HB5203 104TH GENERAL ASSEMBLY

LRB104 18609 HLH 32052 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5203

Introduced 2/10/2026, by Rep. Michael J. Kelly

SYNOPSIS AS INTRODUCED:

35 ILCS 5/246 new

Amends the Illinois Income Tax Act. Creates an income tax credit for a taxpayer who owns, operates, or manages a hotel. Provides that the amount of the credit is equal to 25% of the qualified renovation expenditures incurred during the taxable year, subject to specified limitations. 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 adding Section 246 as follows:

(35 ILCS 5/246 new)

Sec. 246. Hotel renovation tax credit.

(a) As used in this Section:

"Qualified renovation expenditures" means expenditures directly related to the renovation, rehabilitation, or improvement of a hotel property located in this State, to the extent those costs are demonstrably increased as a result of tariffs imposed on imported materials on or after January 1, 2025.

"Qualified taxpayer" means a taxpayer that is subject to tax under subsections (a) and (b) of Section 201 of this Act and who owns, operates, or manages a hotel as defined in the Hotel Operators' Occupation Tax Act.

"Union labor" means labor performed by individuals who are members of a bona fide labor organization recognized under federal or State law.

(b) For taxable years beginning on or after January 1, 2027 and beginning before January 1, 2035, a qualified taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 of this Act in an amount equal to 25% of the qualified renovation expenditures incurred during the taxable year, subject to the limitations provided in this Section.

(c) To be eligible for the credit under this Section:

(1) the taxpayer must certify that all construction, renovation, or rehabilitation work related to the claimed expenditures was performed using union labor;

(2) the taxpayer must provide documentation, as prescribed by the Department, demonstrating that the renovation costs were increased due to tariffs on materials; and

(3) the taxpayer must maintain records sufficient to substantiate eligibility for the credit for a period of not less than 5 years.

(d) The total amount of the credit allowed under this Section for any taxpayer in a taxable year shall not exceed $500,000. The credit may not reduce the taxpayer's liability to less than zero. Any unused credit may be carried forward and applied to the taxpayer's liability for up to 5 taxable years following the year in which the credit is first allowed.

(e) The Department shall adopt rules and prescribe forms as necessary to implement and administer this Section, including rules for verifying tariff-related cost increases and union labor compliance.

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