Bill Text: IL HB2697 | 2025-2026 | 104th General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. In provisions concerning the estimated tax, provides that the required annual payment is the lesser of: (i) 90% of the tax shown on the return for the taxable year, or if no return is filed, 90% of the tax for the year; (ii) 100% of the tax shown on the return of the taxpayer for the preceding taxable year if a return showing a liability for tax was filed by the taxpayer for the preceding taxable year and the preceding year was a taxable year of 12 months; or (iii) 90% of the tax for the taxable year that would have been due based on the Act as it exists on the first day of the taxable year. Effective immediately.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2025-03-21 - Rule 19(a) / Re-referred to Rules Committee [HB2697 Detail]

Download: Illinois-2025-HB2697-Introduced.html

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104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB2697 Introduced , by Rep. Curtis J. Tarver, II SYNOPSIS AS INTRODUCED:
35 ILCS 5/804 from Ch. 120, par. 8-804
Amends the Illinois Income Tax Act. In provisions concerning the estimated tax, provides that the required annual payment is the lesser of: (i) 90% of the tax shown on the return for the taxable year, or if no return is filed, 90% of the tax for the year; (ii) 100% of the tax shown on the return of the taxpayer for the preceding taxable year if a return showing a liability for tax was filed by the taxpayer for the preceding taxable year and the preceding year was a taxable year of 12 months; or (iii) 90% of the tax for the taxable year that would have been due based on the Act as it exists on the first day of the taxable year. Effective immediately.
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A BILL FOR
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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 804 as follows:
(35 ILCS 5/804) (from Ch. 120, par. 8-804)
Sec. 804. Failure to pay estimated tax.
(a) In general. In case of any underpayment of estimated
tax by a taxpayer, except as provided in subsection (d) or (e),
the taxpayer shall be liable to a penalty in an amount
determined at the rate prescribed by Section 3-3 of the
Uniform Penalty and Interest Act upon the amount of the
underpayment (determined under subsection (b)) for each
required installment.
(b) Amount of underpayment. For purposes of subsection
(a), the amount of the underpayment shall be the excess of:
(1) the amount of the installment which would be
required to be paid under subsection (c), over
(2) the amount, if any, of the installment paid on or
before the last date prescribed for payment.
(c) Amount of Required Installments.
(1) Amount.
(A) In General. Except as provided in paragraphs

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(2) and (3), the amount of any required installment
shall be 25% of the required annual payment.
(B) Required Annual Payment. For purposes of
subparagraph (A), the term "required annual payment"
means the lesser of:
(i) 90% of the tax shown on the return for the
taxable year, or if no return is filed, 90% of the
tax for such year;
(ii) for installments due prior to February 1,
2011, and after January 31, 2012, 100% of the tax
shown on the return of the taxpayer for the
preceding taxable year if a return showing a
liability for tax was filed by the taxpayer for
the preceding taxable year and such preceding year
was a taxable year of 12 months; or
(iii) for installments due after January 31,
2011, and prior to February 1, 2012, 150% of the
tax shown on the return of the taxpayer for the
preceding taxable year if a return showing a
liability for tax was filed by the taxpayer for
the preceding taxable year and such preceding year
was a taxable year of 12 months; or .
(iv) 90% of the tax for the taxable year that
would have been due based on this Act as it exists
on the first day of the taxable year.
(2) Lower Required Installment where Annualized Income

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Installment is Less Than Amount Determined Under Paragraph
(1).
(A) In General. In the case of any required
installment if a taxpayer establishes that the
annualized income installment is less than the amount
determined under paragraph (1),
(i) the amount of such required installment
shall be the annualized income installment, and
(ii) any reduction in a required installment
resulting from the application of this
subparagraph shall be recaptured by increasing the
amount of the next required installment determined
under paragraph (1) by the amount of such
reduction, and by increasing subsequent required
installments to the extent that the reduction has
not previously been recaptured under this clause.
(B) Determination of Annualized Income
Installment. In the case of any required installment,
the annualized income installment is the excess, if
any, of:
(i) an amount equal to the applicable
percentage of the tax for the taxable year
computed by placing on an annualized basis the net
income for months in the taxable year ending
before the due date for the installment, over
(ii) the aggregate amount of any prior

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required installments for the taxable year.
(C) Applicable Percentage.
In the case of the following The applicable
required installments: percentage is:
1st .............................. 22.5%
2nd ............................... 45%
3rd ............................... 67.5%
4th ............................... 90%
(D) Annualized Net Income; Individuals. For
individuals, net income shall be placed on an
annualized basis by:
(i) multiplying by 12, or in the case of a
taxable year of less than 12 months, by the number
of months in the taxable year, the net income
computed without regard to the standard exemption
for the months in the taxable year ending before
the month in which the installment is required to
be paid;
(ii) dividing the resulting amount by the
number of months in the taxable year ending before
the month in which such installment date falls;
and
(iii) deducting from such amount the standard
exemption allowable for the taxable year, such
standard exemption being determined as of the last
date prescribed for payment of the installment.

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(E) Annualized Net Income; Corporations. For
corporations, net income shall be placed on an
annualized basis by multiplying by 12 the taxable
income
(i) for the first 3 months of the taxable
year, in the case of the installment required to
be paid in the 4th month,
(ii) for the first 3 months or for the first 5
months of the taxable year, in the case of the
installment required to be paid in the 6th month,
(iii) for the first 6 months or for the first 8
months of the taxable year, in the case of the
installment required to be paid in the 9th month,
and
(iv) for the first 9 months or for the first 11
months of the taxable year, in the case of the
installment required to be paid in the 12th month
of the taxable year,
then dividing the resulting amount by the number of
months in the taxable year (3, 5, 6, 8, 9, or 11 as the
case may be).
(3) Notwithstanding any other provision of this
subsection (c), in the case of a federally regulated
exchange that elects to apportion its income under Section
304(c-1) of this Act, the amount of each required
installment due prior to June 30 of the first taxable year

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to which the election applies shall be 25% of the tax that
would have been shown on the return for that taxable year
if the taxpayer had not made such election.
(d) Exceptions. Notwithstanding the provisions of the
preceding subsections, the penalty imposed by subsection (a)
shall not be imposed if the taxpayer was not required to file
an Illinois income tax return for the preceding taxable year,
or, for individuals, if the taxpayer had no tax liability for
the preceding taxable year and such year was a taxable year of
12 months. The penalty imposed by subsection (a) shall also
not be imposed on any underpayments of estimated tax due
before the effective date of this amendatory Act of 1998 which
underpayments are solely attributable to the change in
apportionment from subsection (a) to subsection (h) of Section
304. The provisions of this amendatory Act of 1998 apply to tax
years ending on or after December 31, 1998.
(e) The penalty imposed for underpayment of estimated tax
by subsection (a) of this Section shall not be imposed to the
extent that the Director or his or her designate determines,
pursuant to Section 3-8 of the Uniform Penalty and Interest
Act that the penalty should not be imposed.
(f) Definition of tax. For purposes of subsections (b) and
(c), the term "tax" means the excess of the tax imposed under
Article 2 of this Act, over the amounts credited against such
tax under Sections 601(b) (3) and (4).
(g) Application of Section in case of tax withheld under

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Article 7. For purposes of applying this Section:
(1) tax withheld from compensation for the taxable
year shall be deemed a payment of estimated tax, and an
equal part of such amount shall be deemed paid on each
installment date for such taxable year, unless the
taxpayer establishes the dates on which all amounts were
actually withheld, in which case the amounts so withheld
shall be deemed payments of estimated tax on the dates on
which such amounts were actually withheld;
(2) amounts timely paid by a partnership, Subchapter S
corporation, or trust on behalf of a partner, shareholder,
or beneficiary pursuant to subsection (f) of Section 502
or Section 709.5 and claimed as a payment of estimated tax
shall be deemed a payment of estimated tax made on the last
day of the taxable year of the partnership, Subchapter S
corporation, or trust for which the income from the
withholding is made was computed; and
(3) all other amounts pursuant to Article 7 shall be
deemed a payment of estimated tax on the date the payment
is made to the taxpayer of the amount from which the tax is
withheld.
(g-5) Amounts withheld under the State Salary and Annuity
Withholding Act. An individual who has amounts withheld under
paragraph (10) of Section 4 of the State Salary and Annuity
Withholding Act may elect to have those amounts treated as
payments of estimated tax made on the dates on which those

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amounts are actually withheld.
(i) Short taxable year. The application of this Section to
taxable years of less than 12 months shall be in accordance
with regulations prescribed by the Department.
The changes in this Section made by Public Act 84-127
shall apply to taxable years ending on or after January 1,
1986.
(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
97-636, eff. 6-1-12.)
Section 99. Effective date. This Act takes effect upon
becoming law.