98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB4455
 
Introduced , by Rep. John M. Cabello
 
SYNOPSIS AS INTRODUCED:



35 ILCS 5/201 from Ch. 120, par. 2-201

 Amends the Illinois Income Tax Act. Reduces the rate of tax on individuals, trusts, and estates to 3.375% for taxable years beginning on or after January 1, 2015 and 2.925% for taxable years beginning on or after January 1, 2025. Reduces the rate of tax on corporations to 4.725% for taxable years beginning on or after January 1, 2015 and 4.32% for taxable years beginning on or after January 1, 2025. Effective immediately.



LRB098 17181 HLH 52269 b


FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


HB4455LRB098 17181 HLH 52269 b



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) 3.375% 3.75% of the taxpayer's net income for the 
 
 
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1 period after December 31, 2014, as calculated under Section 
2 202.5. 
3  (5.2) In the case of an individual, trust, or estate, 
4 for taxable years beginning on or after January 1, 2015, 
5 and ending prior to January 1, 2025, an amount equal to 
6 3.375% 3.75% of the taxpayer's net income for the taxable 
7 year. 
8  (5.3) In the case of an individual, trust, or estate, 
9 for taxable years beginning prior to January 1, 2025, and 
10 ending after December 31, 2024, an amount equal to the sum 
11 of (i) 3.375% 3.75% of the taxpayer's net income for the 
12 period prior to January 1, 2025, as calculated under 
13 Section 202.5, and (ii) 2.925% 3.25% of the taxpayer's net 
14 income for the period after December 31, 2024, as 
15 calculated under Section 202.5. 
16  (5.4) In the case of an individual, trust, or estate, 
17 for taxable years beginning on or after January 1, 2025, an 
18 amount equal to 2.925% 3.25% of the taxpayer's net income 
19 for the taxable year. 
20  (6) In the case of a corporation, for taxable years

21 ending prior to July 1, 1989, an amount equal to 4% of the

22 taxpayer's net income for the taxable year.
23  (7) In the case of a corporation, for taxable years 
24 beginning prior to
July 1, 1989 and ending after June 30, 
25 1989, an amount equal to the sum of
(i) 4% of the 
26 taxpayer's net income for the period prior to July 1, 1989,

 
 
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1 as calculated under Section 202.3, and (ii) 4.8% of the 
2 taxpayer's net
income for the period after June 30, 1989, 
3 as calculated under Section
202.3.
4  (8) In the case of a corporation, for taxable years 
5 beginning after
June 30, 1989, and ending prior to January 
6 1, 2011, an amount equal to 4.8% of the taxpayer's net 
7 income for the
taxable year.
8  (9) In the case of a corporation, for taxable years 
9 beginning prior to January 1, 2011, and ending after 
10 December 31, 2010, an amount equal to the sum of (i) 4.8% 
11 of the taxpayer's net income for the period prior to 
12 January 1, 2011, as calculated under Section 202.5, and 
13 (ii) 7% of the taxpayer's net income for the period after 
14 December 31, 2010, as calculated under Section 202.5. 
15  (10) In the case of a corporation, for taxable years 
16 beginning on or after January 1, 2011, and ending prior to 
17 January 1, 2015, an amount equal to 7% of the taxpayer's 
18 net income for the taxable year. 
19  (11) In the case of a corporation, for taxable years 
20 beginning prior to January 1, 2015, and ending after 
21 December 31, 2014, an amount equal to the sum of (i) 7% of 
22 the taxpayer's net income for the period prior to January 
23 1, 2015, as calculated under Section 202.5, and (ii) 4.725% 
24 5.25% of the taxpayer's net income for the period after 
25 December 31, 2014, as calculated under Section 202.5. 
26  (12) In the case of a corporation, for taxable years 
 
 
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1 beginning on or after January 1, 2015, and ending prior to 
2 January 1, 2025, an amount equal to 4.725% 5.25% of the 
3 taxpayer's net income for the taxable year. 
4  (13) In the case of a corporation, for taxable years 
5 beginning prior to January 1, 2025, and ending after 
6 December 31, 2024, an amount equal to the sum of (i) 4.725% 
7 5.25% of the taxpayer's net income for the period prior to 
8 January 1, 2025, as calculated under Section 202.5, and 
9 (ii) 4.32% 4.8% of the taxpayer's net income for the period 
10 after December 31, 2024, as calculated under Section 202.5. 
11  (14) In the case of a corporation, for taxable years 
12 beginning on or after January 1, 2025, an amount equal to 
13 4.32% 4.8% of the taxpayer's net income for the taxable 
14 year. 
15 The rates under this subsection (b) are subject to the 
16provisions of Section 201.5. 
17 (c) Personal Property Tax Replacement Income Tax.

18Beginning on July 1, 1979 and thereafter, in addition to such 
19income
tax, there is also hereby imposed the Personal Property 
20Tax Replacement
Income Tax measured by net income on every 
21corporation (including Subchapter
S corporations), partnership 
22and trust, for each taxable year ending after
June 30, 1979. 
23Such taxes are imposed on the privilege of earning or
receiving 
24income in or as a resident of this State. The Personal Property

25Tax Replacement Income Tax shall be in addition to the income 
26tax imposed
by subsections (a) and (b) of this Section and in 
 
 
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1addition to all other
occupation or privilege taxes imposed by 
2this State or by any municipal
corporation or political 
3subdivision thereof.
4 (d) Additional Personal Property Tax Replacement Income 
5Tax Rates.
The personal property tax replacement income tax 
6imposed by this subsection
and subsection (c) of this Section 
7in the case of a corporation, other
than a Subchapter S 
8corporation and except as adjusted by subsection (d-1),
shall 
9be an additional amount equal to
2.85% of such taxpayer's net 
10income for the taxable year, except that
beginning on January 
111, 1981, and thereafter, the rate of 2.85% specified
in this 
12subsection shall be reduced to 2.5%, and in the case of a

13partnership, trust or a Subchapter S corporation shall be an 
14additional
amount equal to 1.5% of such taxpayer's net income 
15for the taxable year.
16 (d-1) Rate reduction for certain foreign insurers. In the 
17case of a
foreign insurer, as defined by Section 35A-5 of the 
18Illinois Insurance Code,
whose state or country of domicile 
19imposes on insurers domiciled in Illinois
a retaliatory tax 
20(excluding any insurer
whose premiums from reinsurance assumed 
21are 50% or more of its total insurance
premiums as determined 
22under paragraph (2) of subsection (b) of Section 304,
except 
23that for purposes of this determination premiums from 
24reinsurance do
not include premiums from inter-affiliate 
25reinsurance arrangements),
beginning with taxable years ending 
26on or after December 31, 1999,
the sum of
the rates of tax 
 
 
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1imposed by subsections (b) and (d) shall be reduced (but not

2increased) to the rate at which the total amount of tax imposed 
3under this Act,
net of all credits allowed under this Act, 
4shall equal (i) the total amount of
tax that would be imposed 
5on the foreign insurer's net income allocable to
Illinois for 
6the taxable year by such foreign insurer's state or country of

7domicile if that net income were subject to all income taxes 
8and taxes
measured by net income imposed by such foreign 
9insurer's state or country of
domicile, net of all credits 
10allowed or (ii) a rate of zero if no such tax is
imposed on such 
11income by the foreign insurer's state of domicile.
For the 
12purposes of this subsection (d-1), an inter-affiliate includes 
13a
mutual insurer under common management.
14  (1) For the purposes of subsection (d-1), in no event 
15 shall the sum of the
rates of tax imposed by subsections 
16 (b) and (d) be reduced below the rate at
which the sum of:
17   (A) the total amount of tax imposed on such foreign 
18 insurer under
this Act for a taxable year, net of all 
19 credits allowed under this Act, plus
20   (B) the privilege tax imposed by Section 409 of the 
21 Illinois Insurance
Code, the fire insurance company 
22 tax imposed by Section 12 of the Fire
Investigation 
23 Act, and the fire department taxes imposed under 
24 Section 11-10-1
of the Illinois Municipal Code,
25 equals 1.25% for taxable years ending prior to December 31, 
26 2003, or
1.75% for taxable years ending on or after 
 
 
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1 December 31, 2003, of the net
taxable premiums written for 
2 the taxable year,
as described by subsection (1) of Section 
3 409 of the Illinois Insurance Code.
This paragraph will in 
4 no event increase the rates imposed under subsections
(b) 
5 and (d).
6  (2) Any reduction in the rates of tax imposed by this 
7 subsection shall be
applied first against the rates imposed 
8 by subsection (b) and only after the
tax imposed by 
9 subsection (a) net of all credits allowed under this 
10 Section
other than the credit allowed under subsection (i) 
11 has been reduced to zero,
against the rates imposed by 
12 subsection (d).
13 This subsection (d-1) is exempt from the provisions of 
14Section 250.
15 (e) Investment credit. A taxpayer shall be allowed a credit

16against the Personal Property Tax Replacement Income Tax for

17investment in qualified property.
18  (1) A taxpayer shall be allowed a credit equal to .5% 
19 of
the basis of qualified property placed in service during 
20 the taxable year,
provided such property is placed in 
21 service on or after
July 1, 1984. There shall be allowed an 
22 additional credit equal
to .5% of the basis of qualified 
23 property placed in service during the
taxable year, 
24 provided such property is placed in service on or
after 
25 July 1, 1986, and the taxpayer's base employment
within 
26 Illinois has increased by 1% or more over the preceding 
 
 
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1 year as
determined by the taxpayer's employment records 
2 filed with the
Illinois Department of Employment Security. 
3 Taxpayers who are new to
Illinois shall be deemed to have 
4 met the 1% growth in base employment for
the first year in 
5 which they file employment records with the Illinois

6 Department of Employment Security. The provisions added to 
7 this Section by
Public Act 85-1200 (and restored by Public 
8 Act 87-895) shall be
construed as declaratory of existing 
9 law and not as a new enactment. If,
in any year, the 
10 increase in base employment within Illinois over the

11 preceding year is less than 1%, the additional credit shall 
12 be limited to that
percentage times a fraction, the 
13 numerator of which is .5% and the denominator
of which is 
14 1%, but shall not exceed .5%. The investment credit shall 
15 not be
allowed to the extent that it would reduce a 
16 taxpayer's liability in any tax
year below zero, nor may 
17 any credit for qualified property be allowed for any
year 
18 other than the year in which the property was placed in 
19 service in
Illinois. For tax years ending on or after 
20 December 31, 1987, and on or
before December 31, 1988, the 
21 credit shall be allowed for the tax year in
which the 
22 property is placed in service, or, if the amount of the 
23 credit
exceeds the tax liability for that year, whether it 
24 exceeds the original
liability or the liability as later 
25 amended, such excess may be carried
forward and applied to 
26 the tax liability of the 5 taxable years following
the 
 
 
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1 excess credit years if the taxpayer (i) makes investments 
2 which cause
the creation of a minimum of 2,000 full-time 
3 equivalent jobs in Illinois,
(ii) is located in an 
4 enterprise zone established pursuant to the Illinois

5 Enterprise Zone Act and (iii) is certified by the 
6 Department of Commerce
and Community Affairs (now 
7 Department of Commerce and Economic Opportunity) as 
8 complying with the requirements specified in
clause (i) and 
9 (ii) by July 1, 1986. The Department of Commerce and

10 Community Affairs (now Department of Commerce and Economic 
11 Opportunity) shall notify the Department of Revenue of all 
12 such
certifications immediately. For tax years ending 
13 after December 31, 1988,
the credit shall be allowed for 
14 the tax year in which the property is
placed in service, 
15 or, if the amount of the credit exceeds the tax
liability 
16 for that year, whether it exceeds the original liability or 
17 the
liability as later amended, such excess may be carried 
18 forward and applied
to the tax liability of the 5 taxable 
19 years following the excess credit
years. The credit shall 
20 be applied to the earliest year for which there is
a 
21 liability. If there is credit from more than one tax year 
22 that is
available to offset a liability, earlier credit 
23 shall be applied first.
24  (2) The term "qualified property" means property 
25 which:
26   (A) is tangible, whether new or used, including 
 
 
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1 buildings and structural
components of buildings and 
2 signs that are real property, but not including
land or 
3 improvements to real property that are not a structural 
4 component of a
building such as landscaping, sewer 
5 lines, local access roads, fencing, parking
lots, and 
6 other appurtenances;
7   (B) is depreciable pursuant to Section 167 of the 
8 Internal Revenue Code,
except that "3-year property" 
9 as defined in Section 168(c)(2)(A) of that
Code is not 
10 eligible for the credit provided by this subsection 
11 (e);
12   (C) is acquired by purchase as defined in Section 
13 179(d) of
the Internal Revenue Code;
14   (D) is used in Illinois by a taxpayer who is 
15 primarily engaged in
manufacturing, or in mining coal 
16 or fluorite, or in retailing, or was placed in service 
17 on or after July 1, 2006 in a River Edge Redevelopment 
18 Zone established pursuant to the River Edge 
19 Redevelopment Zone Act; and
20   (E) has not previously been used in Illinois in 
21 such a manner and by
such a person as would qualify for 
22 the credit provided by this subsection
(e) or 
23 subsection (f).
24  (3) For purposes of this subsection (e), 
25 "manufacturing" means
the material staging and production 
26 of tangible personal property by
procedures commonly 
 
 
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1 regarded as manufacturing, processing, fabrication, or

2 assembling which changes some existing material into new 
3 shapes, new
qualities, or new combinations. For purposes of 
4 this subsection
(e) the term "mining" shall have the same 
5 meaning as the term "mining" in
Section 613(c) of the 
6 Internal Revenue Code. For purposes of this subsection
(e), 
7 the term "retailing" means the sale of tangible personal 
8 property for use or consumption and not for resale, or

9 services rendered in conjunction with the sale of tangible 
10 personal property for use or consumption and not for 
11 resale. For purposes of this subsection (e), "tangible 
12 personal property" has the same meaning as when that term 
13 is used in the Retailers' Occupation Tax Act, and, for 
14 taxable years ending after December 31, 2008, does not 
15 include the generation, transmission, or distribution of 
16 electricity.
17  (4) The basis of qualified property shall be the basis

18 used to compute the depreciation deduction for federal 
19 income tax purposes.
20  (5) If the basis of the property for federal income tax 
21 depreciation
purposes is increased after it has been placed 
22 in service in Illinois by
the taxpayer, the amount of such 
23 increase shall be deemed property placed
in service on the 
24 date of such increase in basis.
25  (6) The term "placed in service" shall have the same

26 meaning as under Section 46 of the Internal Revenue Code.
 
 
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1  (7) If during any taxable year, any property ceases to

2 be qualified property in the hands of the taxpayer within 
3 48 months after
being placed in service, or the situs of 
4 any qualified property is
moved outside Illinois within 48 
5 months after being placed in service, the
Personal Property 
6 Tax Replacement Income Tax for such taxable year shall be

7 increased. Such increase shall be determined by (i) 
8 recomputing the
investment credit which would have been 
9 allowed for the year in which
credit for such property was 
10 originally allowed by eliminating such
property from such 
11 computation and, (ii) subtracting such recomputed credit

12 from the amount of credit previously allowed. For the 
13 purposes of this
paragraph (7), a reduction of the basis of 
14 qualified property resulting
from a redetermination of the 
15 purchase price shall be deemed a disposition
of qualified 
16 property to the extent of such reduction.
17  (8) Unless the investment credit is extended by law, 
18 the
basis of qualified property shall not include costs 
19 incurred after
December 31, 2018, except for costs incurred 
20 pursuant to a binding
contract entered into on or before 
21 December 31, 2018.
22  (9) Each taxable year ending before December 31, 2000, 
23 a partnership may
elect to pass through to its
partners the 
24 credits to which the partnership is entitled under this 
25 subsection
(e) for the taxable year. A partner may use the 
26 credit allocated to him or her
under this paragraph only 
 
 
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1 against the tax imposed in subsections (c) and (d) of
this 
2 Section. If the partnership makes that election, those 
3 credits shall be
allocated among the partners in the 
4 partnership in accordance with the rules
set forth in 
5 Section 704(b) of the Internal Revenue Code, and the rules

6 promulgated under that Section, and the allocated amount of 
7 the credits shall
be allowed to the partners for that 
8 taxable year. The partnership shall make
this election on 
9 its Personal Property Tax Replacement Income Tax return for

10 that taxable year. The election to pass through the credits 
11 shall be
irrevocable.
12  For taxable years ending on or after December 31, 2000, 
13 a
partner that qualifies its
partnership for a subtraction 
14 under subparagraph (I) of paragraph (2) of
subsection (d) 
15 of Section 203 or a shareholder that qualifies a Subchapter 
16 S
corporation for a subtraction under subparagraph (S) of 
17 paragraph (2) of
subsection (b) of Section 203 shall be 
18 allowed a credit under this subsection
(e) equal to its 
19 share of the credit earned under this subsection (e) during

20 the taxable year by the partnership or Subchapter S 
21 corporation, determined in
accordance with the 
22 determination of income and distributive share of
income 
23 under Sections 702 and 704 and Subchapter S of the Internal 
24 Revenue
Code. This paragraph is exempt from the provisions 
25 of Section 250.
26 (f) Investment credit; Enterprise Zone; River Edge 
 
 
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1Redevelopment Zone.
2  (1) A taxpayer shall be allowed a credit against the 
3 tax imposed
by subsections (a) and (b) of this Section for 
4 investment in qualified
property which is placed in service 
5 in an Enterprise Zone created
pursuant to the Illinois 
6 Enterprise Zone Act or, for property placed in service on 
7 or after July 1, 2006, a River Edge Redevelopment Zone 
8 established pursuant to the River Edge Redevelopment Zone 
9 Act. For partners, shareholders
of Subchapter S 
10 corporations, and owners of limited liability companies,

11 if the liability company is treated as a partnership for 
12 purposes of
federal and State income taxation, there shall 
13 be allowed a credit under
this subsection (f) to be 
14 determined in accordance with the determination
of income 
15 and distributive share of income under Sections 702 and 704 
16 and
Subchapter S of the Internal Revenue Code. The credit 
17 shall be .5% of the
basis for such property. The credit 
18 shall be available only in the taxable
year in which the 
19 property is placed in service in the Enterprise Zone or 
20 River Edge Redevelopment Zone and
shall not be allowed to 
21 the extent that it would reduce a taxpayer's
liability for 
22 the tax imposed by subsections (a) and (b) of this Section 
23 to
below zero. For tax years ending on or after December 
24 31, 1985, the credit
shall be allowed for the tax year in 
25 which the property is placed in
service, or, if the amount 
26 of the credit exceeds the tax liability for that
year, 
 
 
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1 whether it exceeds the original liability or the liability 
2 as later
amended, such excess may be carried forward and 
3 applied to the tax
liability of the 5 taxable years 
4 following the excess credit year.
The credit shall be 
5 applied to the earliest year for which there is a

6 liability. If there is credit from more than one tax year 
7 that is available
to offset a liability, the credit 
8 accruing first in time shall be applied
first.
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 (f);
17   (C) is acquired by purchase as defined in Section 
18 179(d) of
the Internal Revenue Code;
19   (D) is used in the Enterprise Zone or River Edge 
20 Redevelopment Zone by the taxpayer; and
21   (E) has not been previously used in Illinois in 
22 such a manner and by
such a person as would qualify for 
23 the credit provided by this subsection
(f) or 
24 subsection (e).
25  (3) The basis of qualified property shall be the basis 
26 used to compute
the depreciation deduction for federal 
 
 
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1 income tax purposes.
2  (4) If the basis of the property for federal income tax 
3 depreciation
purposes is increased after it has been placed 
4 in service in the Enterprise
Zone or River Edge 
5 Redevelopment Zone by the taxpayer, the amount of such 
6 increase shall be deemed property
placed in service on the 
7 date of such increase in basis.
8  (5) The term "placed in service" shall have the same 
9 meaning as under
Section 46 of the Internal Revenue Code.
10  (6) If during any taxable year, any property ceases to 
11 be qualified
property in the hands of the taxpayer within 
12 48 months after being placed
in service, or the situs of 
13 any qualified property is moved outside the
Enterprise Zone 
14 or River Edge Redevelopment Zone within 48 months after 
15 being placed in service, the tax
imposed under subsections 
16 (a) and (b) of this Section for such taxable year
shall be 
17 increased. Such increase shall be determined by (i) 
18 recomputing
the investment credit which would have been 
19 allowed for the year in which
credit for such property was 
20 originally allowed by eliminating such
property from such 
21 computation, and (ii) subtracting such recomputed credit

22 from the amount of credit previously allowed. For the 
23 purposes of this
paragraph (6), a reduction of the basis of 
24 qualified property resulting
from a redetermination of the 
25 purchase price shall be deemed a disposition
of qualified 
26 property to the extent of such reduction.
 
 
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1  (7) There shall be allowed an additional credit equal 
2 to 0.5% of the basis of qualified property placed in 
3 service during the taxable year in a River Edge 
4 Redevelopment Zone, provided such property is placed in 
5 service on or after July 1, 2006, and the taxpayer's base 
6 employment within Illinois has increased by 1% or more over 
7 the preceding year as determined by the taxpayer's 
8 employment records filed with the Illinois Department of 
9 Employment Security. Taxpayers who are new to Illinois 
10 shall be deemed to have met the 1% growth in base 
11 employment for the first year in which they file employment 
12 records with the Illinois Department of Employment 
13 Security. If, in any year, the increase in base employment 
14 within Illinois over the preceding year is less than 1%, 
15 the additional credit shall be limited to that percentage 
16 times a fraction, the numerator of which is 0.5% and the 
17 denominator of which is 1%, but shall not exceed 0.5%.

18 (g) (Blank).
19 (h) Investment credit; High Impact Business.
20  (1) Subject to subsections (b) and (b-5) of Section
5.5 
21 of the Illinois Enterprise Zone Act, a taxpayer shall be 
22 allowed a credit
against the tax imposed by subsections (a) 
23 and (b) of this Section for
investment in qualified

24 property which is placed in service by a Department of 
25 Commerce and Economic Opportunity
designated High Impact 
26 Business. The credit shall be .5% of the basis
for such 
 
 
HB4455- 19 -LRB098 17181 HLH 52269 b


1 property. The credit shall not be available (i) until the 
2 minimum
investments in qualified property set forth in 
3 subdivision (a)(3)(A) of
Section 5.5 of the Illinois

4 Enterprise Zone Act have been satisfied
or (ii) until the 
5 time authorized in subsection (b-5) of the Illinois

6 Enterprise Zone Act for entities designated as High Impact 
7 Businesses under
subdivisions (a)(3)(B), (a)(3)(C), and 
8 (a)(3)(D) of Section 5.5 of the Illinois
Enterprise Zone 
9 Act, and shall not be allowed to the extent that it would

10 reduce a taxpayer's liability for the tax imposed by 
11 subsections (a) and (b) of
this Section to below zero. The 
12 credit applicable to such investments shall be
taken in the 
13 taxable year in which such investments have been completed. 
14 The
credit for additional investments beyond the minimum 
15 investment by a designated
high impact business authorized 
16 under subdivision (a)(3)(A) of Section 5.5 of
the Illinois 
17 Enterprise Zone Act shall be available only in the taxable 
18 year in
which the property is placed in service and shall 
19 not be allowed to the extent
that it would reduce a 
20 taxpayer's liability for the tax imposed by subsections
(a) 
21 and (b) of this Section to below zero.
For tax years ending 
22 on or after December 31, 1987, the credit shall be
allowed 
23 for the tax year in which the property is placed in 
24 service, or, if
the amount of the credit exceeds the tax 
25 liability for that year, whether
it exceeds the original 
26 liability or the liability as later amended, such
excess 
 
 
HB4455- 20 -LRB098 17181 HLH 52269 b


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

5 the date of such increase in basis.
6  (5) The term "placed in service" shall have the same 
7 meaning as under
Section 46 of the Internal Revenue Code.
8  (6) If during any taxable year ending on or before 
9 December 31, 1996,
any property ceases to be qualified

10 property in the hands of the taxpayer within 48 months 
11 after being placed
in service, or the situs of any 
12 qualified property is moved outside
Illinois within 48 
13 months after being placed in service, the tax imposed
under 
14 subsections (a) and (b) of this Section for such taxable 
15 year shall
be increased. Such increase shall be determined 
16 by (i) recomputing the
investment credit which would have 
17 been allowed for the year in which
credit for such property 
18 was originally allowed by eliminating such
property from 
19 such computation, and (ii) subtracting such recomputed 
20 credit
from the amount of credit previously allowed. For 
21 the purposes of this
paragraph (6), a reduction of the 
22 basis of qualified property resulting
from a 
23 redetermination of the purchase price shall be deemed a 
24 disposition
of qualified property to the extent of such 
25 reduction.
26  (7) Beginning with tax years ending after December 31, 
 
 
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1 1996, if a
taxpayer qualifies for the credit under this 
2 subsection (h) and thereby is
granted a tax abatement and 
3 the taxpayer relocates its entire facility in
violation of 
4 the explicit terms and length of the contract under Section

5 18-183 of the Property Tax Code, the tax imposed under 
6 subsections
(a) and (b) of this Section shall be increased 
7 for the taxable year
in which the taxpayer relocated its 
8 facility by an amount equal to the
amount of credit 
9 received by the taxpayer under this subsection (h).
10 (i) Credit for Personal Property Tax Replacement Income 
11Tax.
For tax years ending prior to December 31, 2003, a credit 
12shall be allowed
against the tax imposed by
subsections (a) and 
13(b) of this Section for the tax imposed by subsections (c)
and 
14(d) of this Section. This credit shall be computed by 
15multiplying the tax
imposed by subsections (c) and (d) of this 
16Section by a fraction, the numerator
of which is base income 
17allocable to Illinois and the denominator of which is
Illinois 
18base income, and further multiplying the product by the tax 
19rate
imposed by subsections (a) and (b) of this Section.
20 Any credit earned on or after December 31, 1986 under
this 
21subsection which is unused in the year
the credit is computed 
22because it exceeds the tax liability imposed by
subsections (a) 
23and (b) for that year (whether it exceeds the original

24liability or the liability as later amended) may be carried 
25forward and
applied to the tax liability imposed by subsections 
26(a) and (b) of the 5
taxable years following the excess credit 
 
 
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1year, provided that no credit may
be carried forward to any 
2year ending on or
after December 31, 2003. This credit shall be

3applied first to the earliest year for which there is a 
4liability. If
there is a credit under this subsection from more 
5than one tax year that is
available to offset a liability the 
6earliest credit arising under this
subsection shall be applied 
7first.
8 If, during any taxable year ending on or after December 31, 
91986, the
tax imposed by subsections (c) and (d) of this 
10Section for which a taxpayer
has claimed a credit under this 
11subsection (i) is reduced, the amount of
credit for such tax 
12shall also be reduced. Such reduction shall be
determined by 
13recomputing the credit to take into account the reduced tax

14imposed by subsections (c) and (d). If any portion of the

15reduced amount of credit has been carried to a different 
16taxable year, an
amended return shall be filed for such taxable 
17year to reduce the amount of
credit claimed.
18 (j) Training expense credit. Beginning with tax years 
19ending on or
after December 31, 1986 and prior to December 31, 
202003, a taxpayer shall be
allowed a credit against the
tax 
21imposed by subsections (a) and (b) under this Section
for all 
22amounts paid or accrued, on behalf of all persons
employed by 
23the taxpayer in Illinois or Illinois residents employed
outside 
24of Illinois by a taxpayer, for educational or vocational 
25training in
semi-technical or technical fields or semi-skilled 
26or skilled fields, which
were deducted from gross income in the 
 
 
HB4455- 24 -LRB098 17181 HLH 52269 b


1computation of taxable income. The
credit against the tax 
2imposed by subsections (a) and (b) shall be 1.6% of
such 
3training expenses. 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 (j) 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 Any credit allowed under this subsection which is unused in 
12the year
the credit is earned may be carried forward to each of 
13the 5 taxable
years following the year for which the credit is 
14first computed until it is
used. This credit shall be applied 
15first to the earliest year for which
there is a liability. If 
16there is a credit under this subsection from more
than one tax 
17year that is available to offset a liability the earliest

18credit arising under this subsection shall be applied first. No 
19carryforward
credit may be claimed in any tax year ending on or 
20after
December 31, 2003.
21 (k) Research and development credit. For tax years ending 
22after July 1, 1990 and prior to
December 31, 2003, and 
23beginning again for tax years ending on or after December 31, 
242004, and ending prior to January 1, 2016, a taxpayer shall be

25allowed a credit against the tax imposed by subsections (a) and 
26(b) of this
Section for increasing research activities in this 
 
 
HB4455- 25 -LRB098 17181 HLH 52269 b


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

 
 
HB4455- 26 -LRB098 17181 HLH 52269 b


1unused credit shown on its final completed return carried over 
2as a credit
against the tax liability for the following 5 
3taxable years or until it has
been fully used, whichever occurs 
4first; provided that no credit earned in a tax year ending 
5prior to December 31, 2003 may be carried forward to any year 
6ending on or after December 31, 2003.
7 If an unused credit is carried forward to a given year from 
82 or more
earlier years, that credit arising in the earliest 
9year will be applied
first against the tax liability for the 
10given year. If a tax liability for
the given year still 
11remains, the credit from the next earliest year will
then be 
12applied, and so on, until all credits have been used or no tax

13liability for the given year remains. Any remaining unused 
14credit or
credits then will be carried forward to the next 
15following year in which a
tax liability is incurred, except 
16that no credit can be carried forward to
a year which is more 
17than 5 years after the year in which the expense for
which the 
18credit is given was incurred.
19 No inference shall be drawn from this amendatory Act of the 
2091st General
Assembly in construing this Section for taxable 
21years beginning before January
1, 1999.
22 (l) Environmental Remediation Tax Credit.
23  (i) For tax years ending after December 31, 1997 and on 
24 or before
December 31, 2001, a taxpayer shall be allowed a 
25 credit against the tax
imposed by subsections (a) and (b) 
26 of this Section for certain amounts paid
for unreimbursed 
 
 
HB4455- 27 -LRB098 17181 HLH 52269 b


1 eligible remediation costs, as specified in this 
2 subsection.
For purposes of this Section, "unreimbursed 
3 eligible remediation costs" means
costs approved by the 
4 Illinois Environmental Protection Agency ("Agency") under

5 Section 58.14 of the Environmental Protection Act that were 
6 paid in performing
environmental remediation at a site for 
7 which a No Further Remediation Letter
was issued by the 
8 Agency and recorded under Section 58.10 of the 
9 Environmental
Protection Act. The credit must be claimed 
10 for the taxable year in which
Agency approval of the 
11 eligible remediation costs is granted. The credit is
not 
12 available to any taxpayer if the taxpayer or any related 
13 party caused or
contributed to, in any material respect, a 
14 release of regulated substances on,
in, or under the site 
15 that was identified and addressed by the remedial
action 
16 pursuant to the Site Remediation Program of the 
17 Environmental Protection
Act. After the Pollution Control 
18 Board rules are adopted pursuant to the
Illinois 
19 Administrative Procedure Act for the administration and 
20 enforcement of
Section 58.9 of the Environmental 
21 Protection Act, determinations as to credit
availability 
22 for purposes of this Section shall be made consistent with 
23 those
rules. For purposes of this Section, "taxpayer" 
24 includes a person whose tax
attributes the taxpayer has 
25 succeeded to under Section 381 of the Internal
Revenue Code 
26 and "related party" includes the persons disallowed a 
 
 
HB4455- 28 -LRB098 17181 HLH 52269 b


1 deduction
for losses by paragraphs (b), (c), and (f)(1) of 
2 Section 267 of the Internal
Revenue Code by virtue of being 
3 a related taxpayer, as well as any of its
partners. The 
4 credit allowed against the tax imposed by subsections (a) 
5 and
(b) shall be equal to 25% of the unreimbursed eligible 
6 remediation costs in
excess of $100,000 per site, except 
7 that the $100,000 threshold shall not apply
to any site 
8 contained in an enterprise zone as determined by the 
9 Department of
Commerce and Community Affairs (now 
10 Department of Commerce and Economic Opportunity). The 
11 total credit allowed shall not exceed
$40,000 per year with 
12 a maximum total of $150,000 per site. For partners and

13 shareholders of subchapter S corporations, there shall be 
14 allowed a credit
under this subsection to be determined in 
15 accordance with the determination of
income and 
16 distributive share of income under Sections 702 and 704 and

17 subchapter S of the Internal Revenue Code.
18  (ii) A credit allowed under this subsection that is 
19 unused in the year
the credit is earned may be carried 
20 forward to each of the 5 taxable years
following the year 
21 for which the credit is first earned until it is used.
The 
22 term "unused credit" does not include any amounts of 
23 unreimbursed eligible
remediation costs in excess of the 
24 maximum credit per site authorized under
paragraph (i). 
25 This credit shall be applied first to the earliest year
for 
26 which there is a liability. If there is a credit under this 
 
 
HB4455- 29 -LRB098 17181 HLH 52269 b


1 subsection
from more than one tax year that is available to 
2 offset a liability, the
earliest credit arising under this 
3 subsection shall be applied first. A
credit allowed under 
4 this subsection may be sold to a buyer as part of a sale
of 
5 all or part of the remediation site for which the credit 
6 was granted. The
purchaser of a remediation site and the 
7 tax credit shall succeed to the unused
credit and remaining 
8 carry-forward period of the seller. To perfect the

9 transfer, the assignor shall record the transfer in the 
10 chain of title for the
site and provide written notice to 
11 the Director of the Illinois Department of
Revenue of the 
12 assignor's intent to sell the remediation site and the 
13 amount of
the tax credit to be transferred as a portion of 
14 the sale. In no event may a
credit be transferred to any 
15 taxpayer if the taxpayer or a related party would
not be 
16 eligible under the provisions of subsection (i).
17  (iii) For purposes of this Section, the term "site" 
18 shall have the same
meaning as under Section 58.2 of the 
19 Environmental Protection Act.
20 (m) Education expense credit. Beginning with tax years 
21ending after
December 31, 1999, a taxpayer who
is the custodian 
22of one or more qualifying pupils shall be allowed a credit

23against the tax imposed by subsections (a) and (b) of this 
24Section for
qualified education expenses incurred on behalf of 
25the qualifying pupils.
The credit shall be equal to 25% of 
26qualified education expenses, but in no
event may the total 
 
 
HB4455- 30 -LRB098 17181 HLH 52269 b


1credit under this subsection claimed by a
family that is the

2custodian of qualifying pupils exceed $500. In no event shall a 
3credit under
this subsection reduce the taxpayer's liability 
4under this Act to less than
zero. This subsection is exempt 
5from the provisions of Section 250 of this
Act.
6 For purposes of this subsection:
7 "Qualifying pupils" means individuals who (i) are 
8residents of the State of
Illinois, (ii) are under the age of 
921 at the close of the school year for
which a credit is 
10sought, and (iii) during the school year for which a credit
is 
11sought were full-time pupils enrolled in a kindergarten through 
12twelfth
grade education program at any school, as defined in 
13this subsection.
14 "Qualified education expense" means the amount incurred
on 
15behalf of a qualifying pupil in excess of $250 for tuition, 
16book fees, and
lab fees at the school in which the pupil is 
17enrolled during the regular school
year.
18 "School" means any public or nonpublic elementary or 
19secondary school in
Illinois that is in compliance with Title 
20VI of the Civil Rights Act of 1964
and attendance at which 
21satisfies the requirements of Section 26-1 of the
School Code, 
22except that nothing shall be construed to require a child to

23attend any particular public or nonpublic school to qualify for 
24the credit
under this Section.
25 "Custodian" means, with respect to qualifying pupils, an 
26Illinois resident
who is a parent, the parents, a legal 
 
 
HB4455- 31 -LRB098 17181 HLH 52269 b


1guardian, or the legal guardians of the
qualifying pupils.
2 (n) River Edge Redevelopment Zone site remediation tax 
3credit.

4  (i) For tax years ending on or after December 31, 2006, 
5 a taxpayer shall be allowed a credit against the tax 
6 imposed by subsections (a) and (b) of this Section for 
7 certain amounts paid for unreimbursed eligible remediation 
8 costs, as specified in this subsection. For purposes of 
9 this Section, "unreimbursed eligible remediation costs" 
10 means costs approved by the Illinois Environmental 
11 Protection Agency ("Agency") under Section 58.14a of the 
12 Environmental Protection Act that were paid in performing 
13 environmental remediation at a site within a River Edge 
14 Redevelopment Zone for which a No Further Remediation 
15 Letter was issued by the Agency and recorded under Section 
16 58.10 of the Environmental Protection Act. The credit must 
17 be claimed for the taxable year in which Agency approval of 
18 the eligible remediation costs is granted. The credit is 
19 not available to any taxpayer if the taxpayer or any 
20 related party caused or contributed to, in any material 
21 respect, a release of regulated substances on, in, or under 
22 the site that was identified and addressed by the remedial 
23 action pursuant to the Site Remediation Program of the 
24 Environmental Protection Act. Determinations as to credit 
25 availability for purposes of this Section shall be made 
26 consistent with rules adopted by the Pollution Control 
 
 
HB4455- 32 -LRB098 17181 HLH 52269 b


1 Board pursuant to the Illinois Administrative Procedure 
2 Act for the administration and enforcement of Section 58.9 
3 of the Environmental Protection Act. For purposes of this 
4 Section, "taxpayer" includes a person whose tax attributes 
5 the taxpayer has succeeded to under Section 381 of the 
6 Internal Revenue Code and "related party" includes the 
7 persons disallowed a deduction for losses by paragraphs 
8 (b), (c), and (f)(1) of Section 267 of the Internal Revenue 
9 Code by virtue of being a related taxpayer, as well as any 
10 of its partners. The credit allowed against the tax imposed 
11 by subsections (a) and (b) shall be equal to 25% of the 
12 unreimbursed eligible remediation costs in excess of 
13 $100,000 per site.
14  (ii) A credit allowed under this subsection that is 
15 unused in the year the credit is earned may be carried 
16 forward to each of the 5 taxable years following the year 
17 for which the credit is first earned until it is used. This 
18 credit shall be applied first to the earliest year for 
19 which there is a liability. If there is a credit under this 
20 subsection from more than one tax year that is available to 
21 offset a liability, the earliest credit arising under this 
22 subsection shall be applied first. A credit allowed under 
23 this subsection may be sold to a buyer as part of a sale of 
24 all or part of the remediation site for which the credit 
25 was granted. The purchaser of a remediation site and the 
26 tax credit shall succeed to the unused credit and remaining 
 
 
HB4455- 33 -LRB098 17181 HLH 52269 b


1 carry-forward period of the seller. To perfect the 
2 transfer, the assignor shall record the transfer in the 
3 chain of title for the site and provide written notice to 
4 the Director of the Illinois Department of Revenue of the 
5 assignor's intent to sell the remediation site and the 
6 amount of the tax credit to be transferred as a portion of 
7 the sale. In no event may a credit be transferred to any 
8 taxpayer if the taxpayer or a related party would not be 
9 eligible under the provisions of subsection (i).
10  (iii) For purposes of this Section, the term "site" 
11 shall have the same meaning as under Section 58.2 of the 
12 Environmental Protection Act.
13 (o) For each of taxable years during the Compassionate Use 
14of Medical Cannabis Pilot Program, a surcharge is imposed on 
15all taxpayers on income arising from the sale or exchange of 
16capital assets, depreciable business property, real property 
17used in the trade or business, and Section 197 intangibles of 
18an organization registrant under the Compassionate Use of 
19Medical Cannabis Pilot Program Act. The amount of the surcharge 
20is equal to the amount of federal income tax liability for the 
21taxable year attributable to those sales and exchanges. The 
22surcharge imposed does not apply if:
23  (1) the medical cannabis cultivation center 
24 registration, medical cannabis dispensary registration, or 
25 the property of a registration is transferred as a result 
26 of any of the following:
 
 
HB4455- 34 -LRB098 17181 HLH 52269 b


1   (A) bankruptcy, a receivership, or a debt 
2 adjustment initiated by or against the initial 
3 registration or the substantial owners of the initial 
4 registration;
5   (B) cancellation, revocation, or termination of 
6 any registration by the Illinois Department of Public 
7 Health;
8   (C) a determination by the Illinois Department of 
9 Public Health that transfer of the registration is in 
10 the best interests of Illinois qualifying patients as 
11 defined by the Compassionate Use of Medical Cannabis 
12 Pilot Program Act;
13   (D) the death of an owner of the equity interest in 
14 a registrant;
15   (E) the acquisition of a controlling interest in 
16 the stock or substantially all of the assets of a 
17 publicly traded company;
18   (F) a transfer by a parent company to a wholly 
19 owned subsidiary; or
20   (G) the transfer or sale to or by one person to 
21 another person where both persons were initial owners 
22 of the registration when the registration was issued; 
23 or
24  (2) the cannabis cultivation center registration, 
25 medical cannabis dispensary registration, or the 
26 controlling interest in a registrant's property is 
 
 
HB4455- 35 -LRB098 17181 HLH 52269 b


1 transferred in a transaction to lineal descendants in which 
2 no gain or loss is recognized or as a result of a 
3 transaction in accordance with Section 351 of the Internal 
4 Revenue Code in which no gain or loss is recognized.
5(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905, 
6eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; revised 
78-9-13.)


8 Section 99. Effective date. This Act takes effect upon 
9becoming law.