SB2855 104TH GENERAL ASSEMBLY

LRB104 15565 HLH 28731 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2855

Introduced 1/16/2026, by Sen. Paul Faraci

SYNOPSIS AS INTRODUCED:

5 ILCS 340/3	from Ch. 15, par. 503
35 ILCS 60/170-10
35 ILCS 5/246 new
5 ILCS 100/5-45.70 new

Amends the Voluntary Payroll Deductions Act of 1983. Provides that a qualified community foundation that has been approved by the Department of Revenue to issue certificates of receipt under the Illinois Gives Tax Credit Act shall automatically be considered a qualified organization under the Voluntary Payroll Deductions Act of 1983. Amends the Illinois Income Tax Act. Creates an income tax credit for individuals who (i) serve as a volunteer for 100 hours during the taxable year, (ii) do not receive any compensation for their services as a volunteer for the taxable year, and (iii) do not serve on a full-time or part-time career basis for the entity for which they volunteer. Provides that the Department of Revenue may award not more than $5,000,000 in credits under those provisions in any calendar year. Effective immediately.

A BILL FOR

AN ACT concerning State government.

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

Section 5. The Voluntary Payroll Deductions Act of 1983 is amended by changing Section 3 as follows:

(5 ILCS 340/3) (from Ch. 15, par. 503)

Sec. 3. Definitions. As used in this Act unless the context otherwise requires:

(a) "Employee" means any regular officer or employee who receives salary or wages for personal services rendered to the State of Illinois, and includes an individual hired as an employee by contract with that individual.

(b) "Qualified organization" means an organization representing one or more benefiting agencies, which organization is designated by the State Comptroller as qualified to receive payroll deductions under this Act. An organization desiring to be designated as a qualified organization shall:

(1) Submit written or electronic designations on forms approved by the State Comptroller by 500 or more employees or State annuitants, in which such employees or State annuitants indicate that the organization is one for which the employee or State annuitant intends to authorize withholding. The forms shall require the name, last 4 digits only of the social security number, and employing State agency for each employee. Upon notification by the Comptroller that such forms have been approved, the organization shall, within 30 days, notify in writing the Comptroller or his or her designee of its intention to obtain the required number of designations. Such organization shall have 12 months from that date to obtain the necessary designations and return to the State Comptroller's office the completed designations, which shall be subject to verification procedures established by the State Comptroller;

(2) Certify that all benefiting agencies are tax exempt under Section 501(c)(3) of the Internal Revenue Code;

(3) Certify that all benefiting agencies are in compliance with the Illinois Human Rights Act;

(4) Certify that all benefiting agencies are in compliance with the Charitable Trust Act and the Solicitation for Charity Act;

(5) Certify that all benefiting agencies actively conduct health or welfare programs and provide services to individuals directed at one or more of the following common human needs within a community: service, research, and education in the health fields; family and child care services; protective services for children and adults; services for children and adults in foster care; services related to the management and maintenance of the home; day care services for adults; transportation services; information, referral and counseling services; services to eliminate illiteracy; the preparation and delivery of meals; adoption services; emergency shelter care and relief services; disaster relief services; safety services; neighborhood and community organization services; recreation services; social adjustment and rehabilitation services; health support services; or a combination of such services designed to meet the special needs of specific groups, such as children and youth, the ill and infirm, and persons with physical disabilities; and that all such benefiting agencies provide the above described services to individuals and their families in the community and surrounding area in which the organization conducts its fund drive, or that such benefiting agencies provide relief to victims of natural disasters and other emergencies on a where and as needed basis;

(6) Certify that the organization has disclosed the percentage of the organization's total collected receipts from employees or State annuitants that are distributed to the benefiting agencies and the percentage of the organization's total collected receipts from employees or State annuitants that are expended for fund-raising and overhead costs. These percentages shall be the same percentage figures annually disclosed by the organization to the Attorney General. The disclosure shall be made to all solicited employees and State annuitants and shall be in the form of a factual statement on all petitions and in the campaign's brochures for employees and State annuitants;

(7) Certify that all benefiting agencies receiving funds which the employee or State annuitant has requested or designated for distribution to a particular community and surrounding area use a majority of such funds distributed for services in the actual provision of services in that community and surrounding area;

(8) Certify that neither it nor its member organizations will solicit State employees for contributions at their workplace, except pursuant to this Act and the rules promulgated thereunder. Each qualified organization, and each participating United Fund, is encouraged to cooperate with all others and with all State agencies and educational institutions so as to simplify procedures, to resolve differences and to minimize costs;

(9) Certify that it will pay its share of the campaign costs and will comply with the Code of Campaign Conduct as approved by the Comptroller or other agency as designated by the Comptroller; and

(10) Certify that it maintains a year-round office, the telephone number, and person responsible for the operations of the organization in Illinois. That information shall be provided to the State Comptroller at the time the organization is seeking participation under this Act.

Each qualified organization shall submit to the State Comptroller between January 1 and March 1 of each year, a statement that the organization is in compliance with all of the requirements set forth in paragraphs (2) through (10). The State Comptroller shall exclude any organization that fails to submit the statement from the next solicitation period.

In order to be designated as a qualified organization, the organization shall have existed at least 2 years prior to submitting the written or electronic designation forms required in paragraph (1) and shall certify to the State Comptroller that such organization has been providing services described in paragraph (5) in Illinois. If the organization seeking designation represents more than one benefiting agency, it need not have existed for 2 years but shall certify to the State Comptroller that each of its benefiting agencies has existed for at least 2 years prior to submitting the written or electronic designation forms required in paragraph (1) and that each has been providing services described in paragraph (5) in Illinois.

Organizations which have met the requirements of this Act shall be permitted to participate in the State and Universities Combined Appeal as of January 1st of the year immediately following their approval by the Comptroller.

Where the certifications described in paragraphs (2), (3), (4), (5), (6), (7), (8), (9), and (10) above are made by an organization representing more than one benefiting agency they shall be based upon the knowledge and belief of such qualified organization. Any qualified organization shall immediately notify the State Comptroller in writing if the qualified organization receives information or otherwise believes that a benefiting agency is no longer in compliance with the certification of the qualified organization. A qualified organization representing more than one benefiting agency shall thereafter withhold and refrain from distributing to such benefiting agency those funds received pursuant to this Act until the benefiting agency is again in compliance with the qualified organization's certification. The qualified organization shall immediately notify the State Comptroller of the benefiting agency's resumed compliance with the certification, based upon the qualified organization's knowledge and belief, and shall pay over to the benefiting agency those funds previously withheld.

In order to qualify, a qualified organization must receive 250 deduction pledges from the immediately preceding solicitation period as set forth in Section 6. The Comptroller shall, by February 1st of each year, so notify any qualified organization that failed to receive the minimum deduction requirement. The notification shall give such qualified organization until March 1st to provide the Comptroller with documentation that the minimum deduction requirement has been met. On the basis of all the documentation, the Comptroller shall, by March 15th of each year, make publicly available a list of all organizations which have met the minimum payroll deduction requirement. Only those organizations which have met such requirements, as well as the other requirements of this Section, shall be permitted to solicit State employees or State annuitants for voluntary contributions, and the Comptroller shall discontinue withholding for any such organization which fails to meet these requirements, except qualified organizations that received deduction pledges during the 2004 solicitation period are deemed to be qualified for the 2005 solicitation period.

On and after the effective date of this amendatory Act of the 104th General Assembly, a qualified community foundation that has been approved by the Department of Revenue to issue certificates of receipt under the Illinois Gives Tax Credit Act shall automatically be considered a qualified organization without the necessity of complying with the provisions of this subsection (b).

(c) "United Fund" means the organization conducting the single, annual, consolidated effort to secure funds for distribution to agencies engaged in charitable and public health, welfare and services purposes, which is commonly known as the United Fund, or the organization which serves in place of the United Fund organization in communities where an organization known as the United Fund is not organized.

In order for a United Fund to participate in the State and Universities Employees Combined Appeal, it shall comply with the provisions of paragraph (9) of subsection (b).

(d) "State and Universities Employees Combined Appeal", otherwise known as "SECA", means the State-directed joint effort of all of the qualified organizations, together with the United Funds, for the solicitation of voluntary contributions from State and University employees and State annuitants.

(e) "Retirement system" means any or all of the following: the General Assembly Retirement System, the State Employees' Retirement System of Illinois, the State Universities Retirement System, the Teachers' Retirement System of the State of Illinois, and the Judges Retirement System.

(f) "State annuitant" means a person receiving an annuity or disability benefit under Article 2, 14, 15, 16, or 18 of the Illinois Pension Code.

(Source: P.A. 102-291, eff. 8-6-21.)

Section 10. The Illinois Gives Tax Credit Act is amended by changing Section 170-10 as follows:

(35 ILCS 60/170-10)

Sec. 170-10. Tax credit awards; limitations.

(a) For taxable years ending on or after December 31, 2025 and ending before December 31, 2030, the Department shall award, in accordance with this Act, income tax credits to taxpayers who provide an endowment gift to a permanent endowment fund during the taxable year and receive a certificate of receipt under Section 170-15 for that gift, including, but not limited to, an endowment gift made to a permanent endowment fund under the provisions of the Voluntary Payroll Deductions Act of 1983. Subject to the limitations in this Section, the amount of the credit that may be awarded to a taxpayer by the Department under this Act is an amount equal to 25% of the endowment gift. For the purposes of this Section, taxpayers filing a joint return shall be considered one taxpayer.

(b) The aggregate amount of all Illinois Gives tax credits awarded by the Department under this Act in any calendar year may not exceed $5,000,000.

(c) The aggregate amount of all Illinois Gives tax credits that the Department may award to any taxpayer under this Act in any calendar year may not exceed $100,000 for taxpayers who are not spouses filing a joint return or $200,000 for taxpayers who are spouses filing a joint return.

(d) The amount of contributions to any specific qualified community foundation that are eligible for Illinois Gives tax credits under this Section in any calendar year shall not exceed $3,000,000.

(e) Of the annual amount available for tax credits, 25% must be reserved for endowment gifts that do not exceed the small gift maximum set forth in this subsection. The small gift maximum is $25,000. For purposes of determining if a donation meets the small gift maximum, the amount of the credit authorization certificate under Section 170-15 shall be used.

(f) For the purpose of this Section, a credit is considered to be awarded on the date the Department issues an approved contribution authorization certificate under Section 170-15.

(Source: P.A. 103-592, eff. 6-7-24; 104-6, eff. 6-16-25.)

Section 15. The Illinois Income Tax Act is amended by adding Section 246 as follows:

(35 ILCS 5/246 new)

Sec. 246. Volunteer tax credit.

(a) For taxable years beginning on or after January 1, 2026 and beginning prior to January 1, 2031, each individual who (i) serves as a volunteer for 100 hours during the taxable year, (ii) does not receive any compensation for his or her services as a volunteer for the taxable year, and (iii) does not serve on a full-time or part-time career basis for the entity for which he or she volunteers may apply to the Department for a credit against the taxes imposed by subsections (a) and (b) of Section 201. The amount of the credit shall be $500 per eligible individual. The aggregate amount of all tax credits awarded by the Department under this Section in any calendar year may not exceed $5,000,000. Credits shall be awarded on a first-come, first-served basis.

(b) A credit under this Section may not reduce a taxpayer's liability to less than zero.

(c) By January 24 of each year, entities that are organized and operated exclusively for charitable, religious, or educational purposes and possess an active Exemption Identification Number issued by the Department pursuant to the Retailers' Occupation Tax Act must notify the Department of volunteers who (i) volunteered for at least 100 hours during the immediately preceding calendar year and (ii) did not receive compensation for their services as a volunteer during the immediately preceding calendar year. Notification shall be submitted in the manner specified by the Department.

(d) The Department shall adopt rules to implement and administer this Section, including rules concerning applications for the tax credit.

(e) As used in this Section, "volunteer" means a person who serves, other than on a full-time career basis, for an entity that is organized and operated exclusively for charitable, religious, or educational purposes and who possess an active Exemption Identification Number issued by the Department of Revenue pursuant to the Retailers' Occupation Tax Act.

Section 20. The Illinois Administrative Procedure Act is amended by adding Section 5-45.70 as follows:

(5 ILCS 100/5-45.70 new)

Sec. 5-45.70. Emergency rulemaking; Illinois Income Tax Act. To provide for the expeditious and timely implementation of this amendatory Act of the 104th General Assembly, emergency rules implementing Section 246 of the Illinois Income Tax Act may be adopted in accordance with Section 5-45 by the Department of Revenue. The adoption of emergency rules authorized by Section 5-45 and this Section is deemed to be necessary for the public interest, safety, and welfare.

This Section is repealed one year after the effective date of this amendatory Act of the 104th General Assembly.

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