HB5080 104TH GENERAL ASSEMBLY

LRB104 18890 HLH 32335 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5080

Introduced 2/10/2026, by Rep. Mary Beth Canty

SYNOPSIS AS INTRODUCED:

35 ILCS 5/210.5
35 ILCS 5/210.10 new

Amends the Illinois Income Tax Act. Provides that the tax credit for employee child care shall be (i) 30% of the start-up costs expended by the corporate taxpayer to provide a child care facility for the children of its employees and (ii) 10% (currently, 5%) of the annual amount paid by the corporate taxpayer in providing the child care facility for the children of its employees. Creates an income tax credit for corporate taxpayers that are qualified small businesses in an amount equal to 10% of the federal tax credit claimed by the taxpayer for the taxable year for qualified child care expenditures. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by changing Section 210.5 and by adding Section 210.10 as follows:

(35 ILCS 5/210.5)

Sec. 210.5. Tax credit for employee child care.

(a) Each corporate taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 in an amount equal to (i) for taxable years ending on or after December 31, 2000 and on or before December 31, 2004, and for taxable years ending on or after December 31, 2007, and for taxable years ending on or after December 31, 2026, 30% of the start-up costs expended by the corporate taxpayer to provide a child care facility for the children of its employees, and (ii) for taxable years ending on or after December 31, 2000 and on or before December 31, 2025, 5% of the annual amount paid by the corporate taxpayer in providing the child care facility for the children of its employees, and (iii) for taxable years ending after December 31, 2025, 10% of the annual amount paid by the corporate taxpayer in providing the child care facility for the children of its employees. The provisions of Section 250 do not apply to the credits allowed under this Section. If the 5% credit authorized under item (ii) of this subsection is claimed, the 5% credit authorized under Section 210 cannot also be claimed.

To receive the tax credit under this Section a corporate taxpayer may either independently provide and operate a child care facility for the children of its employees or it may join in a partnership with one or more other corporations to jointly provide and operate a child care facility for the children of employees of the corporations in the partnership.

(b) The tax credit may not reduce the taxpayer's liability to less than zero. If the amount of the tax credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit must be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, then the earlier credit must be applied first.

(c) As used in this Section, "start-up costs" means planning, site-preparation, construction, renovation, or acquisition of a child care facility. As used in this Section, "child care facility" is limited to a child care facility located in Illinois.

(d) A corporate taxpayer claiming the credit provided by this Section shall maintain and record such information as the Department may require by rule regarding the child care facility for which the credit is claimed.

(Source: P.A. 95-648, eff. 10-11-07.)

(35 ILCS 5/210.10 new)

Sec. 210.10. Federal enhanced tax credit for employer-provided child care.

(a) For taxable years beginning on or after January 1, 2026, each corporate taxpayer that is a qualified small business is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 in an amount equal to 10% of the federal tax credit claimed by the corporate taxpayer for the taxable year for qualified child care expenditures under Section 45F of the Internal Revenue Code.

(b) A taxpayer may not claim both the credit under Section 210.5 of this Act and the credit under this Section for the same expenditure.

(c) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the tax credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit must be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, then the earlier credit must be applied first.

(d) The Department shall adopt rules necessary to implement and administer this Section.

(e) This Section is exempt from the provisions of Section 250 of this Act.

(f) As used in this Section:

"Qualified child care expenditure" means an expenditure that is paid or incurred:

(1) to acquire, construct, rehabilitate, or expand property:

(A) that is to be used by the Illinois taxpayer as part of a qualified child care facility in Illinois;

(B) with respect to which a deduction for depreciation (or amortization in lieu of depreciation) is allowable; and

(C) that does not constitute part of the principal residence of the taxpayer or any employee of the taxpayer;

(2) for the operating costs of a qualified child care facility of the taxpayer, including costs related to the training of employees, costs for scholarship programs, and the costs of providing increased compensation to employees with higher levels of child care training; or

(3) under a contract with a qualified child care facility to provide child care services to employees of the taxpayer, or under a contract with an intermediate entity that contracts with one or more qualified child care facilities to provide those child care services.

"Qualified child care expenditures" does not include expenses in excess of the fair market value of the care.

"Qualified child care facility" has the same meaning given to that term in Section 45F of the federal Internal Revenue Code.

"Qualified small business" has the same meaning given to that term in Section 45F of the Internal Revenue Code.

Section 99. Effective date. This Act takes effect upon becoming law.