River Edge Redevelopment Zone and shall not be allowed to
20    the extent that it would reduce a taxpayer's liability for
21    the tax imposed by subsections (a) and (b) of this Section
22    to below zero. For tax years ending on or after December
23    31, 1985, the credit shall be allowed for the tax year in
24    which the property is placed in service, or, if the amount
25    of the credit exceeds the tax liability for that year,
26    whether it exceeds the original liability or the liability

 

 

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

 

 

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

 

 

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1    to 0.5% of the basis of qualified property placed in
2    service during the taxable year in a River Edge
3    Redevelopment Zone, provided such property is placed in
4    service on or after July 1, 2006, and the taxpayer's base
5    employment within Illinois has increased by 1% or more over
6    the preceding year as determined by the taxpayer's
7    employment records filed with the Illinois Department of
8    Employment Security. Taxpayers who are new to Illinois
9    shall be deemed to have met the 1% growth in base
10    employment for the first year in which they file employment
11    records with the Illinois Department of Employment
12    Security. If, in any year, the increase in base employment
13    within Illinois over the preceding year is less than 1%,
14    the additional credit shall be limited to that percentage
15    times a fraction, the numerator of which is 0.5% and the
16    denominator of which is 1%, but shall not exceed 0.5%.
17    (g) (Blank).
18    (h) Investment credit; High Impact Business.
19        (1) Subject to subsections (b) and (b-5) of Section 5.5
20    of the Illinois Enterprise Zone Act, a taxpayer shall be
21    allowed a credit against the tax imposed by subsections (a)
22    and (b) of this Section for investment in qualified
23    property which is placed in service by a Department of
24    Commerce and Economic Opportunity designated High Impact
25    Business. The credit shall be .5% of the basis for such
26    property. The credit shall not be available (i) until the

 

 

HB0460- 19 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 20 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 21 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 22 -LRB100 06741 HLH 16782 b

1    subsection (h) and thereby is granted a tax abatement and
2    the taxpayer relocates its entire facility in violation of
3    the explicit terms and length of the contract under Section
4    18-183 of the Property Tax Code, the tax imposed under
5    subsections (a) and (b) of this Section shall be increased
6    for the taxable year in which the taxpayer relocated its
7    facility by an amount equal to the amount of credit
8    received by the taxpayer under this subsection (h).
9    (i) Credit for Personal Property Tax Replacement Income
10Tax. For tax years ending prior to December 31, 2003, a credit
11shall be allowed against the tax imposed by subsections (a) and
12(b) of this Section for the tax imposed by subsections (c) and
13(d) of this Section. This credit shall be computed by
14multiplying the tax imposed by subsections (c) and (d) of this
15Section by a fraction, the numerator of which is base income
16allocable to Illinois and the denominator of which is Illinois
17base income, and further multiplying the product by the tax
18rate imposed by subsections (a) and (b) of this Section.
19    Any credit earned on or after December 31, 1986 under this
20subsection which is unused in the year the credit is computed
21because it exceeds the tax liability imposed by subsections (a)
22and (b) for that year (whether it exceeds the original
23liability or the liability as later amended) may be carried
24forward and applied to the tax liability imposed by subsections
25(a) and (b) of the 5 taxable years following the excess credit
26year, provided that no credit may be carried forward to any

 

 

HB0460- 23 -LRB100 06741 HLH 16782 b

1year ending on or after December 31, 2003. This credit shall be
2applied first to the earliest year for which there is a
3liability. If there is a credit under this subsection from more
4than one tax year that is available to offset a liability the
5earliest credit arising under this subsection shall be applied
6first.
7    If, during any taxable year ending on or after December 31,
81986, the tax imposed by subsections (c) and (d) of this
9Section for which a taxpayer has claimed a credit under this
10subsection (i) is reduced, the amount of credit for such tax
11shall also be reduced. Such reduction shall be determined by
12recomputing the credit to take into account the reduced tax
13imposed by subsections (c) and (d). If any portion of the
14reduced amount of credit has been carried to a different
15taxable year, an amended return shall be filed for such taxable
16year to reduce the amount of credit claimed.
17    (j) Training expense credit. Beginning with tax years
18ending on or after December 31, 1986 and prior to December 31,
192003, a taxpayer shall be allowed a credit against the tax
20imposed by subsections (a) and (b) under this Section for all
21amounts paid or accrued, on behalf of all persons employed by
22the taxpayer in Illinois or Illinois residents employed outside
23of Illinois by a taxpayer, for educational or vocational
24training in semi-technical or technical fields or semi-skilled
25or skilled fields, which were deducted from gross income in the
26computation of taxable income. The credit against the tax

 

 

HB0460- 24 -LRB100 06741 HLH 16782 b

1imposed by subsections (a) and (b) shall be 1.6% of such
2training expenses. For partners, shareholders of subchapter S
3corporations, and owners of limited liability companies, if the
4liability company is treated as a partnership for purposes of
5federal and State income taxation, there shall be allowed a
6credit under this subsection (j) to be determined in accordance
7with the determination of income and distributive share of
8income under Sections 702 and 704 and subchapter S of the
9Internal Revenue Code.
10    Any credit allowed under this subsection which is unused in
11the year the credit is earned may be carried forward to each of
12the 5 taxable years following the year for which the credit is
13first computed until it is used. This credit shall be applied
14first to the earliest year for which there is a liability. If
15there is a credit under this subsection from more than one tax
16year that is available to offset a liability the earliest
17credit arising under this subsection shall be applied first. No
18carryforward credit may be claimed in any tax year ending on or
19after December 31, 2003.
20    (k) Research and development credit. For tax years ending
21after July 1, 1990 and prior to December 31, 2003, and
22beginning again for tax years ending on or after December 31,
232004, and ending prior to January 1, 2016, a taxpayer shall be
24allowed a credit against the tax imposed by subsections (a) and
25(b) of this Section for increasing research activities in this
26State. The credit allowed against the tax imposed by

 

 

HB0460- 25 -LRB100 06741 HLH 16782 b

1subsections (a) and (b) shall be equal to 6 1/2% of the
2qualifying expenditures for increasing research activities in
3this State. For partners, shareholders of subchapter S
4corporations, and owners of limited liability companies, if the
5liability company is treated as a partnership for purposes of
6federal and State income taxation, there shall be allowed a
7credit under this subsection to be determined in accordance
8with the determination of income and distributive share of
9income under Sections 702 and 704 and subchapter S of the
10Internal Revenue Code.
11    For purposes of this subsection, "qualifying expenditures"
12means the qualifying expenditures as defined for the federal
13credit for increasing research activities which would be
14allowable under Section 41 of the Internal Revenue Code and
15which are conducted in this State, "qualifying expenditures for
16increasing research activities in this State" means the excess
17of qualifying expenditures for the taxable year in which
18incurred over qualifying expenditures for the base period,
19"qualifying expenditures for the base period" means the average
20of the qualifying expenditures for each year in the base
21period, and "base period" means the 3 taxable years immediately
22preceding the taxable year for which the determination is being
23made.
24    Any credit in excess of the tax liability for the taxable
25year may be carried forward. A taxpayer may elect to have the
26unused credit shown on its final completed return carried over

 

 

HB0460- 26 -LRB100 06741 HLH 16782 b

1as a credit against the tax liability for the following 5
2taxable years or until it has been fully used, whichever occurs
3first; provided that no credit earned in a tax year ending
4prior to December 31, 2003 may be carried forward to any year
5ending on or after December 31, 2003.
6    If an unused credit is carried forward to a given year from
72 or more earlier years, that credit arising in the earliest
8year will be applied first against the tax liability for the
9given year. If a tax liability for the given year still
10remains, the credit from the next earliest year will then be
11applied, and so on, until all credits have been used or no tax
12liability for the given year remains. Any remaining unused
13credit or credits then will be carried forward to the next
14following year in which a tax liability is incurred, except
15that no credit can be carried forward to a year which is more
16than 5 years after the year in which the expense for which the
17credit is given was incurred.
18    No inference shall be drawn from this amendatory Act of the
1991st General Assembly in construing this Section for taxable
20years beginning before January 1, 1999.
21    (l) Environmental Remediation Tax Credit.
22        (i) For tax years ending after December 31, 1997 and on
23    or before December 31, 2001, a taxpayer shall be allowed a
24    credit against the tax imposed by subsections (a) and (b)
25    of this Section for certain amounts paid for unreimbursed
26    eligible remediation costs, as specified in this

 

 

HB0460- 27 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 28 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 29 -LRB100 06741 HLH 16782 b

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

 

 

HB0460- 30 -LRB100 06741 HLH 16782 b

1custodian of qualifying pupils exceed $500. In no event shall a
2credit under this subsection reduce the taxpayer's liability
3under this Act to less than zero. This subsection is exempt
4from the provisions 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 through
11twelfth grade education program at any school, as defined in
12this 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 for
23the 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.

 

 

HB0460- 31 -LRB100 06741 HLH 16782 b

1    (n) River Edge Redevelopment Zone site remediation tax
2credit.
3        (i) For tax years ending on or after December 31, 2006,
4    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 of
17    the eligible remediation costs is granted. The credit is
18    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 under
21    the site that was identified and addressed by the remedial
22    action pursuant to the Site Remediation Program of the
23    Environmental Protection Act. Determinations as to credit
24    availability for purposes of this Section shall be made
25    consistent with rules adopted by the Pollution Control
26    Board pursuant to the Illinois Administrative Procedure

 

 

HB0460- 32 -LRB100 06741 HLH 16782 b

1    Act for the administration and enforcement of Section 58.9
2    of the Environmental Protection Act. For purposes of this
3    Section, "taxpayer" includes a person whose tax attributes
4    the taxpayer has succeeded to under Section 381 of the
5    Internal Revenue Code and "related party" includes the
6    persons disallowed a deduction for losses by paragraphs
7    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
8    Code by virtue of being a related taxpayer, as well as any
9    of its partners. The credit allowed against the tax imposed
10    by subsections (a) and (b) shall be equal to 25% of the
11    unreimbursed eligible remediation costs in excess of
12    $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 to
20    offset a liability, the earliest credit arising under this
21    subsection shall be applied first. A credit allowed under
22    this subsection may be sold to a buyer as part of a sale of
23    all or part of the remediation site for which the credit
24    was granted. The purchaser of a remediation site and the
25    tax credit shall succeed to the unused credit and remaining
26    carry-forward period of the seller. To perfect the

 

 

HB0460- 33 -LRB100 06741 HLH 16782 b

1    transfer, the assignor shall record the transfer in the
2    chain of title for the site and provide written notice to
3    the Director of the Illinois Department of Revenue of the
4    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 Pilot Program, a surcharge is imposed on
14all taxpayers 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 Pilot Program Act. The amount of the surcharge
19is equal 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

 

 

HB0460- 34 -LRB100 06741 HLH 16782 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        Pilot 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 which

 

 

HB0460- 35 -LRB100 06741 HLH 16782 b

1    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(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
5eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
6eff. 7-16-14.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.