Bill Text: IL SB1911 | 2025-2026 | 104th General Assembly | Enrolled

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Bill Title: Amends the State Finance Act. Provides that the sum of $17,653,153 shall be transferred from the General Revenue Fund to the Audit Expense Fund. Amends the Illinois Income Tax Act. Removes provisions providing that the pass-through entity level election applies only for tax years beginning prior to January 1, 2026. Provides that an addition modification and corresponding deduction for a bonus depreciation deduction under subsection (k) of Section 168 of the Internal Revenue Code also apply to a bonus depreciation deduction for qualified production property under subsection (n) of Section 168 of the Internal Revenue Code. Amends the Film Production Services Tax Credit Act of 2008. Makes changes concerning the credit amount. Provides that wages paid to no more than 2 executive producers per accredited production may be considered Illinois labor expenditures. Creates an exception to the 2-producer limitation for executive producers who receive compensation for other positions on the accredited production. Makes changes concerning conditions under which wages paid to nonresidents qualify as Illinois labor expenditures. Provides that no new credits may be awarded under the Act for tax years beginning on or after January 1, 2039. Amends the Illinois Income Tax Act. Provides that, with respect to compensation paid for in-State services performed for an accredited production under the Film Production Services Tax Credit Act, if the compensation is paid through a loan out company, then the production company or its authorized payroll service company shall withhold taxes on that compensation. Effective immediately.

Sponsorship: Partisan Bill (Democrat 16)

Status: (Passed) 2026-01-13 - Added as Chief Co-Sponsor Sen. Paul Faraci [SB1911 Detail]

Download: Illinois-2025-SB1911-Enrolled.html

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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
ARTICLE 5
Section 5-1. Short title. This Act may be cited as the
Statewide Innovation Development and Economy Act. References
in this Article to "this Act" mean this Article.
Section 5-5. Purpose; findings.
(a) The General Assembly finds and declares that the
purpose of this Act is to promote, stimulate, and develop the
general and economic welfare of the State of Illinois and its
communities and to assist in the development and redevelopment
of major tourism, entertainment, retail, and related projects
within eligible areas of the State, thereby creating new jobs,
stimulating significant capital investment, and promoting the
general welfare of the citizens of this State, by authorizing
municipalities and counties to issue sales tax and revenue
(STAR) bonds for the financing of STAR bond projects, as
defined in Section 5-10, and to otherwise exercise the powers
and authorities granted to municipalities.
(b) The General Assembly further finds and declares that:
(1) It is the policy of the State, in the interest of

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promoting the health, safety, morals, and general welfare
of all the people of the State, to provide incentives to
create new job opportunities, and to promote major
tourism, entertainment, retail, and related projects
within the State.
(2) It is in the public interest to limit the portion
of the aggregate proceeds of STAR bonds issued that are
derived from the State sales tax increment pledged to pay
STAR bonds in any STAR bond district to not more than 50%
of the total development costs for a STAR bond project in
the STAR bond district as set forth in subsection (g) of
Section 5-45.
(3) As a result of the costs of land assemblage,
financing, and infrastructure and other project costs, the
private sector, without the assistance contemplated in
this Act, is unable to develop major tourism,
entertainment, retail, and related projects in some parts
of the State.
(4) The type of projects for which this Act is
intended must be of a certain size and scope and must be
developed in a cohesive and comprehensive manner.
(5) The eligible tracts of land are more likely to
remain underused and undeveloped or to be developed in a
piecemeal manner resulting in inefficient and poorly
planned developments that do not maximize job creation,
job retention, and tax revenue generation within the

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State.
(6) There are multiple eligible areas in the State
that could benefit from this Act.
(7) Investment in major tourism, entertainment,
retail, and related development within the State would
stimulate economic activity in the State, including the
creation and maintenance of jobs, the creation of new and
lasting infrastructure and other improvements, and the
attraction and retention of interstate tourists and
entertainment events that generate significant economic
activity.
(8) The continual encouragement, development, growth,
and expansion of major tourism, entertainment, retail, and
related projects within the State requires a cooperative
and continuous partnership between government and the
private sector.
(9) The State has a responsibility to help create a
favorable climate for new and improved job opportunities
for its citizens and to increase the tax base of the State
and its political subdivisions by encouraging development
of major retail spaces within the State by the private
sector.
(10) The provision of additional incentives by the
State and its political subdivisions will relieve
conditions of unemployment, maintain existing levels of
employment, create new job opportunities, retain jobs

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within the State, increase commerce within the State, and
increase the tax base of the State and its political
subdivisions.
(11) The powers conferred by this Act promote and
protect the health, safety, morals, and welfare of the
State and are for a public purpose and public use for which
public money and resources may be expended.
(12) The necessity in the public interest for the
provisions of this Act is hereby declared as a matter of
legislative determination.
Section 5-10. Definitions. In this Act:
"Base year" means the calendar year immediately before the
calendar year in which the Office of the Governor approves the
first STAR bond project within the STAR bond district.
"Commence work" means the manifest commencement of actual
operations on the development site, such as erecting a
building, general on-site and off-site grading and utility
installations, commencing design and construction
documentation, ordering lead-time materials, excavating the
ground to lay a foundation or a basement, or work of like
description that a reasonable person would recognize as being
done with the intention and purpose to continue work until the
project is completed.
"Corporate authority" or "corporate authorities" means the
county board of a county; the mayor and alderpersons or

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similar body when the reference is to cities; the president
and trustees or similar body when the reference is to villages
or incorporated towns; and the council when the reference is
to municipalities under the commission form of government.
"De minimis amount" means an amount less than 15% of the
land area within a STAR bond district.
"Department" means the Department of Commerce and Economic
Opportunity.
"Developer" means any individual, corporation, trust,
estate, partnership, limited liability partnership, limited
liability company, or other entity. "Developer" does not
include a not-for-profit entity, political subdivision, or
other agency or instrumentality of the State.
"Development user" means an owner, operator, licensee,
codeveloper, subdeveloper, or tenant that: (i) operates a
business within a STAR bond district that is a retail store,
hotel, or entertainment venue; (ii) does not have another
Illinois location within a 30-mile radius at the time of
opening; and (iii) makes an initial capital investment,
including project costs and other direct costs, of not less
than $30,000,000 for the business.
"Director" means the Director of Commerce and Economic
Opportunity.
"Economic development region" means the counties
encompassed within any one of the 10 economic development
regions recognized by the Department on the effective date of

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this Act.
"Eligible area" means contiguous parcels of real property
that meet all of the following: (i) the property is directly
and substantially benefited by the proposed STAR bond district
plan; (ii) at least 50% of the total land area of the real
property is located within an underserved area, as defined by
the Department at the time the STAR bond district plan is
submitted; (iii) the property is located in an area with not
less than 10,000 residents within a 5-mile radius of the
proposed district; (iv) the property is located 15 miles or
less from either a State highway or federal interstate
highway; and (v) the area is found by the governing body of the
political subdivision to meet the following requirements:
(1) the use, condition, and character of the buildings
in the area, if any, are not consistent with the purposes
set forth in Section 5-5;
(2) a STAR bond district within the area is expected
to create or retain job opportunities within the political
subdivision;
(3) a STAR bond district within the area will serve to
further the development of adjacent areas;
(4) without the availability of STAR bonds, the
projects described in the STAR bond district plan would
not be feasible in the area;
(5) a STAR bond district will strengthen the
commercial sector of the political subdivision;

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(6) a STAR bond district will enhance the tax base of
the political subdivision; and
(7) the formation of a STAR bond district is in the
best interest of the political subdivision.
The findings described in paragraphs (1) through (7) are
subject to the review process provided in subsections (e) and
(f) of Section 5-20.
For the purposes of this definition, the area may be
bisected by streets, highways, roads, alleys, railways, bike
paths, streams, rivers, and other waterways and still be
deemed contiguous.
"Entertainment venue" means a business that has a primary
use of providing a venue for entertainment attractions, rides,
or other activities oriented toward the entertainment and
amusement of its patrons.
"Feasibility study" means the feasibility study described
in subsection (b) of Section 5-30.
"Hotel" has the same meaning given to that term in Section
2 of the Hotel Operators' Occupation Tax Act.
"Infrastructure" means the public improvements and private
improvements that serve the public purposes set forth in
Section 5-5 of this Act and that benefit the STAR bond district
or any STAR bond projects, including, but not limited to,
streets, drives and driveways, traffic and directional signs
and signals, parking lots and parking facilities,
interchanges, highways, sidewalks, bridges, underpasses and

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overpasses, bike and walking trails, sanitary storm sewers and
lift stations, drainage conduits, channels, levees, canals,
storm water detention and retention facilities, utilities and
utility connections, water mains and extensions, and street
and parking lot lighting and connections.
"Local sales taxes" means any locally imposed taxes
received by a municipality, county, or other local
governmental entity arising from sales by retailers and
servicemen within a STAR bond district. "Local sales taxes"
includes business district sales taxes, taxes imposed under
Section 5-50, and that portion of the net revenue allocated
from the Local Government Tax Fund and the County and Mass
Transit District Fund to the municipality, county, or other
governmental entity under the Retailers' Occupation Tax Act,
the Use Tax Act, the Service Use Tax Act, and the Service
Occupation Tax Act from transactions at places of business
located in a STAR bond district. "Local sales taxes" does not
include (i) any taxes authorized under the Local Mass Transit
District Act or the Metro-East Park and Recreation District
Act for so long as the applicable taxing district does not
impose a tax on real property, (ii) any county school facility
and resources occupation taxes imposed under Section 5-1006.7
of the Counties Code, (iii) any taxes authorized under the
Flood Prevention District Act, (iv) any taxes authorized under
the Special County Occupation Tax For Public Safety, Public
Facilities, Mental Health, Substance Abuse, or Transportation

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Law, (v) any taxes authorized under the Regional
Transportation Authority Act, (vi) any taxes authorized under
the County Motor Fuel Tax Law, or (vii) any taxes authorized
under the Municipal Motor Fuel Tax Law.
"Local sales tax increment" means:
(1) with respect to local sales taxes administered by
a municipality, county, or other unit of local government,
that portion of the local sales tax that is in excess of
the aggregate local sales tax in the district for the same
month in the base year, as determined by the respective
municipality, county, or other unit of local government;
the Department of Revenue shall allocate the local sales
tax increment only if the local sales tax is administered
by the Department; and
(2) with respect to local sales taxes administered by
the Department of Revenue:
(A) except with respect to the 0.25% county
portion of the 6.25% State rate, all the local sales
tax paid by taxpayers in the district that is in excess
of the aggregate local sales tax paid by taxpayers in
the district for the same month in the base year, as
determined by the Department of Revenue; and
(B) with respect to the 0.25% county portion of
the 6.25% State rate, in the case of a STAR bond
district that is partially or wholly within a
municipality, that portion of the 0.25% county portion

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of the 6.25% rate paid by taxpayers in the district for
sales made within the corporate limits of the
municipality that is in excess of the aggregate local
sales tax paid by taxpayers in the district for sales
made within the corporate limits of the municipality
for the same month in the base year, as determined by
the Department of Revenue, but only if the corporate
authorities of the county adopt an ordinance, and file
a copy of the ordinance with the Department of Revenue
within the same time frames as required for STAR bond
occupation taxes under Section 5-50, that designates
the taxes as part of the local sales tax increment
under this Act.
"Market study" means a study to determine the ability of
the proposed STAR bond project to gain market share locally
and regionally and to remain profitable after the term of
repayment of STAR bonds.
"Master developer" means a developer cooperating with a
political subdivision to plan, develop, and implement a STAR
bond project plan for a STAR bond district. Subject to the
limitations of Section 5-40, the master developer may work
with and transfer certain development rights to other
developers for the purpose of implementing STAR bond project
plans and achieving the purposes of this Act. A master
developer for a STAR bond district shall be appointed by a
political subdivision in the resolution establishing the STAR

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bond district, and the master developer or its affiliate must,
at the time of appointment, own or have control of, through
purchase agreements, option contracts, or other means, not
less than 50% of the acreage within the STAR bond district.
"Master developer" also means any successor developer who has
assumed the role and responsibilities of the original master
developer through the execution of an amended master
development agreement and has been approved as the master
developer through resolution by the applicable political
subdivision.
"Master development agreement" means an agreement between
the master developer (or any approved successor developers)
and the political subdivision to govern a STAR bond district
and any STAR bond projects.
"Municipality" means the city, village, or incorporated
town in which a proposed STAR bond district is located.
"New Opportunities for Vacation and Adventure District" or
"NOVA district" means a STAR bond district that encompasses a
minimum of 500 contiguous acres and, during the STAR bond
district plan approval process, demonstrates a reasonable
expectation of (1) producing a capital investment of at least
$500,000,000, (2) generating not less than $300,000,000 in
annual gross sales, (3) attracting at least 1,000,000 visitors
annually, and (4) creating a minimum of 1,500 jobs.
"Pledged STAR revenues" means those sales tax revenues and
other sources of funds that are pledged to pay debt service on

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STAR bonds or to pay project costs under Section 5-45.
Notwithstanding any provision of law to the contrary, any
State sales tax increment or local sales tax increment from a
retail entity initiating operations in a STAR bond district
while terminating operations at another Illinois location
within 25 miles of the STAR bond district shall not constitute
pledged STAR revenues or be available to pay principal and
interest on STAR bonds. For purposes of this definition,
"terminating operations" means a closing of a retail operation
that is directly related to the opening of the same operation
or like retail entity owned or operated by more than 50% of the
original ownership in a STAR bond district within one year
before or after initiating operations in the STAR bond
district, but it does not mean closing an operation for
reasons beyond the control of the retail entity, as documented
by the retail entity, subject to a reasonable finding by the
municipality (or county if such retail operation is not
located within a municipality) in which the terminated
operations were located that the closed location contained
inadequate space, had become economically obsolete, or was no
longer a viable location for the retailer or serviceperson.
"Political subdivision" means a municipality or county
that undertakes to establish a STAR bond district under the
provisions of this Act.
"Professional sports" means any of the following sports at
the major league level: baseball, basketball, football, or ice

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hockey.
"Project costs" means the total of all costs incurred or
estimated to be incurred on or after the date of establishment
of a STAR bond district that are reasonable or necessary to
implement a STAR bond district plan or any STAR bond project
plans, or both, including costs incurred for public
improvements and private improvements that serve the public
purposes set forth in Section 5-5 of this Act. "Project costs"
includes, without limitation:
(1) costs of studies, surveys, development of plans
and specifications, formation, implementation, and
administration of a STAR bond district, STAR bond district
plan, any STAR bond projects, or any STAR bond project
plans, including, but not limited to, staff and
professional service costs for architectural, engineering,
legal, financial, planning, or other services; however, no
charges for professional services may be based on a
percentage of the tax increment collected, and no
contracts for professional services, excluding
architectural and engineering services, may be entered
into if the terms of the contract extend beyond a period of
3 years;
(2) property assembly costs, including, but not
limited to, costs related to:
(A) the acquisition of land and other real
property or rights or interests in the land or other

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real property located within the boundaries of a STAR
bond district;
(B) the demolition of buildings, site preparation,
and site improvements that serve as an engineered
barrier addressing ground level or below ground
environmental contamination, including, but not
limited to, parking lots and other concrete or asphalt
barriers; and
(C) the clearing and grading of land and the
importing of additional soil and fill materials or the
removal of soil and fill materials from the site;
(3) subject to paragraph (6), the costs of buildings
and other vertical improvements that are located within
the boundaries of a STAR bond district and are owned by a
political subdivision or other public entity, including
without limitation police and fire stations, educational
facilities, and public restrooms and rest areas;
(4) costs of buildings and other vertical improvements
that are located within: (i) the boundaries of a STAR bond
district and are owned by a development user, except that
only 4 development users, other than a hotel or
entertainment venue, in a STAR bond district and one hotel
are eligible to include the cost of those vertical
improvements as project costs, or (ii) the boundaries of a
NOVA district;
(5) costs of the following vertical improvements that

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are located within (i) the boundaries of a STAR bond
district and owned by an entertainment venue, except that
only one entertainment venue in a STAR bond district is
eligible to include the cost of those vertical
improvements as project costs, or (ii) a NOVA district:
(A) buildings;
(B) rides and attractions, including, but not
limited to, carousels, slides, roller coasters,
displays, models, towers, works of art, and similar
theme and amusement park improvements; and
(C) other vertical improvements;
(6) costs of the design and construction of
infrastructure and public works located within the
boundaries of a STAR bond district that are reasonable or
necessary to implement a STAR bond district plan or any
STAR bond project plans, or both, except that "project
costs" does not include the cost of constructing a new
municipal public building principally used to provide
offices, storage space, or conference facilities or
vehicle storage, maintenance, or repair for
administrative, public safety, or public works personnel
and that is not intended to replace an existing public
building unless the political subdivision makes a
reasonable determination in a STAR bond district plan or
any STAR bond project plans, supported by information that
provides the basis for that determination, that the new

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municipal building is required to meet an increase in the
need for public safety purposes anticipated to result from
the implementation of the STAR bond district plan or any
STAR bond project plans;
(7) costs of the design and construction of the
following improvements located outside the boundaries of a
STAR bond district if the costs are essential to further
the purpose and development of a STAR bond district plan
and either (i) part of and connected to sewer, water, or
utility service lines that physically connect to the STAR
bond district or (ii) significant improvements for
adjacent off-site highways, streets, roadways, and
interchanges that are approved by the Department of
Transportation. No other cost of infrastructure and public
works improvements located outside the boundaries of a
STAR bond district may be deemed project costs;
(8) costs of job training and retraining projects for
current and future employees of development users,
including programs implemented by businesses located
within a STAR bond district;
(9) financing costs, including, but not limited to,
all necessary and incidental expenses related to the
issuance of obligations and the payment of interest on any
obligations issued under this Act, including interest
accruing during the estimated period of construction of
any improvements in a STAR bond district or any STAR bond

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projects for which such obligations are issued and for not
exceeding 36 months thereafter and including reasonable
reserves related thereto;
(10) interest costs incurred by a developer for
project costs related to the acquisition, formation,
implementation, development, construction, and
administration of a STAR bond district, STAR bond district
plan, STAR bond projects, or any STAR bond project plans
if:
(A) payment of the costs in any one year may not
exceed 30% of the annual interest costs incurred by
the developer with regard to the STAR bond district or
any STAR bond projects during that year; and
(B) the total of the interest payments paid under
this Act may not exceed 30% of the total cost paid or
incurred by the developer for a STAR bond district or
STAR bond projects, plus project costs, excluding any
property assembly costs incurred by a political
subdivision under this Act;
(11) to the extent the political subdivision by
written agreement accepts and approves the same, all or a
portion of a taxing district's capital costs resulting
from a STAR bond district or STAR bond projects
necessarily incurred or to be incurred within a taxing
district in furtherance of the objectives of a STAR bond
district plan or STAR bond project plans;

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(12) costs of common areas located within the
boundaries of a STAR bond district;
(13) costs of landscaping and plantings, retaining
walls and fences, artificial lakes and ponds, shelters,
benches, lighting, and similar amenities located within
the boundaries of a STAR bond district;
(14) costs of mounted building signs, site monuments,
and pylon signs located within the boundaries of a STAR
bond district; or
(15) if included in the STAR bond district plan and
approved in writing by the Director, salaries or a portion
of salaries for local government employees to the extent
the same are directly attributable to the work of those
employees on the establishment and management of a STAR
bond district or any STAR bond project.
Except as specified in items (1) through (15) of this
definition, "project costs" does not include:
(A) the cost of construction of buildings that are
owned by a municipality or county and leased to a
development user for uses other than as a retail store,
hotel, or entertainment venue;
(B) moving expenses for employees of the businesses
locating within the STAR bond district;
(C) property taxes for property located in the STAR
bond district;
(D) lobbying costs; and

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(E) general overhead or administrative costs of the
political subdivision that would still have been incurred
by the political subdivision if the political subdivision
had not established a STAR bond district.
"Project development agreement" means any one or more
agreements, including any amendments to that agreement or
those agreements, between a master developer and any
codeveloper or subdeveloper in connection with a STAR bond
project, which project development agreement may include the
political subdivision as a party.
"Project labor agreement" means a prehire collective
bargaining agreement that covers all terms and conditions of
employment between the general contractor and all
subcontractors hired by the master developer, developer,
codeveloper, or subdeveloper, as applicable, of a STAR bond
project. A "project labor agreement" must include the
following provisions: (1) a provision establishing the minimum
hourly wage for each class of labor organization employee; (2)
a provision establishing the benefits and other compensation
for each class of labor organization employee; (3) a provision
requiring that no strike or dispute will be engaged in by the
labor organization employees; (4) a provision requiring that
no lockout or dispute will be engaged in by the general
contractor and all subcontractors building the project; and
(5) a provision establishing goals for apprenticeship hours to
be performed by minority persons and women and goals for total

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hours to be performed by minority persons and women, as those
terms are defined in the Business Enterprise for Minorities,
Women, and Persons with Disabilities Act. A "project labor
agreement" may include other terms and conditions as
necessary.
"Projected market area" means any area within the State in
which a STAR bond district or STAR bond project is projected to
have a significant fiscal or market impact as determined by
the Director.
"Resolution" means a resolution, order, ordinance, or
other appropriate form of legislative action of a political
subdivision or other applicable public entity approved by a
vote of a majority of a quorum at a meeting of the governing
body of the political subdivision or applicable public entity.
"STAR bond" means a sales tax and revenue bond, note, or
other obligation payable from pledged STAR revenues and issued
by a political subdivision, the proceeds of which shall be
used only to pay project costs as defined in this Act.
"STAR bond district" means the specific area that is
declared to be an eligible area by the political subdivision,
that has received approval by the State, and in which the
political subdivision may develop one or more STAR bond
projects.
"STAR bond district plan" means the preliminary or
conceptual plan that generally identifies the proposed STAR
bond project areas and identifies in a general manner the

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buildings, facilities, and improvements to be constructed or
improved in each STAR bond project area.
"STAR bond project" means a project that is located within
a STAR bond district and that is approved under Section 5-30.
"STAR bond project area" means the geographic area within
a STAR bond district in which there may be one or more STAR
bond projects.
"STAR bond project plan" means the written plan adopted by
a political subdivision for the development of a STAR bond
project in a STAR bond district; the plan may include, but is
not limited to, (i) project costs incurred prior to the date of
the STAR bond project plan and estimated future STAR bond
project costs, (ii) proposed sources of funds to pay those
costs, (iii) the nature and estimated term of any obligations
to be issued by the political subdivision to pay those costs,
(iv) the most recent equalized assessed valuation of the STAR
bond project area, (v) an estimate of the equalized assessed
valuation of the STAR bond district or applicable project area
after completion of a STAR bond project, (vi) a general
description of the types of any known or proposed developers,
users, or tenants of the STAR bond project or projects
included in the plan, (vii) a general description of the type,
structure, and character of the property or facilities to be
developed or improved, (viii) a description of the general
land uses to apply to the STAR bond project, and (ix) a general
description or an estimate of the type, class, and number of

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employees to be employed in the operation of the STAR bond
project.
"State sales tax" means all the net revenue realized under
the Retailers' Occupation Tax Act, the Use Tax Act, the
Service Use Tax Act, and the Service Occupation Tax Act from
transactions at places of business located within a STAR bond
district, excluding that portion of the net revenue realized
under the Retailers' Occupation Tax Act, the Use Tax Act, the
Service Use Tax Act, and the Service Occupation Tax Act from
transactions at places of business located within a STAR bond
district that is deposited into the Local Government Tax Fund
and the County and Mass Transit District Fund.
"State sales tax increment" means:
(1) with respect to all STAR bond districts that do
not qualify as NOVA districts:
(A) 100% of that portion of the aggregate State
sales tax that is in excess of the aggregate State
sales tax for the same month in the base year, as
determined by the Department of Revenue, from
transactions at up to 4 development users located
within a STAR bond district, which development users
shall be designated by the master developer and
approved by the political subdivision and the Director
of Revenue in conjunction with the applicable STAR
bond project approval; and
(B) 25% of that portion of the aggregate State

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sales tax that is in excess of the aggregate State
sales tax for the same month in the base year, as
determined by the Department of Revenue from all other
transactions within a STAR bond district; and
(2) with respect to all NOVA districts:
(A) 100% of that portion of the State sales tax
that is in excess of the State sales tax for the same
month in the base year, as determined by the
Department of Revenue, from transactions at up to 4
development users located, which development users
shall be designated by the master developer and
approved by the political subdivision and the Director
of Revenue in conjunction with the applicable STAR
bond project approval; and
(B) 50% of that portion of the State sales tax that
is in excess of the State sales tax for the same month
in the base year from all other transactions within
the NOVA district.
"Substantial change" means a change in which the proposed
STAR bond project plan differs substantially in size, scope,
or use from the approved STAR bond district plan or STAR bond
project plan.
"Taxpayer" means an individual, partnership, corporation,
limited liability company, trust, estate, or other entity that
is subject to the Illinois Income Tax Act.
"Total development costs" means the aggregate public and

SB1911 Enrolled - 24 - LRB104 09605 HLH 19670 b
private investment in a STAR bond district, including project
costs and other direct and indirect costs related to the
development of the STAR bond district.
"Underserved area" has the meaning given to that term in
Section 5-5 of the Economic Development for a Growing Economy
Tax Credit Act.
"Vacant" means that portion of the land in a proposed STAR
bond district that is not occupied by a building, facility, or
other vertical improvement.
Section 5-15. Limitations on STAR bond districts and STAR
bond projects. The Office of the Governor, in consultation
with the Department, the Department of Revenue, and the
Governor's Office of Management and Budget, shall have final
approval of all STAR bond districts and STAR bond projects
established under this Act, which may be established
throughout the 10 Economic Development Regions in the State as
established by the Department. Regardless of the number of
STAR bond districts established within any Economic
Development Region: (i) only one STAR bond project may be
approved for each Economic Development Region having a
population of less than 600,000; (ii) up to 3 STAR bond
projects may be approved for each Economic Development Region
having a population of between 600,000 and 999,999; and (iii)
up to 4 STAR bond projects may be approved for each Economic
Development Region having a population of 1,000,000 or more,

SB1911 Enrolled - 25 - LRB104 09605 HLH 19670 b
excluding projects located in STAR bond districts established
under the Innovation Development and Economy Act. A STAR bond
district under this Act may not be located either entirely or
partially inside of a municipality with a population in excess
of 2,000,000.
A STAR bond project that is not located in a NOVA district
may not receive reimbursement from the proceeds of bonds
secured by State sales tax increment that exceeds the lesser
of (1) 50% of the total development costs or (2) an aggregate
amount of $75,000,000. A STAR bond project that is located in a
NOVA district may not receive reimbursement from the proceeds
of bonds secured by State sales tax increment that exceeds the
lesser of (1) 50% of the total development costs or (2) an
aggregate amount of $800,000,000.
Section 5-20. Establishment of STAR bond district.
(a) The corporate authorities of a municipality may
establish a STAR bond district within an eligible area within
the municipality or partially outside the boundaries of the
municipality in an unincorporated area of the county. A STAR
bond district that is partially outside the boundaries of the
municipality must also be approved by the corporate
authorities of the county by the passage of a resolution. The
corporate authorities of a county may establish a STAR bond
district in an eligible area in any unincorporated area of the
county.

SB1911 Enrolled - 26 - LRB104 09605 HLH 19670 b
(b) When a political subdivision is interested in
establishing a STAR bond district, the political subdivision
must first provide notice to the Director of Commerce and
Economic Opportunity and the Director of Revenue on or before
June 1, 2026 of its intention to establish a STAR bond
district. After filing notice, the political subdivision shall
determine whether the area satisfies the statutory criteria to
establish a STAR bond district consistent with this Act. The
corporate authorities of the political subdivision shall adopt
a resolution stating that the political subdivision is
considering the establishment of a STAR bond district. The
resolution shall:
(1) give notice, in the same manner as set forth in
subsection (e) of Section 5-30, that a public hearing will
be held to consider the establishment of a STAR bond
district and fix the date, hour, and place of the public
hearing, which shall be at a location that is within 20
miles of the STAR bond district, in a facility that can
accommodate a large crowd, and in a facility that is
accessible to persons with disabilities;
(2) describe the proposed general boundaries of the
STAR bond district;
(3) describe the STAR bond district plan;
(4) require that a description and map of the proposed
STAR bond district are available for inspection at a time
and place designated;

SB1911 Enrolled - 27 - LRB104 09605 HLH 19670 b
(5) identify the master developer for the STAR bond
district; and
(6) require that the corporate authorities consider
findings necessary for the establishment of a STAR bond
district.
(c) Upon the conclusion of the public hearing the
corporate authorities of the political subdivision may adopt a
resolution to establish the STAR bond district.
(1) A resolution to establish a STAR bond district
shall:
(A) make findings that the proposed STAR bond
district is to be developed with a STAR bond project;
(B) make findings that the STAR bond district is
an eligible area;
(C) contain a STAR bond district plan that
identifies in a general manner the buildings and
facilities that are proposed to be constructed or
improved as part of the STAR bond project and that
includes plans for at least one development user;
(D) contain the legal description of the STAR bond
district;
(E) appoint the master developer for the STAR bond
district, subject to the provisions of Section 5-25,
and, if applicable, verify that master developer has a
signed project labor agreement for the construction of
future improvements within any STAR bond projects;

SB1911 Enrolled - 28 - LRB104 09605 HLH 19670 b
(F) if applicable, make a finding that the STAR
bond district plan demonstrates a reasonable
expectation that it will meet the acreage, capital
investment, sales, and job creation thresholds
necessary to qualify as a NOVA district and contains a
request for NOVA district designation; and
(G) establish the STAR bond district, contingent
upon approval of the State as set forth in subsection
(e).
(2) If the resolution to establish a STAR bond
district is not adopted by the political subdivision
within 60 days after the conclusion of the public hearing,
then the STAR bond district shall not be established.
(3) Upon adoption of a resolution to establish a STAR
bond district, the political subdivision shall send a
certified copy of the resolution to the Director of
Commerce and Economic Opportunity, the Director of
Revenue, and the Director of the Governor's Office of
Management and Budget within 60 days after the adoption of
the resolution.
(d) Upon adoption of a resolution to establish a STAR bond
district, the STAR bond district and any STAR bond project
shall be governed by a master development agreement between
the political subdivision and the master developer. A STAR
bond district that is partially outside the boundaries of a
municipality shall require only one master development

SB1911 Enrolled - 29 - LRB104 09605 HLH 19670 b
agreement, which shall be between the municipality and the
master developer. In no event shall there be more than one
master development agreement governing the terms and
conditions of a STAR bond district. The master development
agreement shall require the master developer to ensure
compliance with the following requirements to reduce the
ecological impact of the STAR bond district development: (i)
inclusion of pollution prevention, erosion, and sedimentation
control plans during construction; (ii) protection of
endangered species' habitat and wetlands mitigation; (iii)
preservation of at least 20% of the STAR bond district as green
space, including lawns, parks, landscaped areas, paths, lakes,
ponds, and other water features; (iv) promotion of the use of
renewable energy to the extent commercially feasible; (v)
implementation of recycling programs during construction and
at completed STAR bond projects; (vi) preservation of water
quality and promotion of water conservation through the use of
techniques such as reusing storm water and landscaping with
native and low-maintenance vegetation to reduce the need for
irrigation and fertilization; (vii) inclusion of comprehensive
lighting programs that reduce light pollution within the STAR
bond district; and (viii) promotion of shared parking between
different users to reduce the impact on project sites.
(e) Upon adoption of a resolution to establish a STAR bond
district, the political subdivision shall submit the proposed
STAR bond district plan to the Department, the Department of

SB1911 Enrolled - 30 - LRB104 09605 HLH 19670 b
Revenue, and the Governor's Office of Management and Budget
for consideration. All proposed STAR bond district plans must
be submitted on or before January 1, 2027 for consideration.
The Department, the Department of Revenue, and the Governor's
Office of Management and Budget shall make a joint
recommendation to approve a STAR bond district if the agencies
find that: (i) the proposed STAR bond district is an eligible
area; (ii) the STAR bond district plan includes a STAR bond
project that would entail a projected capital investment of at
least $30,000,000 for a STAR bond district that is not
proposed to be designated as a NOVA district or $500,000,000
for a STAR bond district that is proposed to be designated as a
NOVA district; (iii) the STAR bond district plan includes a
STAR bond project that is reasonably projected to produce at
least $60,000,000 of annual gross sales and at least 300 new
jobs or, for a STAR bond district proposed to be designated as
a NOVA district, at least $300,000,000 of annual gross sales
and 1,500 new jobs; (iv) the STAR bond district plan includes
potential development users; (v) the creation of the STAR bond
district and STAR bond district plan are in accordance with
the purpose of this Act and the public interest; and (vi) the
STAR bond district and STAR bond district plan meet any other
requirement that the State deems appropriate. The agencies
shall send a copy of their written findings and recommendation
for approval or denial of a STAR bond district to the Office of
the Governor for review and final action. In the case of any

SB1911 Enrolled - 31 - LRB104 09605 HLH 19670 b
NOVA district, those written findings and recommendations
shall be submitted to the Office of the Governor within 60 days
following the agencies' receipt of the District Plan proposing
the NOVA district.
(f) Upon receipt of the written findings and
recommendations, the Office of the Governor shall review the
submission and issue a final approval or denial of the STAR
bond district and send written notice of its approval or
denial to the requesting political subdivision and to the
agencies. If requested by the political subdivision under
paragraph (F) of subsection (c) of this Section, the written
notice shall also include a determination as to whether the
proposed STAR bond district qualifies for designation as a
NOVA district and shall be issued within 30 days after the
Office of the Governor receives the written findings of the
agencies as provided in subsection (e).
(g) Starting on the fifth anniversary of the first date of
distribution of State sales tax increment from the approved
STAR bond project in the STAR bond district, or, if the project
is in a NOVA district, the earlier of (i) the fifteenth
anniversary of that date or (ii) the date requested by the
master developer, and continuing each anniversary thereafter,
the Director shall, in consultation with the political
subdivision and the master developer, determine the total
number of new jobs created within the STAR bond district, the
total development cost to date, and the master developer's

SB1911 Enrolled - 32 - LRB104 09605 HLH 19670 b
compliance with its obligations under any written agreements
with the State. If, on the fifth anniversary of the first date
of distribution of State sales tax increment from the approved
STAR bond project in the STAR bond district, or the earlier of
(i) the fifteenth anniversary of that date or (ii) the date
requested by the master developer if the project is in a NOVA
district, the Director determines that the total development
cost to date is not equal to or greater than (i) $30,000,000 if
the project is not in a NOVA district or (ii) $500,000,000 if
the project is in a NOVA district, or that the master developer
is in breach of any written agreement with the State, then no
new STAR bonds may be issued in the STAR bond district until
the total development cost exceeds $30,000,000 or
$500,000,000, as applicable, or the breach of agreement is
cured, or both. If, on the fifth anniversary of the first date
of distribution of State sales tax increment from the approved
STAR bond project in the STAR bond district, or the earlier of
(i) the fifteenth anniversary of that date or (ii) the date
requested by the master developer if the project is in a NOVA
district, there are not at least (i) 300 new jobs existing in
the STAR bond district if the project is not in a NOVA district
or (ii) 1,500 new jobs existing in the STAR bond district if
the project is in a NOVA district, the State may require the
master developer to pay the State a penalty of $1,500 per job
under 300 or 1,500, as applicable, each year until the earlier
of (i) the twenty-third anniversary of the first date of

SB1911 Enrolled - 33 - LRB104 09605 HLH 19670 b
distribution of State sales tax increment from the approved
STAR bond project in the STAR bond district, (ii) the date that
all STAR bonds issued in the STAR bond district have been paid
off, or (iii) the date on which at least 300 jobs or 1,500
jobs, as applicable, have been created in the STAR bond
district. Upon creation of 300 jobs or 1,500 jobs, as
applicable, in the STAR bond district, there shall not be an
ongoing obligation to maintain those jobs after the fifth
anniversary of the first date of distribution of State sales
tax increment from the approved STAR bond project in the STAR
bond district, and the master developer shall be relieved of
any liability with respect to job creation under this
subsection. Notwithstanding anything to the contrary in this
subsection, the master developer shall not be liable for the
penalties set forth in this subsection if the breach of
agreement, failure to reach the required amount in total
development costs, or failure to create the required number of
jobs is due to delays caused by force majeure, as that term is
defined in the master development agreement.
Section 5-25. Master developer standards. The master
developer appointed for the STAR bond district shall meet high
standards of creditworthiness and financial strength, as
demonstrated by one or more of the following: (i) corporate
debenture ratings of BBB or higher by Standard & Poor's
Corporation or Baa or higher by Moody's Investors Service,

SB1911 Enrolled - 34 - LRB104 09605 HLH 19670 b
Inc.; (ii) a letter from a financial institution with assets
of $10,000,000 or more attesting to the financial strength of
the master developer; or (iii) specific evidence of equity
financing for not less than 10% of the estimated total STAR
bond project costs.
Section 5-30. Approval of STAR bond projects.
(a) The corporate authorities of a political subdivision
seeking to establish a STAR bond project in an approved STAR
bond district must submit a proposed STAR bond project plan to
the Department, the Department of Revenue, and the Governor's
Office of Management and Budget on or before June 1, 2028. A
STAR bond project which is partially outside the boundaries of
a municipality must also be approved by the corporate
authorities of the county by resolution.
After the establishment of a STAR bond district, the
master developer may propose a STAR bond project to a
political subdivision, and the master developer shall, in
cooperation with the political subdivision, prepare a STAR
bond project plan in consultation with the planning commission
of the political subdivision, if any. The STAR bond project
plan may be implemented in separate development stages.
(b) Any political subdivision considering a STAR bond
project within a STAR bond district shall cause to be prepared
an independent feasibility study. The feasibility study shall
be prepared by a feasibility consultant approved by the

SB1911 Enrolled - 35 - LRB104 09605 HLH 19670 b
Department. The feasibility consultant shall provide certified
copies of the feasibility study to the political subdivision,
the Department, the Department of Revenue, and the Governor's
Office of Management and Budget. The feasibility study shall
include the following:
(1) the estimated amount of pledged STAR revenues
expected to be collected in each year through the maturity
date of the proposed STAR bonds;
(2) a statement of how the jobs and taxes obtained
from the STAR bond project will contribute significantly
to the economic development of the State and region;
(3) visitation expectations;
(4) the unique quality of the project;
(5) an economic impact study;
(6) a market study;
(7) current and anticipated infrastructure analysis;
(8) integration and collaboration with other resources
or businesses;
(9) the quality of service and experience provided, as
measured against national consumer standards for the
specific target market;
(10) project accountability, measured according to
best industry practices;
(11) the expected return on State and local investment
that the STAR bond project is anticipated to produce; and
(12) an anticipated principal and interest payment

SB1911 Enrolled - 36 - LRB104 09605 HLH 19670 b
schedule on the STAR bonds.
The feasibility consultant, along with any other
consultants commissioned to perform the studies and other
analysis required by the feasibility study, shall be selected
by the political subdivision but approved by the Department.
The consultants shall be retained by the political
subdivision. The political subdivision may seek reimbursement
from the master developer.
The failure to include all information enumerated in this
subsection in the feasibility study for a STAR bond project
shall not affect the validity of STAR bonds issued under this
Act.
(c) If the political subdivision determines the STAR bond
project is feasible, the STAR bond project plan shall include:
(1) a summary of the feasibility study;
(2) a reference to the STAR bond district plan that
identifies the STAR bond project area that is set forth in
the STAR bond project plan that is being considered;
(3) a legal description and map of the STAR bond
project area to be developed or redeveloped;
(4) a description of the buildings and facilities
proposed to be constructed or improved in the STAR bond
project area, including development users, as applicable;
(5) a copy of letters of intent to locate within the
STAR bond district signed by both the master developer and
the appropriate corporate officer of at least one

SB1911 Enrolled - 37 - LRB104 09605 HLH 19670 b
development user for the STAR bond project proposed within
the district;
(6) a copy of a project labor agreement entered into
by the master developer and a commitment by the master
developer, other developers, contractors, and
subcontractors to comply with the requirements of Section
30-22 of the Illinois Procurement Code as they apply to
responsible bidders; and
(7) any other information the corporate authorities of
the political subdivision deems reasonable and necessary
to advise the public of the intent of the STAR bond project
plan.
(d) Before a political subdivision may hold a public
hearing to consider a STAR bond project plan, the political
subdivision must apply to the Department, the Department of
Revenue, and the Governor's Office of Management and Budget
for joint review and recommendation and ultimate approval or
denial by the Office of the Governor of the STAR bond project
plan. The corporate authorities of a political subdivision
seeking to establish a STAR bond project in an approved STAR
bond district must submit a proposed STAR bond project plan to
the Department, the Department of Revenue, and the Governor's
Office of Management and Budget by June 1, 2028 for
consideration.
An application for approval of a STAR bond project plan
must not be approved by the State unless all the components of

SB1911 Enrolled - 38 - LRB104 09605 HLH 19670 b
the feasibility study set forth in paragraphs (1) through (12)
of subsection (b) have been completed and submitted for review
and recommendation for approval or denial. In addition to
reviewing all the other elements of the STAR bond project plan
required under subsection (c), which must be included in the
application and include a letter of intent as required under
paragraph (5) of subsection (c) in order to receive State
approval, the Department, the Department of Revenue, and the
Governor's Office of Management and Budget must review the
feasibility study and consider all the components of the
feasibility study set forth in paragraphs (1) through (12) of
subsection (b), including, without limitation, the economic
impact study and the financial benefit of the proposed STAR
bond project to the local, regional, and State economies, the
proposed adverse impacts on similar businesses and projects as
well as municipalities within the market area, and the net
effect of the proposed STAR bond project on the local,
regional, and State economies. In addition to the economic
impact study, the political subdivision must also submit to
the agencies, as part of its application, the financial and
other information that substantiates the basis for the
conclusion of the economic impact study, in the form and
manner as required by the agencies, so that the agencies can
verify the results of the study. In addition to any other
criteria in this subsection, the State may not approve the
STAR bond project plan unless the agencies are satisfied that

SB1911 Enrolled - 39 - LRB104 09605 HLH 19670 b
the proposed development users are, in fact, true development
users and find that the STAR bond project plan is in accordance
with the purpose of this Act and the public interest. As part
of the review, the agencies shall evaluate the conclusions of
the feasibility study as it relates to the projected State and
local sales tax increments expected to be generated in the
STAR bond district. The Department, the Department of Revenue,
and the Governor's Office of Management and Budget shall
jointly recommend the approval of a STAR bond project plan. In
making the recommendation, the agencies shall consider the
proximity of a proposed STAR bond project to another proposed
or existing STAR bond project. Notwithstanding any other
provision of this Act, the Department, the Department of
Revenue, and the Governor's Office of Management and Budget
shall not approve any STAR bond project plan that includes as
part of the plan the development of any facility, stadium,
arena, or other structure if: (1) the purpose of the facility,
stadium, arena, or other structure is the holding of
professional sports contests; or (2) the facility, stadium,
arena, or other structure is within a one-mile radius of any
structure that is developed on or after the effective date of
this Act and has as one of its purposes the holding of
professional sports contests. The agencies shall send a copy
of their written findings and recommended approval or denial
of the STAR bond project plan to the Office of the Governor for
final action. Upon receipt of the Director's written findings

SB1911 Enrolled - 40 - LRB104 09605 HLH 19670 b
and recommendation, the Office of the Governor shall issue a
final approval or denial of the STAR bond project plan based on
the criteria in this subsection and Section 5-15 and send a
written approval or denial to the requesting political
subdivision. Notwithstanding any other provision of law, for
STAR bond districts designated as NOVA districts, the Office
of the Governor shall issue a final approval or denial of the
STAR bond project plan based on the criteria in this
subsection and Section 5-15 and send written approval or
denial to the requesting political subdivision within 180 days
after the political subdivision applies for approval, as set
out in this subsection (d). In granting its approval, the
Office of the Governor may require the political subdivision
to execute a binding agreement or memorandum of understanding
with the State. The terms of the agreement or memorandum may
include, among other things, the political subdivision's
repayment of the State sales tax increment distributed to it
if any violation of the agreement or memorandum or this Act
occurs.
(e) Upon a finding by the planning and zoning commission
of the political subdivision, if any, that the STAR bond
project plan is consistent with the intent of the
comprehensive plan for the development of the political
subdivision and upon issuance of written approval of the STAR
bond project plan from the Office of the Governor under
subsection (d) of this Section, the corporate authorities of

SB1911 Enrolled - 41 - LRB104 09605 HLH 19670 b
the political subdivision shall adopt a resolution stating
that the political subdivision is considering the adoption of
the STAR bond project plan. The resolution shall:
(1) give notice that a public hearing will be held to
consider the adoption of the STAR bond project plan and
fix the date, hour, and place of the public hearing;
(2) describe the general boundaries of the STAR bond
district within which the STAR bond project will be
located and the date of establishment of the STAR bond
district;
(3) describe the general boundaries of the area
proposed to be included within the STAR bond project area;
(4) provide that the STAR bond project plan and map of
the area to be redeveloped or developed are available for
inspection during regular office hours in the offices of
the political subdivision; and
(5) contain a summary of the terms and conditions of
any proposed project development agreement with the
political subdivision.
(f) A public hearing shall be conducted to consider the
adoption of any STAR bond project plan.
(1) The date fixed for the public hearing to consider
the adoption of the STAR bond project plan shall be not
less than 20 nor more than 90 days following the date of
the adoption of the resolution fixing the date of the
hearing.

SB1911 Enrolled - 42 - LRB104 09605 HLH 19670 b
(2) A copy of the political subdivision's resolution
providing for the public hearing shall be sent by
certified mail, return receipt requested, to the corporate
authorities of the county. A copy of the political
subdivision's resolution providing for the public hearing
shall be sent by certified mail, return receipt requested,
to each person or persons in whose name the general taxes
for the last preceding year were paid on each parcel of
land lying within the proposed STAR bond project area
within 10 days following the date of the adoption of the
resolution. The resolution shall be published once in a
newspaper of general circulation in the political
subdivision not less than one week nor more than 3 weeks
before the date fixed for the public hearing. A map or
aerial photo clearly delineating the area of land proposed
to be included within the STAR bond project area shall be
published with the resolution.
(3) The hearing shall be held at a location that is
within 20 miles of the STAR bond district in a facility
that can accommodate a large crowd is accessible to
persons with disabilities.
(4) At the public hearing, a representative of the
political subdivision or master developer shall present
the STAR bond project plan. Following the presentation of
the STAR bond project plan, all interested persons shall
be given an opportunity to be heard. The corporate

SB1911 Enrolled - 43 - LRB104 09605 HLH 19670 b
authorities may continue the date and time of the public
hearing.
(g) Upon conclusion of the public hearing, the governing
body of the political subdivision may adopt the STAR bond
project plan by a resolution approving the STAR bond project
plan.
(h) After the adoption by the corporate authorities of the
political subdivision of a STAR bond project plan, the
political subdivision may enter into a project development
agreement if the master developer has requested the political
subdivision to be a party to the project development agreement
under subsection (b) of Section 5-40.
(i) Within 30 days after the adoption by the political
subdivision of a STAR bond project plan, the clerk of the
political subdivision shall transmit a copy of the legal
description of the land and a list of all new and existing
mailing addresses within the STAR bond district, a copy of the
resolution adopting the STAR bond project plan, and a map or
plat indicating the boundaries of the STAR bond project area
and STAR bond district to the clerk, treasurer, and governing
body of the county and to the Department and Department of
Revenue. Within 30 days of creation of any new mailing address
within a STAR bond district, the clerk of the political
subdivision shall provide written notice of that new address
to the Department and the Department of Revenue.
If a certified copy of the resolution adopting the STAR

SB1911 Enrolled - 44 - LRB104 09605 HLH 19670 b
bond project plan is filed with the Department of Revenue on or
before the first day of April, the Department of Revenue, if
all other requirements of this subsection are met, shall
proceed to collect and allocate any local sales tax increment
and any State sales tax increment in accordance with the
provisions of this Act on the first day of July next following
the adoption and filing. If a certified copy of the resolution
adopting the STAR bond project plan is filed with the
Department of Revenue after April 1 but on or before the first
day of October, the Department of Revenue, if all other
requirements of this subsection are met, shall proceed to
collect and allocate any local sales tax increment and any
State sales tax increment in accordance with the provisions of
this Act as of the first day of January next following the
adoption and filing.
Any substantial changes to a STAR bond project plan as
adopted shall be subject to a public hearing following
publication of notice thereof in a newspaper of general
circulation in the political subdivision and approval by
resolution of the governing body of the political subdivision.
The Department of Revenue shall not collect or allocate
any local sales tax increment or State sales tax increment
until the political subdivision also provides, in the manner
prescribed by the Department of Revenue, the boundaries of the
STAR bond district and each address in the STAR bond district
in such a way that the Department of Revenue can determine by

SB1911 Enrolled - 45 - LRB104 09605 HLH 19670 b
its address whether a business is located in the STAR bond
district. The political subdivision must provide this boundary
and address information to the Department of Revenue, with a
copy to the Department, on or before April 1 for
administration and enforcement under this Act by the
Department of Revenue beginning on the following July 1 and on
or before October 1 for administration and enforcement under
this Act by the Department of Revenue beginning on the
following January 1. The Department of Revenue shall not
administer or enforce any change made to the boundaries of a
STAR bond district or any address change, addition, or
deletion until the political subdivision reports the boundary
change or address change, addition, or deletion to the
Department of Revenue, with a copy to the Department, in the
manner prescribed by the Department of Revenue. The political
subdivision must provide this boundary change or address
change, addition, or deletion information to the Department of
Revenue, with a copy to the Department, on or before April 1
for administration and enforcement by the Department of
Revenue of the change, addition, or deletion beginning on the
following July 1 and on or before October 1 for administration
and enforcement by the Department of Revenue of the change,
addition, or deletion beginning on the following January 1. If
a retailer is incorrectly included or excluded from the list
of those located in the STAR bond district, the Department of
Revenue shall be held harmless if the Department reasonably

SB1911 Enrolled - 46 - LRB104 09605 HLH 19670 b
relied on information provided by the political subdivision.
(j) Any STAR bond project must be approved by the
political subdivision within 23 years after the date of the
approval of the STAR bond district; however, any amendments to
the STAR bond project may occur following that date.
(k) Any developer of a STAR bond project shall commence
work on the STAR bond project within 3 years from the date of
adoption of the STAR bond project plan. If the developer fails
to commence work on the STAR bond project within the 3-year
period, funding for the project shall cease and the developer
of the project or complex shall have one year to appeal to the
political subdivision for a one-time reapproval of the project
and funding. If the project is reapproved, the 3-year period
for commencement shall begin again on the date of the
reapproval. If the project is not reapproved or if the
developer again fails to commence work on the STAR bond
project within the second 3-year period, the project shall be
terminated, and the Department may accept applications for a
new STAR bond project in the Economic Development Region.
(l) After the adoption of a STAR bond project plan by the
corporate authorities of the political subdivision and
approval by the Office of the Governor under subsection (d),
the political subdivision may authorize the issuance of STAR
bonds in one or more series to finance the STAR bond project or
pay or reimburse any eligible project cost within the STAR
bond district in accordance with the provisions of this Act.

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(m) Except as otherwise provided in subsection (n), the
maximum maturity of STAR bonds issued to finance a STAR bond
project shall not exceed 23 years from the first date of
distribution of State sales tax increment from the STAR bond
project to the political subdivision unless the political
subdivision extends that maturity by resolution up to a
maximum of 35 years from such first distribution date. Any
such extension shall require the approval of the Office of the
Governor, upon the recommendation of the Directors. In no
event shall the maximum maturity date for any STAR bonds
exceed that date which is 35 years from the first distribution
date of the first STAR bonds issued in a STAR bond district.
(n) The maximum maturity of STAR bonds issued to finance a
STAR bond project located within a NOVA district shall not
exceed 35 years from the first date of distribution of State
sales tax increment from the STAR bond project to the
political subdivision.
Section 5-35. Approval of STAR bond projects in NOVA
districts. Notwithstanding any other provision of this Act, a
STAR bond project may be approved within each STAR bond
district designated as a NOVA district. Except as otherwise
provided in this Act, approval of a NOVA district shall follow
the same procedures applicable to STAR bond district approval
as provided in Section 5-20, and that designation shall be
determined by the Office of the Governor during the STAR bond

SB1911 Enrolled - 48 - LRB104 09605 HLH 19670 b
district approval process. The NOVA district must satisfy the
criteria set forth to be considered a NOVA district under
Section 5-10. Except as otherwise provided in this Act,
establishment of a NOVA district shall be construed to have
the same application and effect as a STAR bond district.
Section 5-40. Codevelopers and subdevelopers.
(a) Upon approval of a STAR bond project by the political
subdivision, the master developer may, subject to the approval
of the State and the political subdivision, develop the STAR
bond project on its own or it may develop the STAR bond project
with another developer, which may include an assignment or
transfer of development rights.
A master developer may sell, lease, or otherwise convey
its property interest in the STAR bond project area to a
codeveloper or subdeveloper.
(b) A master developer may enter into one or more
agreements with a codeveloper or subdeveloper in connection
with a STAR bond project, and the master developer may request
that the political subdivision become a party to the project
development agreement, or the master developer may request
that the political subdivision amend its master development
agreement to provide for certain terms and conditions that may
be related to the codeveloper or subdeveloper and the STAR
bond project. For any project development agreement to which
the political subdivision would be a party or for any

SB1911 Enrolled - 49 - LRB104 09605 HLH 19670 b
amendments to the master development agreement, the terms and
conditions must be acceptable to both the master developer and
the political subdivision. The Director shall receive a copy
of the master development agreement and any amendments.
Section 5-45. STAR bonds; source of payment.
(a) Any political subdivision shall have the power to
issue STAR bonds in one or more series to finance the
undertaking of any STAR bond project in accordance with the
provisions of this Act and the Omnibus Bond Acts. Any STAR bond
project approved under this Act may be completed in one or more
phases, and STAR bonds may be issued, in one or more series, to
finance any STAR bond project or phase thereof. STAR bonds may
be issued as revenue bonds, alternate bonds, or general
obligation bonds as defined in and subject to the procedures
provided in the Local Government Debt Reform Act.
STAR bonds may be made payable, both as to principal and
interest, from the following revenues, which, to the extent
pledged by each respective political subdivision or other
public entity for that purpose, shall constitute pledged STAR
revenues:
(1) revenues of the political subdivision derived from
or held in connection with the undertaking and carrying
out of any STAR bond project or projects under this Act;
(2) available private funds and contributions, grants,
tax credits, or other financial assistance from the State

SB1911 Enrolled - 50 - LRB104 09605 HLH 19670 b
or federal government;
(3) any taxes created under Section 5-50 and
designated as pledged STAR revenues by the political
subdivision;
(4) all the local sales tax increment of a
municipality, county, or other unit of local government;
(5) any special service area taxes collected within
the STAR bond district under the Special Service Area Tax
Act, which may be used for the purposes of funding project
costs or paying debt service on STAR bonds in addition to
the purposes contained in the special service area plan;
(6) all the State sales tax increment;
(7) any other revenues appropriated by the political
subdivision; and
(8) any combination of these methods.
(b) The political subdivision may pledge the pledged STAR
revenues to the repayment of STAR bonds before, simultaneously
with, or after the issuance of the STAR bonds.
(c) Bonds issued as revenue bonds shall not be general
obligations of the political subdivision, nor, in any event,
shall they give rise to a charge against the political
subdivision's general credit or taxing powers or be payable
out of any funds or properties other than those set forth in
subsection (a). The bonds shall so state on their face.
(d) For each STAR bond project financed with STAR bonds
payable from the pledged STAR revenues, the political

SB1911 Enrolled - 51 - LRB104 09605 HLH 19670 b
subdivision shall prepare and submit to the Department, the
Department of Revenue, the Office of the Governor, and the
Governor's Office of Management and Budget by June 1 of each
year a report describing the status of the STAR bond project,
any expenditures of the proceeds of STAR bonds that have
occurred for the preceding calendar year, and any expenditures
of the proceeds of the bonds expected to occur in the future,
including the amount of pledged STAR revenue, the amount of
revenue that has been spent, the projected amount of the
revenue, and the anticipated use of the revenue. Each annual
report shall be accompanied by an affidavit of the master
developer certifying the contents of the report as true to the
best of the master developer's knowledge. The Department shall
have the right, but not the obligation, to request the Auditor
General to review the annual report and the political
subdivision's records containing the source information for
the report for the purpose of verifying the report's contents.
If the Auditor General declines the request for review, the
Department shall have the right to select an independent
third-party auditor to conduct an audit of the annual report
and the political subdivision's records containing the source
information for the report. The reasonable cost of the audit
shall be paid by the master developer. The master development
agreement shall grant the Department and the Auditor General
the right to review the records of the political subdivision
containing the source information for the report.

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(e) As soon as possible after the first day of each month,
upon certification of the Department of Revenue, the
Comptroller shall order transferred and the Treasurer shall
transfer, from the General Revenue Fund to the STAR Bonds
Revenue Fund, the State sales tax increment for the second
preceding month, less 3% of that amount, which shall be
transferred into the Tax Compliance and Administration Fund
and shall be used by the Department of Revenue, subject to
appropriation, to cover the costs of the Department of Revenue
in administering this Act. As soon as possible after the first
day of each month, upon certification of the Department of
Revenue, the Comptroller shall order transferred and the
Treasurer shall transfer, from the Local Government Tax Fund
to the STAR Bonds Revenue Fund, the local sales tax increment
for the second preceding month, as provided in Section 6z-18
of the State Finance Act and from the County and Mass Transit
District Fund to the STAR Bonds Revenue Fund the local sales
tax increment for the second preceding month, as provided in
Section 6z-20 of the State Finance Act. On or before the 25th
day of each calendar month, the Department of Revenue shall
prepare and certify to the Comptroller the disbursement of
stated sums of money out of the STAR Bonds Revenue Fund to
named municipalities and counties, the municipalities and
counties to be those entitled to distribution of taxes or
penalties paid to the Department of Revenue during the second
preceding calendar month. The amount to be paid to each

SB1911 Enrolled - 53 - LRB104 09605 HLH 19670 b
municipality or county shall be the amount of the State sales
tax increment and the local sales tax increment (not including
credit memoranda or the amount transferred into the Tax
Compliance and Administration Fund) collected during the
second preceding calendar month by the Department of Revenue
from retailers and servicepersons on transactions at places of
business located within a STAR bond district in that
municipality or county, plus an amount the Department of
Revenue determines is necessary to offset any amounts which
were erroneously paid to a different taxing body, and not
including an amount equal to the amount of refunds made during
the second preceding calendar month by the Department of
Revenue, and not including any amount which the Department of
Revenue determines is necessary to offset any amounts which
are payable to a different taxing body but were erroneously
paid to the municipality or county. Within 10 days after
receipt by the Comptroller of the disbursement certification
to the municipalities and counties, which shall be given to
the Comptroller by the Department of Revenue, the Comptroller
shall cause the orders to be drawn for the respective amounts
in accordance with the directions contained in the
certification. When certifying the amount of monthly
disbursement to a municipality or county under this
subsection, the Department of Revenue shall increase or
decrease that amount by an amount necessary to offset any
misallocation of previous disbursements. The offset amount

SB1911 Enrolled - 54 - LRB104 09605 HLH 19670 b
shall be the amount erroneously disbursed within the 6 months
preceding the time a misallocation is discovered.
(f) The corporate authorities of the political subdivision
shall deposit the proceeds for the STAR Bonds Revenue Fund
into a special fund of the political subdivision called the
"[Name of political subdivision] STAR Bond District Revenue
Fund" for the purpose of paying or reimbursing STAR bond
project costs and obligations incurred in the payment of those
costs. If the political subdivision fails to issue STAR bonds
within 180 days after the first distribution to the political
subdivision from the STAR Bonds Revenue Fund, the Department
of Revenue shall cease distribution of the State sales tax
increment to the political subdivision, shall transfer any
State sales tax increment in the STAR Bonds Revenue Fund to the
General Revenue Fund, and shall cease deposits of State sales
tax increment amounts into the STAR Bonds Revenue Fund. The
political subdivision shall repay all the State sales tax
increment distributed to the political subdivision to date,
which amounts shall be deposited into the General Revenue
Fund. If not repaid within 90 days after notice from the State,
the Department of Revenue shall withhold distributions to the
political subdivision from the Local Government Tax Fund until
the excess amount is repaid, which withheld amounts shall be
transferred to the General Revenue Fund. At such time as the
political subdivision notifies the Department of Revenue in
writing that it has issued STAR Bonds in accordance with this

SB1911 Enrolled - 55 - LRB104 09605 HLH 19670 b
Act and provides the Department with a copy of the political
subdivision's official statement, bond purchase agreements,
indenture, or other evidence of bond sale, the Department of
Revenue shall resume deposits of the State sales tax increment
into the STAR Bonds Revenue Fund and distribution of the State
sales tax increment to the political subdivision in accordance
with this Section.
(g) If at any time after the seventh anniversary of the
date of distribution of State sales tax increment from a STAR
bond project the Auditor General determines that the
percentage of the aggregate proceeds of STAR bonds issued to
date that is derived from the State sales tax increment has
exceeded 50% of the total development costs of that STAR Bonds
project, no additional STAR bonds may be issued for that STAR
Bonds project until that percentage is reduced to 50% or
below. When the percentage has been reduced to 50% or below,
the master developer shall have the right, at its own cost, to
obtain a new audit prepared by an independent third-party
auditor verifying compliance and shall provide such audit to
the Auditor General for review and approval. Upon the Auditor
General's determination from the audit that the percentage has
been reduced to 50% or below, STAR bonds may again be issued
for the STAR bond project.
Section 5-50. STAR bond occupation taxes.
(a) If the corporate authorities of a political

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subdivision have established a STAR bond district and have
elected to impose a tax by ordinance under subsection (b) or
(c) of this Section, each year after the date of the adoption
of the ordinance and until all STAR bond project costs and all
political subdivision obligations financing the STAR bond
project costs, if any, have been paid in accordance with the
STAR bond project plans, but in no event longer than the
maximum maturity date of the last of the STAR bonds issued for
projects in the STAR bond district, all amounts generated by
the retailers' occupation tax and service occupation tax shall
be collected, and the tax shall be enforced, by the Department
of Revenue in the same manner as all retailers' occupation
taxes and service occupation taxes imposed in the political
subdivision imposing the tax. The corporate authorities of the
political subdivision shall deposit the proceeds of the taxes
imposed under subsections (b) and (c) into either (i) a
special fund held by the corporate authorities of the
political subdivision called the STAR Bonds Tax Allocation
Fund for the purpose of paying STAR bond project costs and
obligations incurred in the payment of those costs if such
taxes are designated as pledged STAR revenues by resolution or
ordinance of the political subdivision or (ii) the political
subdivision's general corporate fund if such taxes are not
designated as pledged STAR revenues by resolution or
ordinance.
The tax imposed under this Section by a municipality may

SB1911 Enrolled - 57 - LRB104 09605 HLH 19670 b
be imposed only on the portion of a STAR bond district that is
within the boundaries of the municipality. For any part of a
STAR bond district that lies outside the boundaries of that
municipality, the municipality in which the other part of the
STAR bond district lies (or the county, in cases where a
portion of the STAR bond district lies in the unincorporated
area of a county) is authorized to impose the tax under this
Section on that part of the STAR bond district.
(b) The corporate authorities of a political subdivision
that has established a STAR bond district under this Act may,
by ordinance or resolution, impose a STAR Bond Retailers'
Occupation Tax upon all persons engaged in the business of
selling tangible personal property, other than an item of
tangible personal property titled or registered with an agency
of this State's government, at retail in the STAR bond
district at a rate not to exceed 1% of the gross receipts from
the sales made in the course of that business, to be imposed
only in 0.25% increments. The tax may not be imposed on
tangible personal property taxed at the 1% rate under the
Retailers' Occupation Tax Act. The tax may not be imposed on
aviation fuel for so long as the revenue use requirements of 49
U.S.C. 47107(b) and 49 U.S.C. 47133 are binding on the
political subdivision.
The tax imposed under this subsection and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the Department of Revenue. The

SB1911 Enrolled - 58 - LRB104 09605 HLH 19670 b
certificate of registration that is issued by the Department
of Revenue to a retailer under the Retailers' Occupation Tax
Act shall permit the retailer to engage in a business that is
taxable under any ordinance or resolution enacted under this
subsection without registering separately with the Department
of Revenue under such ordinance or resolution or under this
subsection. The Department of Revenue shall have full power to
administer and enforce this subsection, to collect all taxes
and penalties due under this subsection in the manner
hereinafter provided, and to determine all rights to credit
memoranda arising on account of the erroneous payment of tax
or penalty under this subsection. In the administration of,
and compliance with, this subsection, the Department of
Revenue and persons who are subject to this subsection shall
have the same rights, remedies, privileges, immunities,
powers, and duties, and be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions,
and definitions of terms and employ the same modes of
procedure, as are prescribed in Sections 1, 1a through 1o, 2
through 2-65 (in respect to all provisions therein other than
the State rate of tax), 2c through 2h, 3 (except as to the
disposition of taxes and penalties collected), 4, 5, 5a, 5b,
5c, 5d, 5e, 5f, 5g, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8, 9, 10,
11, 12, 13, and 14 of the Retailers' Occupation Tax Act and all
provisions of the Uniform Penalty and Interest Act, as fully
as if those provisions were set forth herein.

SB1911 Enrolled - 59 - LRB104 09605 HLH 19670 b
If a tax is imposed under this subsection (b), a tax shall
also be imposed under subsection (c) of this Section.
(c) If a tax has been imposed under subsection (b), a STAR
Bond Service Occupation Tax shall also be imposed upon all
persons engaged, in the STAR bond district, in the business of
making sales of service, who, as an incident to making those
sales of service, transfer tangible personal property within
the STAR bond district, either in the form of tangible
personal property or in the form of real estate as an incident
to a sale of service. The service occupation tax shall be
imposed upon all persons engaged in the business of making
sales of service at the same rate as the tax imposed in
subsection (b) of the selling price of tangible personal
property transferred within the STAR bond district by such
servicemen as an incident to a sale of service and shall not
exceed 1% and shall be imposed only in 0.25% increments. The
tax may not be imposed on tangible personal property taxed at
the 1% rate under the Service Occupation Tax Act. The tax may
not be imposed on aviation fuel for so long as the revenue use
requirements of 49 U.S.C. 47107(b) and 49 U.S.C. 47133 are
binding on the political subdivision.
The tax imposed under this subsection and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the Department of Revenue. The
certificate of registration that is issued by the Department
of Revenue to a retailer under the Retailers' Occupation Tax

SB1911 Enrolled - 60 - LRB104 09605 HLH 19670 b
Act or under the Service Occupation Tax Act shall permit the
registrant to engage in a business that is taxable under any
ordinance or resolution enacted under this subsection without
registering separately with the Department of Revenue under
that ordinance or resolution or under this subsection. The
Department of Revenue shall have full power to administer and
enforce this subsection, to collect all taxes and penalties
due under this subsection, to dispose of taxes and penalties
so collected in the manner provided in this Act, and to
determine all rights to credit memoranda arising on account of
the erroneous payment of tax or penalty under this subsection.
In the administration of, and compliance with this subsection,
the Department of Revenue and persons who are subject to this
subsection shall have the same rights, remedies, privileges,
immunities, powers, and duties, and be subject to the same
conditions, restrictions, limitations, penalties, exclusions,
exemptions, and definitions of terms and employ the same modes
of procedure as are prescribed in Sections 2, 2a through 2d, 3
through 3-50 (in respect to all provisions therein other than
the State rate of tax), 4 (except that the reference to the
State shall be to the STAR bond district), 5, 7, 8 (except that
the jurisdiction to which the tax shall be a debt to the extent
indicated in that Section 8 shall be the political
subdivision), 9 (except as to the disposition of taxes and
penalties collected, and except that the returned merchandise
credit for this tax may not be taken against any State tax),

SB1911 Enrolled - 61 - LRB104 09605 HLH 19670 b
10, 11, 12 (except the reference therein to Section 2b of the
Retailers' Occupation Tax Act), 13 (except that any reference
to the State shall mean the political subdivision), the first
paragraph of Section 15, and Sections 16, 17, 18, 19 and 20 of
the Service Occupation Tax Act and all provisions of the
Uniform Penalty and Interest Act, as fully as if those
provisions were set forth herein.
If a tax is imposed under this subsection (c), a tax shall
also be imposed under subsection (b) of this Section.
(d) Persons subject to any tax imposed under this Section
may reimburse themselves for their seller's tax liability
under this Section by separately stating the tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State taxes that sellers are required
to collect under the Use Tax Act, in accordance with such
bracket schedules as the Department may prescribe.
Whenever the Department of Revenue determines that a
refund should be made under this Section to a claimant the
Department of Revenue shall not issue a credit memorandum. The
Department of Revenue shall notify the State Comptroller, who
shall cause the order to be drawn for the amount specified and
to the person named in the notification from the Department of
Revenue. The refund shall be paid by the State Treasurer out of
the STAR Bond Retailers' Occupation Tax Fund.
Except as otherwise provided in this subsection, the
Department of Revenue shall immediately pay over to the State

SB1911 Enrolled - 62 - LRB104 09605 HLH 19670 b
Treasurer, ex officio, as trustee, all taxes, penalties, and
interest collected under this Section for deposit into the
STAR Bond Retailers' Occupation Tax Fund. On or before the
25th day of each calendar month, the Department of Revenue
shall prepare and certify to the Comptroller the disbursement
of stated sums of money to named political subdivisions from
the STAR Bond Retailers' Occupation Tax Fund, the political
subdivisions to be those from which retailers have paid taxes
or penalties under this Section to the Department of Revenue
during the second preceding calendar month. The amount to be
paid to each political subdivision shall be the amount (not
including credit memoranda) collected under this Section
during the second preceding calendar month by the Department
of Revenue plus an amount the Department of Revenue determines
is necessary to offset any amounts that were erroneously paid
to a different taxing body, and not including an amount equal
to the amount of refunds made during the second preceding
calendar month by the Department of Revenue, less 3% of that
amount, which shall be deposited into the Tax Compliance and
Administration Fund and shall be used by the Department of
Revenue, subject to appropriation, to cover the costs of the
Department of Revenue in administering and enforcing the
provisions of this Section, on behalf of such political
subdivision, and not including any amount that the Department
of Revenue determines is necessary to offset any amounts that
were payable to a different taxing body but were erroneously

SB1911 Enrolled - 63 - LRB104 09605 HLH 19670 b
paid to the political subdivision. Within 10 days after
receipt by the Comptroller of the disbursement certification
to the political subdivisions provided for in this Section to
be given to the Comptroller by the Department, the Comptroller
shall cause the orders to be drawn for the respective amounts
in accordance with the directions contained in the
certification. The proceeds of the tax paid to political
subdivisions under this Section shall be deposited into either
(i) the STAR Bonds Tax Allocation Fund by the political
subdivision if the political subdivision has designated them
as pledged STAR revenues by resolution or ordinance or (ii)
the political subdivision's general corporate fund if the
political subdivision has not designated them as pledged STAR
revenues.
An ordinance or resolution imposing or discontinuing the
tax under this Section or effecting a change in the rate
thereof shall either (i) be adopted and a certified copy
thereof filed with the Department of Revenue on or before the
first day of April, whereupon the Department of Revenue, if
all other requirements of this Section are met, shall proceed
to administer and enforce this Section as of the first day of
July next following the adoption and filing; or (ii) be
adopted and a certified copy thereof filed with the Department
of Revenue on or before the first day of October, whereupon, if
all other requirements of this Section are met, the Department
of Revenue shall proceed to administer and enforce this

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Section as of the first day of January next following the
adoption and filing.
The Department of Revenue shall not administer or enforce
an ordinance imposing, discontinuing, or changing the rate of
the tax under this Section until the political subdivision
also provides, in the manner prescribed by the Department of
Revenue, the boundaries of the STAR bond district and each
address in the STAR bond district in such a way that the
Department of Revenue can determine by its address whether a
business is located in the STAR bond district. The political
subdivision must provide this boundary and address information
to the Department of Revenue on or before April 1 for
administration and enforcement of the tax under this Section
by the Department of Revenue beginning on the following July 1
and on or before October 1 for administration and enforcement
of the tax under this Section by the Department of Revenue
beginning on the following January 1. The Department of
Revenue shall not administer or enforce any change made to the
boundaries of a STAR bond district or any address change,
addition, or deletion until the political subdivision reports
the boundary change or address change, addition, or deletion
to the Department of Revenue in the manner prescribed by the
Department of Revenue. The political subdivision must provide
this boundary change or address change, addition, or deletion
information to the Department of Revenue on or before April 1
for administration and enforcement by the Department of

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Revenue of the change, addition, or deletion beginning on the
following July 1 and on or before October 1 for administration
and enforcement by the Department of Revenue of the change,
addition, or deletion beginning on the following January 1.
The retailers in the STAR bond district shall be responsible
for charging the tax imposed under this Section. If a retailer
is incorrectly included or excluded from the list of those
required to collect the tax under this Section, both the
Department of Revenue and the retailer shall be held harmless
if they reasonably relied on information provided by the
political subdivision.
A political subdivision that imposes the tax under this
Section must submit to the Department of Revenue any other
information as the Department of Revenue may require that is
necessary for the administration and enforcement of the tax.
When certifying the amount of a monthly disbursement to a
political subdivision under this Section, the Department of
Revenue shall increase or decrease the amount by an amount
necessary to offset any misallocation of previous
disbursements. The offset amount shall be the amount
erroneously disbursed within the previous 6 months from the
time a misallocation is discovered.
Nothing in this Section shall be construed to authorize
the political subdivision to impose a tax upon the privilege
of engaging in any business which under the Constitution of
the United States may not be made the subject of taxation by

SB1911 Enrolled - 66 - LRB104 09605 HLH 19670 b
this State.
(e) When STAR bond project costs, including, without
limitation, all political subdivision obligations financing
STAR bond project costs, have been paid, any surplus funds
then remaining in the STAR Bonds Tax Allocation Fund shall be
distributed to the treasurer of the political subdivision for
deposit into the political subdivision's general corporate
fund. Upon payment of all STAR bond project costs and
retirement of obligations, but in no event later than the
maximum maturity date of the last of the STAR bonds issued in
the STAR bond district, the political subdivision shall adopt
an ordinance immediately rescinding the taxes imposed under
this Section and file a certified copy of the ordinance with
the Department of Revenue in the form and manner as described
in this Section.
Section 5-55. STAR Bonds School Improvement and Operations
Trust Fund.
(a) Deposits into the STAR Bonds School Improvement and
Operations Trust Fund, established under Section 33 of the
Innovation Development and Economy Act, shall be made as
provided under this Section. Moneys in the Trust Fund shall be
used by the Department of Revenue only for the purpose of
making payments to regional superintendents of schools to make
distributions to school districts in educational service
regions that include the STAR bond district. Moneys in the

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Trust Fund are not subject to appropriation and shall be used
solely as provided in this Section. All deposits into the
Trust Fund shall be held in the Trust Fund by the State
Treasurer as ex officio custodian separate and apart from all
public moneys or funds of this State and shall be distributed
by the Department of Revenue exclusively for the purposes set
forth in this Section. All moneys in the Trust Fund shall be
invested and reinvested by the State Treasurer. All interest
accruing from these investments shall be deposited into the
Trust Fund.
(b) Upon approval of a STAR bond district, the political
subdivision shall immediately transmit to the county clerk of
the county in which the district is located a certified copy of
the ordinance creating the district, a legal description of
the district, a map of the district, identification of the
year that the county clerk shall use for determining the total
initial equalized assessed value of the district consistent
with subsection (c), and a list of the parcel or tax
identification number of each parcel of property included in
the district.
(c) Upon approval of a STAR bond district, the county
clerk immediately thereafter shall determine (i) the most
recently ascertained equalized assessed value of each lot,
block, tract, or parcel of real property within the STAR bond
district, from which shall be deducted the homestead
exemptions under Article 15 of the Property Tax Code, which

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value shall be the initial equalized assessed value of each
such piece of property, and (ii) the total equalized assessed
value of all taxable real property within the district by
adding together the most recently ascertained equalized
assessed value of each taxable lot, block, tract, or parcel of
real property within the district, from which shall be
deducted the homestead exemptions under Article 15 of the
Property Tax Code, and shall certify that amount as the total
initial equalized assessed value of the taxable real property
within the STAR bond district.
(d) In reference to any STAR bond district created within
any political subdivision, and in respect to which the county
clerk has certified the total initial equalized assessed value
of the property in the area, the political subdivision may
thereafter request the clerk in writing to adjust the initial
equalized value of all taxable real property within the STAR
bond district by deducting from it the exemptions under
Article 15 of the Property Tax Code applicable to each lot,
block, tract, or parcel of real property within the STAR bond
district. The county clerk shall immediately, after the
written request to adjust the total initial equalized value is
received, determine the total homestead exemptions in the STAR
bond district as provided under Article 15 of the Property Tax
Code by adding together the homestead exemptions provided by
Article 15 on each lot, block, tract, or parcel of real
property within the STAR bond district and then shall deduct

SB1911 Enrolled - 69 - LRB104 09605 HLH 19670 b
the total of the exemptions from the total initial equalized
assessed value. The county clerk shall then promptly certify
that amount as the total initial equalized assessed value as
adjusted of the taxable real property within the STAR bond
district.
(e) The county clerk or other person authorized by law
shall compute the tax rates for each taxing district with all
or a portion of its equalized assessed value located in the
STAR bond district. The rate per cent of tax determined shall
be extended to the current equalized assessed value of all
property in the district in the same manner as the rate per
cent of tax is extended to all other taxable property in the
taxing district.
(f) Beginning with the assessment year in which the first
development user in the first STAR bond project in a STAR bond
district makes its first retail sales and for each assessment
year thereafter until final maturity of the last STAR bonds
issued in the district, the county clerk or other person
authorized by law shall determine the increase in equalized
assessed value of all real property within the STAR bond
district by subtracting the initial equalized assessed value
of all property in the district certified under subsection (c)
from the current equalized assessed value of all property in
the district. Each year, the property taxes arising from the
increase in equalized assessed value in the STAR bond district
shall be determined for each taxing district and shall be

SB1911 Enrolled - 70 - LRB104 09605 HLH 19670 b
certified to the county collector.
(g) Beginning with the year in which taxes are collected
based on the assessment year in which the first development
user in the first STAR bond project in a STAR bond district
makes its first retail sales and for each year thereafter
until final maturity of the last STAR bonds issued in the
district, the county collector shall, within 30 days after
receipt of property taxes, transmit to the Department of
Revenue to be deposited into the STAR Bonds School Improvement
and Operations Trust Fund 15% of property taxes attributable
to the increase in equalized assessed value within the STAR
bond district from each taxing district as certified in
subsection (f).
(h) The Department of Revenue shall pay to the regional
superintendent of schools whose educational service region
includes a STAR bond district, for each year for which money is
remitted to the Department of Revenue and paid into the STAR
Bonds School Improvement and Operations Trust Fund, the money
in the Fund as provided in this Section. The amount paid to
each school district shall be allocated proportionately by the
regional superintendent of schools, based on each qualifying
school district's fall enrollment for the then-current school
year, such that the school district with the largest fall
enrollment receives the largest proportionate share of money
paid out of the Fund or by any other method or formula that the
regional superintendent of schools deems fit, equitable, and

SB1911 Enrolled - 71 - LRB104 09605 HLH 19670 b
in the public interest. The regional superintendent may
allocate moneys to school districts that are outside the
regional superintendent's educational service region or to
other regional superintendents.
The Department of Revenue shall be held harmless for the
distributions made under this Section and all distributions
shall be final.
(i) In any year that an assessment appeal is filed, the
extension of taxes on any assessment so appealed shall not be
delayed. In the case of an assessment that is altered, any
taxes extended upon the unauthorized assessment or part
thereof shall be abated, or, if already paid, shall be
refunded with interest as provided in Section 23-20 of the
Property Tax Code. In the case of an assessment appeal, the
county collector shall notify the Department of Revenue that
an assessment appeal has been filed and the amount of the tax
that would have been deposited into the STAR Bonds School
Improvement and Operations Trust Fund. The county collector
shall hold that amount in a separate fund until the appeal
process is final. After the appeal process is finalized, the
county collector shall transmit to the Department of Revenue
the amount of tax that remains, if any, after all required
refunds are made.
(j) In any year that ad valorem taxes are allocated to the
STAR Bonds School Improvement and Operations Trust Fund, that
allocation shall not reduce or otherwise impact the school aid

SB1911 Enrolled - 72 - LRB104 09605 HLH 19670 b
provided to any school district under the general State school
aid formula provided for in Section 18-8.05 of the School Code
or the evidence-based funding formula provided for in Section
18-8.15 of the School Code.
Section 5-60. Alternate bonds and general obligation
bonds. A political subdivision shall have the power to issue
alternate revenue and other general obligation bonds to
finance the undertaking, establishment, or redevelopment of
any STAR bond project as provided under the procedures set
forth in the Local Government Debt Reform Act. A political
subdivision shall have the power to issue general obligation
bonds to finance the undertaking, establishment, or
redevelopment of any STAR bond project on approval by the
voters of the political subdivision of a proposition
authorizing the issue of such bonds.
The full faith and credit of the State, any department,
authority, public corporation or quasi-public corporation of
the State, any State college or university, or any other
public agency created by the State shall not be pledged for any
payment under any obligation authorized by this Act.
Section 5-65. Amendments to STAR bond district.
(a) Any addition of real property to a STAR bond district
or any substantial change to a STAR bond district plan shall be
subject to the same procedure for public notice, hearing, and

SB1911 Enrolled - 73 - LRB104 09605 HLH 19670 b
approval, including approval by the Department and the Office
of the Governor, as is required for the establishment of the
STAR bond district under this Act.
The addition or removal of land to or from a STAR bond
district shall require the consent of the master developer of
the STAR bond district.
(b) Any land that is outside of and contiguous to an
established STAR bond district and is subsequently owned,
leased, or controlled by the master developer shall be added
to a STAR bond district at the request of the master developer
and by approval of the political subdivision if the land
becomes a part of a STAR bond project area.
(c) If a political subdivision has undertaken a STAR bond
project within a STAR bond district, and the political
subdivision desires to subsequently remove more than a de
minimis amount of real property from the STAR bond district,
then prior to any removal of property the political
subdivision must provide a revised feasibility study showing
that the pledged STAR revenues from the resulting STAR bond
district within which the STAR bond project is located are
estimated to be sufficient to pay the project costs. If the
revenue from the resulting STAR bond district is insufficient
to pay the project costs, then the property may not be removed
from the STAR bond district. Any removal of real property from
a STAR bond district shall be approved by a resolution of the
corporate authorities of the political subdivision.

SB1911 Enrolled - 74 - LRB104 09605 HLH 19670 b
Section 5-70. Restrictions. STAR bond districts may lie
within an enterprise zone. During any period of time that STAR
bonds are outstanding for a STAR bond district, a developer
may not use any land located in the STAR bond district for any
retail store whose primary business is the sale of
automobiles, including trucks and other automotive vehicles
with 4 wheels designed for passenger transportation on public
streets and thoroughfares. No STAR bond district may contain
more than 900,000 square feet of floor space devoted to
traditional retail use, which does not include space devoted
to entertainment venues, hotels, warehouse space, storage
space, or approved development users.
Section 5-75. Reporting taxes.
(a) Notwithstanding any other provisions of law to the
contrary, the Department of Revenue shall provide a certified
report of the State sales tax increment and local sales tax
increment from all taxpayers within a STAR bond district to
the bond trustee, escrow agent, or paying agent for such bonds
upon the written request of the political subdivision on or
before the 25th day of each month. Such report shall provide a
detailed allocation of State sales tax increment and local
sales tax increment from each local sales tax and State sales
tax reported to the Department of Revenue.
The bond trustee, escrow agent, or paying agent shall keep

SB1911 Enrolled - 75 - LRB104 09605 HLH 19670 b
such sales and use tax reports and the information contained
therein confidential, but may use such information for
purposes of allocating and depositing the sales and use tax
revenues in connection with the bonds used to finance project
costs in such STAR bond district. Except as otherwise provided
in this Section, the sales and use tax reports received by the
bond trustee, escrow agent, or paying agent shall be subject
to the confidentiality provisions of Section 11 of the
Retailers' Occupation Tax Act.
(b) The political subdivision shall determine when the
amount of sales tax and other revenues that have been
collected and distributed to the bond debt service or reserve
fund is sufficient to satisfy all principal and interest costs
to the maturity date or dates of any STAR bond issued by a
political subdivision to finance a STAR bond project and shall
give the Department of Revenue written notice of such
determination. The notice shall include a date certain on
which deposits into the STAR Bonds Revenue Fund for that STAR
bond project shall terminate and shall be provided to the
Department of Revenue at least 60 days prior to that date.
Thereafter, all sales tax and other revenues shall be
collected and distributed in accordance with applicable law.
If the political subdivision fails to give timely notice
under this subsection (b), the Department of Revenue, upon
discovery of this failure, shall cease distribution of the
State sales tax increment to the political subdivision, shall

SB1911 Enrolled - 76 - LRB104 09605 HLH 19670 b
transfer any State sales tax increment in the STAR Bonds
Revenue Fund to the General Revenue Fund, and shall cease
deposits of State sales tax increment amounts into the STAR
Bonds Revenue Fund. Any amount of State sales tax increment
distributed to the political subdivision from the STAR Bonds
Revenue Fund in excess of the amount sufficient to satisfy all
principal and interest costs to the maturity date or dates of
any STAR bond issued by the political subdivision to finance a
STAR bond project shall be repaid to the Department of Revenue
and deposited into the General Revenue Fund. If not repaid
within 90 days after notice from the State, the Department of
Revenue shall withhold distributions to the political
subdivision from the Local Government Tax Fund until the
excess amount is repaid, which withheld amounts shall be
transferred to the General Revenue Fund.
Section 5-80. Review committee. Upon the seventh
anniversary of the first date of distribution of State sales
tax increment from the first STAR bond project in the State
under this Act, a 7-member STAR bonds review committee shall
be formed consisting of one appointee of each of the Director,
the Director of the Governor's Office of Management and
Budget, the Director of Revenue, the President of the Senate,
the Senate Minority Leader, the Speaker of the House, and the
House Minority Leader. The review committee shall evaluate the
success of all STAR bond districts then existing in the State

SB1911 Enrolled - 77 - LRB104 09605 HLH 19670 b
and make a determination of the comprehensive economic
benefits and detriments of STAR bonds in the State as a whole.
In making its determination, the review committee shall
examine available data regarding job creation, sales revenues,
and capital investment in STAR bond districts; development
that has occurred and is planned in areas adjacent to STAR bond
districts that will not be directly financed with STAR bonds;
effects of market conditions on STAR bond districts and the
likelihood of future successes based on improving or declining
market conditions; retail sales migration and cannibalization
of retail sales due to STAR bond districts; and other relevant
economic factors. The review committee shall provide the
Director, the Director of the Governor's Office of Management
and Budget, the Director of Revenue, the General Assembly, and
the Governor with a written report detailing its findings and
shall make a final determination of whether STAR bonds have
had, and are likely to continue having, a negative or positive
economic impact on the State as a whole. Upon completing and
filing its written report, the review committee shall be
dissolved.
Section 5-85. Severability. If any provision of this Act
or the application thereof to any persons or circumstances is
held invalid, such invalidity shall not affect other
provisions or application of the Act that can be given effect
without the invalid provisions or application and to this end

SB1911 Enrolled - 78 - LRB104 09605 HLH 19670 b
the provisions of this Act are declared to be severable.
Section 5-90. Rules. The Department and the Department of
Revenue shall have the authority to adopt such rules as are
reasonable and necessary to implement the provisions of this
Act. Notwithstanding the foregoing, the Department and the
Department of Revenue shall have the authority, prior to
adoption and approval of those rules, to consult on and
recommend approval of a STAR bond district in accordance with
subsection (d) of Section 5-30 and to otherwise administer the
Act while those rules are pending adoption and approval.
Section 5-95. Open meetings and freedom of information.
All public hearings related to the administration, formation,
implementation, development, or construction of a STAR bond
district, STAR bond district plan, STAR bond project, or STAR
bond project plan, including, but not limited to, the public
hearings required by Sections 5-20, 5-30, and 5-65 of this
Act, shall be held in compliance with the Open Meetings Act.
The public hearing records, feasibility study, and other
documents that do not otherwise meet a confidentiality
exemption shall be subject to disclosure under the Freedom of
Information Act.
Section 5-100. Powers of political subdivisions. The
provisions of this Act are intended to be supplemental and in

SB1911 Enrolled - 79 - LRB104 09605 HLH 19670 b
addition to all other power or authority granted to political
subdivisions, shall be construed liberally, and shall not be
construed as a limitation of any power or authority otherwise
granted. In addition to the powers a political subdivision may
have under other provisions of law, a political subdivision
shall have all the following powers in connection with a STAR
bond district:
(1) To make and enter into all contracts necessary or
incidental to the implementation and furtherance of a STAR
bond district plan.
(2) Within a STAR bond district, to acquire by
purchase, donation, or lease, and to own, convey, lease,
mortgage, or dispose of land and other real or personal
property or rights or interests in property and to grant
or acquire licenses, easements, and options with respect
to property, all in the manner and at a price the political
subdivision determines is reasonably necessary to achieve
the objectives of the STAR bond project.
(3) To clear any area within a STAR bond district by
demolition or removal of any existing buildings,
structures, fixtures, utilities, or improvements and to
clear and grade land.
(4) To install, repair, construct, reconstruct, extend
or relocate public streets, public utilities, and other
public site improvements located both within and outside
the boundaries of a STAR bond district that are essential

SB1911 Enrolled - 80 - LRB104 09605 HLH 19670 b
to the preparation of a STAR bond district for use in
accordance with a STAR bond district plan.
(5) To renovate, rehabilitate, reconstruct, relocate,
repair, or remodel any existing buildings, improvements,
and fixtures within a STAR bond district.
(6) To install or construct any public buildings,
structures, works, streets, improvements, utilities, or
fixtures within a STAR bond district.
(7) To issue STAR bonds as provided in this Act.
(8) Subject to the limitations set forth in the
definition of "project costs" in Section 5-10 of this Act,
to fix, charge, and collect fees, rents, and charges for
the use of any building, facility, or property or any
portion of a building, facility, or property owned or
leased by the political subdivision in furtherance of a
STAR bond project under this Act within a STAR bond
district.
(9) To accept grants, guarantees, donations of
property or labor, or any other thing of value for use in
connection with a STAR bond project.
(10) To pay or cause to be paid STAR bond project
costs, including, specifically, to reimburse any developer
or nongovernmental person for STAR bond project costs
incurred by that person. A political subdivision is not
required to obtain any right, title, or interest in any
real or personal property in order to pay STAR bond

SB1911 Enrolled - 81 - LRB104 09605 HLH 19670 b
project costs associated with the property. The political
subdivision shall adopt accounting procedures necessary to
determine that the STAR bond project costs are properly
paid.
(11) To exercise any and all other powers necessary to
effectuate the purposes of this Act.
Section 10-5. The State Finance Act is amended by changing
Section 6z-27 as follows:
(30 ILCS 105/6z-27)
Sec. 6z-27. All moneys in the Audit Expense Fund shall be
transferred, appropriated and used only for the purposes
authorized by, and subject to the limitations and conditions
prescribed by, the Illinois State Auditing Act.
Within 30 days after July 1, 2025, or as soon thereafter as
practical, the State Comptroller shall order transferred and
the State Treasurer shall transfer from the following funds
moneys in the specified amounts for deposit into the Audit
Expense Fund:
Academic Quality Assurance Fund.........................$940
African-American HIV/AIDS Response Fund...............$4,266
Agricultural Premium Fund...........................$169,467
Alzheimer's Awareness Fund............................$1,068
Alzheimer's Disease Research,
Care, and Support Fund..............................$502

SB1911 Enrolled - 82 - LRB104 09605 HLH 19670 b
Amusement Ride and Patron Safety Fund.................$6,888
Assisted Living and Shared
Housing Regulatory Fund...........................$4,011
Board of Higher Education State
Contracts and Grants Fund........................$13,416
Capital Development Board Revolving Fund..............$10,711
Care Provider Fund for Persons with
a Developmental Disability.........................$9,771
CDLIS/AAMVA/NMVTIS Trust Fund..........................$3,433
Chicago State University Education
Improvement Fund.................................$15,774
Child Labor and Day and Temporary
Labor Services Enforcement Fund..................$15,414
Child Support Administrative Fund.....................$3,739
Coal Technology Development
Assistance Fund...................................$3,019
Common School Fund..................................$246,578
Community Mental Health
Medicaid Trust Fund..............................$10,597
Consumer Intervenor Compensation Fund.................$1,700
Death Certificate Surcharge Fund......................$1,550
Death Penalty Abolition Fund..........................$2,688
Department of Business Services
Special Operations Fund..........................$10,406
Department of Human Services
Community Services Fund..........................$15,086

SB1911 Enrolled - 83 - LRB104 09605 HLH 19670 b
Dram Shop Fund......................................$212,500
Driver Services Administration Fund.....................$937
Drug Rebate Fund.....................................$54,214
Drug Treatment Fund...................................$1,236
Education Assistance Fund.........................$2,193,017
Emergency Planning and Training Fund....................$528
Emergency Public Health Fund..........................$8,769
Employee Classification Fund............................$967
EMS Assistance Fund...................................$1,150
Estate Tax Refund Fund................................$1,628
Facilities Management Revolving Fund.................$35,073
Facility Licensing Fund...............................$6,082
Fair and Exposition Fund..............................$6,903
Federal Financing Cost
Reimbursement Fund................................$7,100
Feed Control Fund....................................$13,874
Fertilizer Control Fund...............................$9,357
Fire Prevention Fund..................................$4,282
General Assembly Technology Fund......................$2,830
General Professions Dedicated Fund....................$4,131
General Revenue Fund..............................$17,653,153
Governor's Administrative Fund........................$5,956
Governor's Grant Fund.................................$3,164
Grant Accountability and Transparency Fund............$1,041
Guardianship and Advocacy Fund.......................$16,432
Health Facility Plan Review Fund......................$2,286

SB1911 Enrolled - 84 - LRB104 09605 HLH 19670 b
Health and Human Services
Medicaid Trust Fund..............................$10,902
Healthcare Provider Relief Fund.....................$321,428
Home Care Services Agency Licensure Fund..............$2,843
Hospital Licensure Fund...............................$1,251
Hospital Provider Fund...............................$99,530
Illinois Affordable Housing Trust Fund...............$19,809
Illinois Community College Board
Contracts and Grants Fund........................$14,687
Illinois Health Facilities Planning Fund..............$3,155
Illinois Independent Tax Tribunal Fund...............$11,636
IMSA Income Fund......................................$6,805
Illinois School Asbestos Abatement Fund...............$1,141
Illinois State Fair Fund.............................$69,621
Illinois Telecommunications Access
Corporation Fund..................................$1,546
Illinois Underground Utility
Facilities Damage Prevention Fund................$12,035
Illinois Veterans' Rehabilitation Fund................$1,103
Illinois Workers' Compensation
Commission Operations Fund......................$241,658
Industrial Hemp Regulatory Fund.......................$1,407
Interpreters for the Deaf Fund........................$8,657
Lead Poisoning Screening, Prevention,
and Abatement Fund...............................$19,789
Lobbyist Registration Administration Fund...............$843

SB1911 Enrolled - 85 - LRB104 09605 HLH 19670 b
Long Term Care Monitor/Receiver Fund.................$42,485
Long-Term Care Provider Fund.........................$20,620
Low-Level Radioactive Waste Facility
Development and Operation Fund....................$2,402
Mandatory Arbitration Fund............................$2,635
Mental Health Fund....................................$5,353
Mental Health Reporting Fund..........................$1,226
Metabolic Screening and Treatment Fund...............$46,885
Monitoring Device Driving Permit
Administration Fee Fund...........................$1,475
Motor Fuel Tax Fund...................................$1,068
Motor Vehicle License Plate Fund.....................$13,927
Multiple Sclerosis Research Fund........................$961
Nuclear Safety Emergency Preparedness Fund...........$87,774
Nursing Dedicated and Professional Fund.................$595
Partners For Conservation Fund......................$117,108
Personal Property Tax Replacement Fund..............$218,128
Pesticide Control Fund...............................$42,146
Plumbing Licensure and Program Fund...................$3,672
Private Business and Vocational Schools
Quality Assurance Fund..............................$867
Professional Services Fund...........................$90,610
Public Defender Fund..................................$6,198
Public Health Laboratory
Services Revolving Fund...........................$1,098
Public Utility Fund.................................$282,488

SB1911 Enrolled - 86 - LRB104 09605 HLH 19670 b
Radiation Protection Fund............................$37,946
Rebuild Illinois Projects Fund.......................$58,858
Rental Housing Support Program Fund...................$4,083
Road Fund............................................$55,409
Secretary Of State DUI Administration Fund............$2,767
Secretary Of State Identification Security
and Theft Prevention Fund........................$16,793
Secretary Of State Special License Plate Fund.........$3,473
Secretary Of State Special Services Fund.............$26,832
Securities Audit and Enforcement Fund.................$4,889
Serve Illinois Commission Fund........................$1,803
Special Education Medicaid Matching Fund..............$4,329
State Gaming Fund.....................................$1,997
State Garage Revolving Fund...........................$7,501
State Lottery Fund..................................$311,489
State Pensions Fund.................................$500,000
State Treasurer's Bank Services Trust Fund..............$752
Supreme Court Special Purposes Fund...................$4,184
Tattoo and Body Piercing Establishment
Registration Fund.................................$1,166
Tobacco Settlement Recovery Fund....................$143,143
Tourism Promotion Fund...............................$79,695
Transportation Regulatory Fund......................$108,481
Trauma Center Fund....................................$1,872
University Of Illinois Hospital Services Fund.........$5,476
Vehicle Hijacking and Motor Vehicle Theft Prevention and

SB1911 Enrolled - 87 - LRB104 09605 HLH 19670 b
Insurance Verification Trust Fund.................$9,331
Vehicle Inspection Fund...............................$2,786
Weights and Measures Fund............................$24,640
Notwithstanding any provision of the law to the contrary,
the General Assembly hereby authorizes the use of such funds
for the purposes set forth in this Section.
These provisions do not apply to funds classified by the
Comptroller as federal trust funds or State trust funds. The
Audit Expense Fund may receive transfers from those trust
funds only as directed herein, except where prohibited by the
terms of the trust fund agreement. The Auditor General shall
notify the trustees of those funds of the estimated cost of the
audit to be incurred under the Illinois State Auditing Act for
the fund. The trustees of those funds shall direct the State
Comptroller and Treasurer to transfer the estimated amount to
the Audit Expense Fund.
The Auditor General may bill entities that are not subject
to the above transfer provisions, including private entities,
related organizations and entities whose funds are locally
held, for the cost of audits, studies, and investigations
incurred on their behalf. Any revenues received under this
provision shall be deposited into the Audit Expense Fund.
In the event that moneys on deposit in any fund are
unavailable, by reason of deficiency or any other reason
preventing their lawful transfer, the State Comptroller shall
order transferred and the State Treasurer shall transfer the

SB1911 Enrolled - 88 - LRB104 09605 HLH 19670 b
amount deficient or otherwise unavailable from the General
Revenue Fund for deposit into the Audit Expense Fund.
On or before December 1, 1992, and each December 1
thereafter, the Auditor General shall notify the Governor's
Office of Management and Budget (formerly Bureau of the
Budget) of the amount estimated to be necessary to pay for
audits, studies, and investigations in accordance with the
Illinois State Auditing Act during the next succeeding fiscal
year for each State fund for which a transfer or reimbursement
is anticipated.
Beginning with fiscal year 1994 and during each fiscal
year thereafter, the Auditor General may direct the State
Comptroller and Treasurer to transfer moneys from funds
authorized by the General Assembly for that fund. In the event
funds, including federal and State trust funds but excluding
the General Revenue Fund, are transferred, during fiscal year
1994 and during each fiscal year thereafter, in excess of the
amount to pay actual costs attributable to audits, studies,
and investigations as permitted or required by the Illinois
State Auditing Act or specific action of the General Assembly,
the Auditor General shall, on September 30, or as soon
thereafter as is practicable, direct the State Comptroller and
Treasurer to transfer the excess amount back to the fund from
which it was originally transferred.
(Source: P.A. 103-8, eff. 6-7-23; 103-129, eff. 6-30-23;
103-588, eff. 6-5-24; 104-2, eff. 6-16-25.)

SB1911 Enrolled - 89 - LRB104 09605 HLH 19670 b
Section 10-10. The Illinois Income Tax Act is amended by
changing Sections 201, 203, and 701 as follows:
(35 ILCS 5/201)
Sec. 201. Tax imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate for
each taxable year ending after July 31, 1969 on the privilege
of earning or receiving income in or as a resident of this
State. Such tax shall be in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
(1) In the case of an individual, trust or estate, for
taxable years ending prior to July 1, 1989, an amount
equal to 2 1/2% of the taxpayer's net income for the
taxable year.
(2) In the case of an individual, trust or estate, for
taxable years beginning prior to July 1, 1989 and ending
after June 30, 1989, an amount equal to the sum of (i) 2
1/2% of the taxpayer's net income for the period prior to
July 1, 1989, as calculated under Section 202.3, and (ii)
3% of the taxpayer's net income for the period after June

SB1911 Enrolled - 90 - LRB104 09605 HLH 19670 b
30, 1989, as calculated under Section 202.3.
(3) In the case of an individual, trust or estate, for
taxable years beginning after June 30, 1989, and ending
prior to January 1, 2011, an amount equal to 3% of the
taxpayer's net income for the taxable year.
(4) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2011, and
ending after December 31, 2010, an amount equal to the sum
of (i) 3% of the taxpayer's net income for the period prior
to January 1, 2011, as calculated under Section 202.5, and
(ii) 5% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(5) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2011,
and ending prior to January 1, 2015, an amount equal to 5%
of the taxpayer's net income for the taxable year.
(5.1) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2015, and
ending after December 31, 2014, an amount equal to the sum
of (i) 5% of the taxpayer's net income for the period prior
to January 1, 2015, as calculated under Section 202.5, and
(ii) 3.75% of the taxpayer's net income for the period
after December 31, 2014, as calculated under Section
202.5.
(5.2) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2015,

SB1911 Enrolled - 91 - LRB104 09605 HLH 19670 b
and ending prior to July 1, 2017, an amount equal to 3.75%
of the taxpayer's net income for the taxable year.
(5.3) In the case of an individual, trust, or estate,
for taxable years beginning prior to July 1, 2017, and
ending after June 30, 2017, an amount equal to the sum of
(i) 3.75% of the taxpayer's net income for the period
prior to July 1, 2017, as calculated under Section 202.5,
and (ii) 4.95% of the taxpayer's net income for the period
after June 30, 2017, as calculated under Section 202.5.
(5.4) In the case of an individual, trust, or estate,
for taxable years beginning on or after July 1, 2017, an
amount equal to 4.95% of the taxpayer's net income for the
taxable year.
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of the
taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the
taxpayer's net income for the period prior to July 1,
1989, as calculated under Section 202.3, and (ii) 4.8% of
the taxpayer's net income for the period after June 30,
1989, as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, and ending prior to January
1, 2011, an amount equal to 4.8% of the taxpayer's net

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income for the taxable year.
(9) In the case of a corporation, for taxable years
beginning prior to January 1, 2011, and ending after
December 31, 2010, an amount equal to the sum of (i) 4.8%
of the taxpayer's net income for the period prior to
January 1, 2011, as calculated under Section 202.5, and
(ii) 7% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(10) In the case of a corporation, for taxable years
beginning on or after January 1, 2011, and ending prior to
January 1, 2015, an amount equal to 7% of the taxpayer's
net income for the taxable year.
(11) In the case of a corporation, for taxable years
beginning prior to January 1, 2015, and ending after
December 31, 2014, an amount equal to the sum of (i) 7% of
the taxpayer's net income for the period prior to January
1, 2015, as calculated under Section 202.5, and (ii) 5.25%
of the taxpayer's net income for the period after December
31, 2014, as calculated under Section 202.5.
(12) In the case of a corporation, for taxable years
beginning on or after January 1, 2015, and ending prior to
July 1, 2017, an amount equal to 5.25% of the taxpayer's
net income for the taxable year.
(13) In the case of a corporation, for taxable years
beginning prior to July 1, 2017, and ending after June 30,
2017, an amount equal to the sum of (i) 5.25% of the

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taxpayer's net income for the period prior to July 1,
2017, as calculated under Section 202.5, and (ii) 7% of
the taxpayer's net income for the period after June 30,
2017, as calculated under Section 202.5.
(14) In the case of a corporation, for taxable years
beginning on or after July 1, 2017, an amount equal to 7%
of the taxpayer's net income for the taxable year.
The rates under this subsection (b) are subject to the
provisions of Section 201.5.
(b-5) Surcharge; sale or exchange of assets, properties,
and intangibles of organization gaming licensees. For each of
taxable years 2019 through 2027, a surcharge is imposed on all
taxpayers on income arising from the sale or exchange of
capital assets, depreciable business property, real property
used in the trade or business, and Section 197 intangibles (i)
of an organization licensee under the Illinois Horse Racing
Act of 1975 and (ii) of an organization gaming licensee under
the Illinois Gambling Act. The amount of the surcharge is
equal to the amount of federal income tax liability for the
taxable year attributable to those sales and exchanges. The
surcharge imposed shall not apply if:
(1) the organization gaming license, organization
license, or racetrack property is transferred as a result
of any of the following:
(A) bankruptcy, a receivership, or a debt
adjustment initiated by or against the initial

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licensee or the substantial owners of the initial
licensee;
(B) cancellation, revocation, or termination of
any such license by the Illinois Gaming Board or the
Illinois Racing Board;
(C) a determination by the Illinois Gaming Board
that transfer of the license is in the best interests
of Illinois gaming;
(D) the death of an owner of the equity interest in
a licensee;
(E) the acquisition of a controlling interest in
the stock or substantially all of the assets of a
publicly traded company;
(F) a transfer by a parent company to a wholly
owned subsidiary; or
(G) the transfer or sale to or by one person to
another person where both persons were initial owners
of the license when the license was issued; or
(2) the controlling interest in the organization
gaming license, organization license, or racetrack
property is transferred in a transaction to lineal
descendants in which no gain or loss is recognized or as a
result of a transaction in accordance with Section 351 of
the Internal Revenue Code in which no gain or loss is
recognized; or
(3) live horse racing was not conducted in 2010 at a

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racetrack located within 3 miles of the Mississippi River
under a license issued pursuant to the Illinois Horse
Racing Act of 1975.
The transfer of an organization gaming license,
organization license, or racetrack property by a person other
than the initial licensee to receive the organization gaming
license is not subject to a surcharge. The Department shall
adopt rules necessary to implement and administer this
subsection.
(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal Property
Tax Replacement Income Tax measured by net income on every
corporation (including Subchapter S corporations), partnership
and trust, for each taxable year ending after June 30, 1979.
Such taxes are imposed on the privilege of earning or
receiving income in or as a resident of this State. The
Personal Property Tax Replacement Income Tax shall be in
addition to the income tax imposed by subsections (a) and (b)
of this Section and in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S

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corporation and except as adjusted by subsection (d-1), shall
be an additional amount equal to 2.85% of such taxpayer's net
income for the taxable year, except that beginning on January
1, 1981, and thereafter, the rate of 2.85% specified in this
subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an
additional amount equal to 1.5% of such taxpayer's net income
for the taxable year.
(d-1) Rate reduction for certain foreign insurers. In the
case of a foreign insurer, as defined by Section 35A-5 of the
Illinois Insurance Code, whose state or country of domicile
imposes on insurers domiciled in Illinois a retaliatory tax
(excluding any insurer whose premiums from reinsurance assumed
are 50% or more of its total insurance premiums as determined
under paragraph (2) of subsection (b) of Section 304, except
that for purposes of this determination premiums from
reinsurance do not include premiums from inter-affiliate
reinsurance arrangements), beginning with taxable years ending
on or after December 31, 1999, the sum of the rates of tax
imposed by subsections (b) and (d) shall be reduced (but not
increased) to the rate at which the total amount of tax imposed
under this Act, net of all credits allowed under this Act,
shall equal (i) the total amount of tax that would be imposed
on the foreign insurer's net income allocable to Illinois for
the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes

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and taxes measured by net income imposed by such foreign
insurer's state or country of domicile, net of all credits
allowed or (ii) a rate of zero if no such tax is imposed on
such income by the foreign insurer's state of domicile. For
the purposes of this subsection (d-1), an inter-affiliate
includes a mutual insurer under common management.
(1) For the purposes of subsection (d-1), in no event
shall the sum of the rates of tax imposed by subsections
(b) and (d) be reduced below the rate at which the sum of:
(A) the total amount of tax imposed on such
foreign insurer under this Act for a taxable year, net
of all credits allowed under this Act, plus
(B) the privilege tax imposed by Section 409 of
the Illinois Insurance Code, the fire insurance
company tax imposed by Section 12 of the Fire
Investigation Act, and the fire department taxes
imposed under Section 11-10-1 of the Illinois
Municipal Code,
equals 1.25% for taxable years ending prior to December
31, 2003, or 1.75% for taxable years ending on or after
December 31, 2003, of the net taxable premiums written for
the taxable year, as described by subsection (1) of
Section 409 of the Illinois Insurance Code. This paragraph
will in no event increase the rates imposed under
subsections (b) and (d).
(2) Any reduction in the rates of tax imposed by this

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subsection shall be applied first against the rates
imposed by subsection (b) and only after the tax imposed
by subsection (a) net of all credits allowed under this
Section other than the credit allowed under subsection (i)
has been reduced to zero, against the rates imposed by
subsection (d).
This subsection (d-1) is exempt from the provisions of
Section 250.
(e) Investment credit. A taxpayer shall be allowed a
credit against the Personal Property Tax Replacement Income
Tax for investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to .5%
of the basis of qualified property placed in service
during the taxable year, provided such property is placed
in service on or after July 1, 1984. There shall be allowed
an additional credit equal to .5% of the basis of
qualified property placed in service during the taxable
year, provided such property is placed in service on or
after July 1, 1986, and the taxpayer's base employment
within Illinois has increased by 1% or more over the
preceding year as determined by the taxpayer's employment
records filed with the Illinois Department of Employment
Security. Taxpayers who are new to Illinois shall be
deemed to have met the 1% growth in base employment for the
first year in which they file employment records with the
Illinois Department of Employment Security. The provisions

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added to this Section by Public Act 85-1200 (and restored
by Public Act 87-895) shall be construed as declaratory of
existing law and not as a new enactment. If, in any year,
the increase in base employment within Illinois over the
preceding year is less than 1%, the additional credit
shall be limited to that percentage times a fraction, the
numerator of which is .5% and the denominator of which is
1%, but shall not exceed .5%. The investment credit shall
not be allowed to the extent that it would reduce a
taxpayer's liability in any tax year below zero, nor may
any credit for qualified property be allowed for any year
other than the year in which the property was placed in
service in Illinois. For tax years ending on or after
December 31, 1987, and on or before December 31, 1988, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether it
exceeds the original liability or the liability as later
amended, such excess may be carried forward and applied to
the tax liability of the 5 taxable years following the
excess credit years if the taxpayer (i) makes investments
which cause the creation of a minimum of 2,000 full-time
equivalent jobs in Illinois, (ii) is located in an
enterprise zone established pursuant to the Illinois
Enterprise Zone Act and (iii) is certified by the
Department of Commerce and Community Affairs (now

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Department of Commerce and Economic Opportunity) as
complying with the requirements specified in clause (i)
and (ii) by July 1, 1986. The Department of Commerce and
Community Affairs (now Department of Commerce and Economic
Opportunity) shall notify the Department of Revenue of all
such certifications immediately. For tax years ending
after December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability
or the liability as later amended, such excess may be
carried forward and applied to the tax liability of the 5
taxable years following the excess credit years. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, earlier
credit shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings and
signs that are real property, but not including land
or improvements to real property that are not a
structural component of a building such as
landscaping, sewer lines, local access roads, fencing,
parking lots, and other appurtenances;

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(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(e);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining coal
or fluorite, or in retailing, or was placed in service
on or after July 1, 2006 in a River Edge Redevelopment
Zone established pursuant to the River Edge
Redevelopment Zone Act; and
(E) has not previously been used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (e) or
subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes
of this subsection (e) the term "mining" shall have the
same meaning as the term "mining" in Section 613(c) of the
Internal Revenue Code. For purposes of this subsection

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(e), the term "retailing" means the sale of tangible
personal property for use or consumption and not for
resale, or services rendered in conjunction with the sale
of tangible personal property for use or consumption and
not for resale. For purposes of this subsection (e),
"tangible personal property" has the same meaning as when
that term is used in the Retailers' Occupation Tax Act,
and, for taxable years ending after December 31, 2008,
does not include the generation, transmission, or
distribution of electricity.
(4) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(5) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in Illinois by the taxpayer, the amount
of such increase shall be deemed property placed in
service on the date of such increase in basis.
(6) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(7) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside Illinois within 48
months after being placed in service, the Personal
Property Tax Replacement Income Tax for such taxable year

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shall be increased. Such increase shall be determined by
(i) recomputing the investment credit which would have
been allowed for the year in which credit for such
property was originally allowed by eliminating such
property from such computation and, (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (7), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(8) Unless the investment credit is extended by law,
the basis of qualified property shall not include costs
incurred after December 31, 2018, except for costs
incurred pursuant to a binding contract entered into on or
before December 31, 2018.
(9) Each taxable year ending before December 31, 2000,
a partnership may elect to pass through to its partners
the credits to which the partnership is entitled under
this subsection (e) for the taxable year. A partner may
use the credit allocated to him or her under this
paragraph only against the tax imposed in subsections (c)
and (d) of this Section. If the partnership makes that
election, those credits shall be allocated among the
partners in the partnership in accordance with the rules
set forth in Section 704(b) of the Internal Revenue Code,

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and the rules promulgated under that Section, and the
allocated amount of the credits shall be allowed to the
partners for that taxable year. The partnership shall make
this election on its Personal Property Tax Replacement
Income Tax return for that taxable year. The election to
pass through the credits shall be irrevocable.
For taxable years ending on or after December 31,
2000, a partner that qualifies its partnership for a
subtraction under subparagraph (I) of paragraph (2) of
subsection (d) of Section 203 or a shareholder that
qualifies a Subchapter S corporation for a subtraction
under subparagraph (S) of paragraph (2) of subsection (b)
of Section 203 shall be allowed a credit under this
subsection (e) equal to its share of the credit earned
under this subsection (e) during the taxable year by the
partnership or Subchapter S corporation, determined in
accordance with the determination of income and
distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. This
paragraph is exempt from the provisions of Section 250.
(f) Investment credit; Enterprise Zone; River Edge
Redevelopment Zone.
(1) A taxpayer shall be allowed a credit against the
tax imposed by subsections (a) and (b) of this Section for
investment in qualified property which is placed in
service in an Enterprise Zone created pursuant to the

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Illinois Enterprise Zone Act or, for property placed in
service on or after July 1, 2006, a River Edge
Redevelopment Zone established pursuant to the River Edge
Redevelopment Zone Act. For partners, shareholders of
Subchapter S corporations, and owners of limited liability
companies, if the liability company is treated as a
partnership for purposes of federal and State income
taxation, for taxable years ending before December 31,
2023, there shall be allowed a credit under this
subsection (f) to be determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the
Internal Revenue Code. For taxable years ending on or
after December 31, 2023, for partners and shareholders of
Subchapter S corporations, the provisions of Section 251
shall apply with respect to the credit under this
subsection. The credit shall be .5% of the basis for such
property. The credit shall be available only in the
taxable year in which the property is placed in service in
the Enterprise Zone or River Edge Redevelopment Zone and
shall not be allowed to the extent that it would reduce a
taxpayer's liability for the tax imposed by subsections
(a) and (b) of this Section to below zero. For tax years
ending on or after December 31, 1985, the credit shall be
allowed for the tax year in which the property is placed in
service, or, if the amount of the credit exceeds the tax

SB1911 Enrolled - 106 - LRB104 09605 HLH 19670 b
liability for that year, whether it exceeds the original
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of
the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, the
credit accruing first in time shall be applied first.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(f);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer; and
(E) has not been previously used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (f) or
subsection (e).
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal

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income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside the Enterprise
Zone or River Edge Redevelopment Zone within 48 months
after being placed in service, the tax imposed under
subsections (a) and (b) of this Section for such taxable
year shall be increased. Such increase shall be determined
by (i) recomputing the investment credit which would have
been allowed for the year in which credit for such
property was originally allowed by eliminating such
property from such computation, and (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (6), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent

SB1911 Enrolled - 108 - LRB104 09605 HLH 19670 b
of such reduction.
(7) There shall be allowed an additional credit equal
to 0.5% of the basis of qualified property placed in
service during the taxable year in a River Edge
Redevelopment Zone, provided such property is placed in
service on or after July 1, 2006, and the taxpayer's base
employment within Illinois has increased by 1% or more
over the preceding year as determined by the taxpayer's
employment records filed with the Illinois Department of
Employment Security. Taxpayers who are new to Illinois
shall be deemed to have met the 1% growth in base
employment for the first year in which they file
employment records with the Illinois Department of
Employment Security. If, in any year, the increase in base
employment within Illinois over the preceding year is less
than 1%, the additional credit shall be limited to that
percentage times a fraction, the numerator of which is
0.5% and the denominator of which is 1%, but shall not
exceed 0.5%.
(8) For taxable years beginning on or after January 1,
2021, there shall be allowed an Enterprise Zone
construction jobs credit against the taxes imposed under
subsections (a) and (b) of this Section as provided in
Section 13 of the Illinois Enterprise Zone Act.
The credit or credits may not reduce the taxpayer's
liability to less than zero. If the amount of the credit or

SB1911 Enrolled - 109 - LRB104 09605 HLH 19670 b
credits exceeds the taxpayer's liability, the excess may
be carried forward and applied against the taxpayer's
liability in succeeding calendar years in the same manner
provided under paragraph (4) of Section 211 of this Act.
The credit or credits shall be applied to the earliest
year for which there is a tax liability. If there are
credits from more than one taxable year that are available
to offset a liability, the earlier credit shall be applied
first.
For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies,
if the liability company is treated as a partnership for
the purposes of federal and State income taxation, for
taxable years ending before December 31, 2023, there shall
be allowed a credit under this Section to be determined in
accordance with the determination of income and
distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. For taxable
years ending on or after December 31, 2023, for partners
and shareholders of Subchapter S corporations, the
provisions of Section 251 shall apply with respect to the
credit under this subsection.
The total aggregate amount of credits awarded under
the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
shall not exceed $20,000,000 in any State fiscal year.
This paragraph (8) is exempt from the provisions of

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Section 250.
(g) (Blank).
(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b-5) of Section
5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
be allowed a credit against the tax imposed by subsections
(a) and (b) of this Section for investment in qualified
property which is placed in service by a Department of
Commerce and Economic Opportunity designated High Impact
Business. The credit shall be .5% of the basis for such
property. The credit shall not be available (i) until the
minimum investments in qualified property set forth in
subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act have been satisfied or (ii) until the
time authorized in subsection (b-5) of the Illinois
Enterprise Zone Act for entities designated as High Impact
Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
Act, and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero. The
credit applicable to such investments shall be taken in
the taxable year in which such investments have been
completed. The credit for additional investments beyond
the minimum investment by a designated high impact
business authorized under subdivision (a)(3)(A) of Section

SB1911 Enrolled - 111 - LRB104 09605 HLH 19670 b
5.5 of the Illinois Enterprise Zone Act shall be available
only in the taxable year in which the property is placed in
service and shall not be allowed to the extent that it
would reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero. For
tax years ending on or after December 31, 1987, the credit
shall be allowed for the tax year in which the property is
placed in service, or, if the amount of the credit exceeds
the tax liability for that year, whether it exceeds the
original liability or the liability as later amended, such
excess may be carried forward and applied to the tax
liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest
year for which there is a liability. If there is credit
from more than one tax year that is available to offset a
liability, the credit accruing first in time shall be
applied first.
Changes made in this subdivision (h)(1) by Public Act
88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not

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eligible for the credit provided by this subsection
(h);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in a federally designated Foreign Trade
Zone or Sub-Zone located in Illinois by the taxpayer, the
amount of such increase shall be deemed property placed in
service on the date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed
under subsections (a) and (b) of this Section for such
taxable year shall be increased. Such increase shall be

SB1911 Enrolled - 113 - LRB104 09605 HLH 19670 b
determined by (i) recomputing the investment credit which
would have been allowed for the year in which credit for
such property was originally allowed by eliminating such
property from such computation, and (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (6), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(7) Beginning with tax years ending after December 31,
1996, if a taxpayer qualifies for the credit under this
subsection (h) and thereby is granted a tax abatement and
the taxpayer relocates its entire facility in violation of
the explicit terms and length of the contract under
Section 18-183 of the Property Tax Code, the tax imposed
under subsections (a) and (b) of this Section shall be
increased for the taxable year in which the taxpayer
relocated its facility by an amount equal to the amount of
credit received by the taxpayer under this subsection (h).
(h-5) High Impact Business construction jobs credit. For
taxable years beginning on or after January 1, 2021, there
shall also be allowed a High Impact Business construction jobs
credit against the tax imposed under subsections (a) and (b)
of this Section as provided in subsections (i) and (j) of
Section 5.5 of the Illinois Enterprise Zone Act.

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The credit or credits may not reduce the taxpayer's
liability to less than zero. If the amount of the credit or
credits exceeds the taxpayer's liability, the excess may be
carried forward and applied against the taxpayer's liability
in succeeding calendar years in the manner provided under
paragraph (4) of Section 211 of this Act. The credit or credits
shall be applied to the earliest year for which there is a tax
liability. If there are credits from more than one taxable
year that are available to offset a liability, the earlier
credit shall be applied first.
For partners, shareholders of Subchapter S corporations,
and owners of limited liability companies, for taxable years
ending before December 31, 2023, if the liability company is
treated as a partnership for the purposes of federal and State
income taxation, there shall be allowed a credit under this
Section to be determined in accordance with the determination
of income and distributive share of income under Sections 702
and 704 and Subchapter S of the Internal Revenue Code. For
taxable years ending on or after December 31, 2023, for
partners and shareholders of Subchapter S corporations, the
provisions of Section 251 shall apply with respect to the
credit under this subsection.
The total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
exceed $20,000,000 in any State fiscal year.
This subsection (h-5) is exempt from the provisions of

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Section 250.
(i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, a credit
shall be allowed against the tax imposed by subsections (a)
and (b) of this Section for the tax imposed by subsections (c)
and (d) of this Section. This credit shall be computed by
multiplying the tax imposed by subsections (c) and (d) of this
Section by a fraction, the numerator of which is base income
allocable to Illinois and the denominator of which is Illinois
base income, and further multiplying the product by the tax
rate imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under this
subsection which is unused in the year the credit is computed
because it exceeds the tax liability imposed by subsections
(a) and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried
forward and applied to the tax liability imposed by
subsections (a) and (b) of the 5 taxable years following the
excess credit year, provided that no credit may be carried
forward to any year ending on or after December 31, 2003. This
credit shall be applied first to the earliest year for which
there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability the earliest credit arising under this
subsection shall be applied first.
If, during any taxable year ending on or after December

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31, 1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such
taxable year to reduce the amount of credit claimed.
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) under this Section for all
amounts paid or accrued, on behalf of all persons employed by
the taxpayer in Illinois or Illinois residents employed
outside of Illinois by a taxpayer, for educational or
vocational training in semi-technical or technical fields or
semi-skilled or skilled fields, which were deducted from gross
income in the computation of taxable income. The credit
against the tax imposed by subsections (a) and (b) shall be
1.6% of such training expenses. For partners, shareholders of
subchapter S corporations, and owners of limited liability
companies, if the liability company is treated as a
partnership for purposes of federal and State income taxation,
for taxable years ending before December 31, 2023, there shall
be allowed a credit under this subsection (j) to be determined

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in accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
subchapter S of the Internal Revenue Code. For taxable years
ending on or after December 31, 2023, for partners and
shareholders of Subchapter S corporations, the provisions of
Section 251 shall apply with respect to the credit under this
subsection.
Any credit allowed under this subsection which is unused
in the year the credit is earned may be carried forward to each
of the 5 taxable years following the year for which the credit
is first computed until it is used. This credit shall be
applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from
more than one tax year that is available to offset a liability,
the earliest credit arising under this subsection shall be
applied first. No carryforward credit may be claimed in any
tax year ending on or after December 31, 2003.
(k) Research and development credit. For tax years ending
after July 1, 1990 and prior to December 31, 2003, and
beginning again for tax years ending on or after December 31,
2004, and ending prior to January 1, 2032, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a)
and (b) of this Section for increasing research activities in
this State. The credit allowed against the tax imposed by
subsections (a) and (b) shall be equal to 6 1/2% of the
qualifying expenditures for increasing research activities in

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this State. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if
the liability company is treated as a partnership for purposes
of federal and State income taxation, for taxable years ending
before December 31, 2023, there shall be allowed a credit
under this subsection to be determined in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and subchapter S of the Internal Revenue
Code. For taxable years ending on or after December 31, 2023,
for partners and shareholders of Subchapter S corporations,
the provisions of Section 251 shall apply with respect to the
credit under this subsection.
For purposes of this subsection, "qualifying expenditures"
means the qualifying expenditures as defined for the federal
credit for increasing research activities which would be
allowable under Section 41 of the Internal Revenue Code and
which are conducted in this State, "qualifying expenditures
for increasing research activities in this State" means the
excess of qualifying expenditures for the taxable year in
which incurred over qualifying expenditures for the base
period, "qualifying expenditures for the base period" means
the average of the qualifying expenditures for each year in
the base period, and "base period" means the 3 taxable years
immediately preceding the taxable year for which the
determination is being made.
Any credit in excess of the tax liability for the taxable

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year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over
as a credit against the tax liability for the following 5
taxable years or until it has been fully used, whichever
occurs first; provided that no credit earned in a tax year
ending prior to December 31, 2003 may be carried forward to any
year ending on or after December 31, 2003.
If an unused credit is carried forward to a given year from
2 or more earlier years, that credit arising in the earliest
year will be applied first against the tax liability for the
given year. If a tax liability for the given year still
remains, the credit from the next earliest year will then be
applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused
credit or credits then will be carried forward to the next
following year in which a tax liability is incurred, except
that no credit can be carried forward to a year which is more
than 5 years after the year in which the expense for which the
credit is given was incurred.
No inference shall be drawn from Public Act 91-644 in
construing this Section for taxable years beginning before
January 1, 1999.
It is the intent of the General Assembly that the research
and development credit under this subsection (k) shall apply
continuously for all tax years ending on or after December 31,
2004 and ending prior to January 1, 2032, including, but not

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limited to, the period beginning on January 1, 2016 and ending
on July 6, 2017 (the effective date of Public Act 100-22). All
actions taken in reliance on the continuation of the credit
under this subsection (k) by any taxpayer are hereby
validated.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997 and
on or before December 31, 2001, a taxpayer shall be
allowed a credit against the tax imposed by subsections
(a) and (b) of this Section for certain amounts paid for
unreimbursed eligible remediation costs, as specified in
this subsection. For purposes of this Section,
"unreimbursed eligible remediation costs" means costs
approved by the Illinois Environmental Protection Agency
("Agency") under Section 58.14 of the Environmental
Protection Act that were paid in performing environmental
remediation at a site for which a No Further Remediation
Letter was issued by the Agency and recorded under Section
58.10 of the Environmental Protection Act. The credit must
be claimed for the taxable year in which Agency approval
of the eligible remediation costs is granted. The credit
is not available to any taxpayer if the taxpayer or any
related party caused or contributed to, in any material
respect, a release of regulated substances on, in, or
under the site that was identified and addressed by the
remedial action pursuant to the Site Remediation Program

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of the Environmental Protection Act. After the Pollution
Control Board rules are adopted pursuant to the Illinois
Administrative Procedure Act for the administration and
enforcement of Section 58.9 of the Environmental
Protection Act, determinations as to credit availability
for purposes of this Section shall be made consistent with
those rules. For purposes of this Section, "taxpayer"
includes a person whose tax attributes the taxpayer has
succeeded to under Section 381 of the Internal Revenue
Code and "related party" includes the persons disallowed a
deduction for losses by paragraphs (b), (c), and (f)(1) of
Section 267 of the Internal Revenue Code by virtue of
being a related taxpayer, as well as any of its partners.
The credit allowed against the tax imposed by subsections
(a) and (b) shall be equal to 25% of the unreimbursed
eligible remediation costs in excess of $100,000 per site,
except that the $100,000 threshold shall not apply to any
site contained in an enterprise zone as determined by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity). The
total credit allowed shall not exceed $40,000 per year
with a maximum total of $150,000 per site. For partners
and shareholders of subchapter S corporations, there shall
be allowed a credit under this subsection to be determined
in accordance with the determination of income and
distributive share of income under Sections 702 and 704

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and subchapter S of the Internal Revenue Code.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. The
term "unused credit" does not include any amounts of
unreimbursed eligible remediation costs in excess of the
maximum credit per site authorized under paragraph (i).
This credit shall be applied first to the earliest year
for which there is a liability. If there is a credit under
this subsection from more than one tax year that is
available to offset a liability, the earliest credit
arising under this subsection shall be applied first. A
credit allowed under this subsection may be sold to a
buyer as part of a sale of all or part of the remediation
site for which the credit was granted. The purchaser of a
remediation site and the tax credit shall succeed to the
unused credit and remaining carry-forward period of the
seller. To perfect the transfer, the assignor shall record
the transfer in the chain of title for the site and provide
written notice to the Director of the Illinois Department
of Revenue of the assignor's intent to sell the
remediation site and the amount of the tax credit to be
transferred as a portion of the sale. In no event may a
credit be transferred to any taxpayer if the taxpayer or a
related party would not be eligible under the provisions

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of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(m) Education expense credit. Beginning with tax years
ending after December 31, 1999, a taxpayer who is the
custodian of one or more qualifying pupils shall be allowed a
credit against the tax imposed by subsections (a) and (b) of
this Section for qualified education expenses incurred on
behalf of the qualifying pupils. The credit shall be equal to
25% of qualified education expenses, but in no event may the
total credit under this subsection claimed by a family that is
the custodian of qualifying pupils exceed (i) $500 for tax
years ending prior to December 31, 2017, and (ii) $750 for tax
years ending on or after December 31, 2017. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. Notwithstanding any other
provision of law, for taxable years beginning on or after
January 1, 2017, no taxpayer may claim a credit under this
subsection (m) if the taxpayer's adjusted gross income for the
taxable year exceeds (i) $500,000, in the case of spouses
filing a joint federal tax return or (ii) $250,000, in the case
of all other taxpayers. This subsection is exempt from the
provisions of Section 250 of this Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are

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residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit is
sought were full-time pupils enrolled in a kindergarten
through twelfth grade education program at any school, as
defined in this subsection.
"Qualified education expense" means the amount incurred on
behalf of a qualifying pupil in excess of $250 for tuition,
book fees, and lab fees at the school in which the pupil is
enrolled during the regular school year.
"School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School Code,
except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify
for the credit under this Section.
"Custodian" means, with respect to qualifying pupils, an
Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
(n) River Edge Redevelopment Zone site remediation tax
credit.
(i) For tax years ending on or after December 31,
2006, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) of this Section for
certain amounts paid for unreimbursed eligible remediation

SB1911 Enrolled - 125 - LRB104 09605 HLH 19670 b
costs, as specified in this subsection. For purposes of
this Section, "unreimbursed eligible remediation costs"
means costs approved by the Illinois Environmental
Protection Agency ("Agency") under Section 58.14a of the
Environmental Protection Act that were paid in performing
environmental remediation at a site within a River Edge
Redevelopment Zone for which a No Further Remediation
Letter was issued by the Agency and recorded under Section
58.10 of the Environmental Protection Act. The credit must
be claimed for the taxable year in which Agency approval
of the eligible remediation costs is granted. The credit
is not available to any taxpayer if the taxpayer or any
related party caused or contributed to, in any material
respect, a release of regulated substances on, in, or
under the site that was identified and addressed by the
remedial action pursuant to the Site Remediation Program
of the Environmental Protection Act. Determinations as to
credit availability for purposes of this Section shall be
made consistent with rules adopted by the Pollution
Control Board pursuant to the Illinois Administrative
Procedure Act for the administration and enforcement of
Section 58.9 of the Environmental Protection Act. For
purposes of this Section, "taxpayer" includes a person
whose tax attributes the taxpayer has succeeded to under
Section 381 of the Internal Revenue Code and "related
party" includes the persons disallowed a deduction for

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losses by paragraphs (b), (c), and (f)(1) of Section 267
of the Internal Revenue Code by virtue of being a related
taxpayer, as well as any of its partners. The credit
allowed against the tax imposed by subsections (a) and (b)
shall be equal to 25% of the unreimbursed eligible
remediation costs in excess of $100,000 per site.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. This
credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available
to offset a liability, the earliest credit arising under
this subsection shall be applied first. A credit allowed
under this subsection may be sold to a buyer as part of a
sale of all or part of the remediation site for which the
credit was granted. The purchaser of a remediation site
and the tax credit shall succeed to the unused credit and
remaining carry-forward period of the seller. To perfect
the transfer, the assignor shall record the transfer in
the chain of title for the site and provide written notice
to the Director of the Illinois Department of Revenue of
the assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any

SB1911 Enrolled - 127 - LRB104 09605 HLH 19670 b
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(o) For each of taxable years during the Compassionate Use
of Medical Cannabis Program, a surcharge is imposed on all
taxpayers on income arising from the sale or exchange of
capital assets, depreciable business property, real property
used in the trade or business, and Section 197 intangibles of
an organization registrant under the Compassionate Use of
Medical Cannabis Program Act. The amount of the surcharge is
equal to the amount of federal income tax liability for the
taxable year attributable to those sales and exchanges. The
surcharge imposed does not apply if:
(1) the medical cannabis cultivation center
registration, medical cannabis dispensary registration, or
the property of a registration is transferred as a result
of any of the following:
(A) bankruptcy, a receivership, or a debt
adjustment initiated by or against the initial
registration or the substantial owners of the initial
registration;
(B) cancellation, revocation, or termination of
any registration by the Illinois Department of Public
Health;

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(C) a determination by the Illinois Department of
Public Health that transfer of the registration is in
the best interests of Illinois qualifying patients as
defined by the Compassionate Use of Medical Cannabis
Program Act;
(D) the death of an owner of the equity interest in
a registrant;
(E) the acquisition of a controlling interest in
the stock or substantially all of the assets of a
publicly traded company;
(F) a transfer by a parent company to a wholly
owned subsidiary; or
(G) the transfer or sale to or by one person to
another person where both persons were initial owners
of the registration when the registration was issued;
or
(2) the cannabis cultivation center registration,
medical cannabis dispensary registration, or the
controlling interest in a registrant's property is
transferred in a transaction to lineal descendants in
which no gain or loss is recognized or as a result of a
transaction in accordance with Section 351 of the Internal
Revenue Code in which no gain or loss is recognized.
(p) Pass-through entity tax.
(1) For taxable years ending on or after December 31,
2021 and beginning prior to January 1, 2026, a partnership

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(other than a publicly traded partnership under Section
7704 of the Internal Revenue Code) or Subchapter S
corporation may elect to apply the provisions of this
subsection. A separate election shall be made for each
taxable year. Such election shall be made at such time,
and in such form and manner as prescribed by the
Department, and, once made, is irrevocable.
(2) Entity-level tax. A partnership or Subchapter S
corporation electing to apply the provisions of this
subsection shall be subject to a tax for the privilege of
earning or receiving income in this State in an amount
equal to 4.95% of the taxpayer's net income for the
taxable year.
(3) Net income defined.
(A) In general. For purposes of paragraph (2), the
term net income has the same meaning as defined in
Section 202 of this Act, except that, for tax years
ending on or after December 31, 2023, a deduction
shall be allowed in computing base income for
distributions to a retired partner to the extent that
the partner's distributions are exempt from tax under
Section 203(a)(2)(F) of this Act. In addition, the
following modifications shall not apply:
(i) the standard exemption allowed under
Section 204;
(ii) the deduction for net losses allowed

SB1911 Enrolled - 130 - LRB104 09605 HLH 19670 b
under Section 207;
(iii) in the case of an S corporation, the
modification under Section 203(b)(2)(S); and
(iv) in the case of a partnership, the
modifications under Section 203(d)(2)(H) and
Section 203(d)(2)(I).
(B) Special rule for tiered partnerships. If a
taxpayer making the election under paragraph (1) is a
partner of another taxpayer making the election under
paragraph (1), net income shall be computed as
provided in subparagraph (A), except that the taxpayer
shall subtract its distributive share of the net
income of the electing partnership (including its
distributive share of the net income of the electing
partnership derived as a distributive share from
electing partnerships in which it is a partner).
(4) Credit for entity level tax. Each partner or
shareholder of a taxpayer making the election under this
Section shall be allowed a credit against the tax imposed
under subsections (a) and (b) of Section 201 of this Act
for the taxable year of the partnership or Subchapter S
corporation for which an election is in effect ending
within or with the taxable year of the partner or
shareholder in an amount equal to 4.95% times the partner
or shareholder's distributive share of the net income of
the electing partnership or Subchapter S corporation, but

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not to exceed the partner's or shareholder's share of the
tax imposed under paragraph (1) which is actually paid by
the partnership or Subchapter S corporation. If the
taxpayer is a partnership or Subchapter S corporation that
is itself a partner of a partnership making the election
under paragraph (1), the credit under this paragraph shall
be allowed to the taxpayer's partners or shareholders (or
if the partner is a partnership or Subchapter S
corporation then its partners or shareholders) in
accordance with the determination of income and
distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. If the
amount of the credit allowed under this paragraph exceeds
the partner's or shareholder's liability for tax imposed
under subsections (a) and (b) of Section 201 of this Act
for the taxable year, such excess shall be treated as an
overpayment for purposes of Section 909 of this Act.
(5) Nonresidents. A nonresident individual who is a
partner or shareholder of a partnership or Subchapter S
corporation for a taxable year for which an election is in
effect under paragraph (1) shall not be required to file
an income tax return under this Act for such taxable year
if the only source of net income of the individual (or the
individual and the individual's spouse in the case of a
joint return) is from an entity making the election under
paragraph (1) and the credit allowed to the partner or

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shareholder under paragraph (4) equals or exceeds the
individual's liability for the tax imposed under
subsections (a) and (b) of Section 201 of this Act for the
taxable year.
(6) Liability for tax. Except as provided in this
paragraph, a partnership or Subchapter S making the
election under paragraph (1) is liable for the
entity-level tax imposed under paragraph (2). If the
electing partnership or corporation fails to pay the full
amount of tax deemed assessed under paragraph (2), the
partners or shareholders shall be liable to pay the tax
assessed (including penalties and interest). Each partner
or shareholder shall be liable for the unpaid assessment
based on the ratio of the partner's or shareholder's share
of the net income of the partnership over the total net
income of the partnership. If the partnership or
Subchapter S corporation fails to pay the tax assessed
(including penalties and interest) and thereafter an
amount of such tax is paid by the partners or
shareholders, such amount shall not be collected from the
partnership or corporation.
(7) Foreign tax. For purposes of the credit allowed
under Section 601(b)(3) of this Act, tax paid by a
partnership or Subchapter S corporation to another state
which, as determined by the Department, is substantially
similar to the tax imposed under this subsection, shall be

SB1911 Enrolled - 133 - LRB104 09605 HLH 19670 b
considered tax paid by the partner or shareholder to the
extent that the partner's or shareholder's share of the
income of the partnership or Subchapter S corporation
allocated and apportioned to such other state bears to the
total income of the partnership or Subchapter S
corporation allocated or apportioned to such other state.
(8) Suspension of withholding. The provisions of
Section 709.5 of this Act shall not apply to a partnership
or Subchapter S corporation for the taxable year for which
an election under paragraph (1) is in effect.
(9) Requirement to pay estimated tax. For each taxable
year for which an election under paragraph (1) is in
effect, a partnership or Subchapter S corporation is
required to pay estimated tax for such taxable year under
Sections 803 and 804 of this Act if the amount payable as
estimated tax can reasonably be expected to exceed $500.
(10) The provisions of this subsection shall apply
only with respect to taxable years for which the
limitation on individual deductions applies under Section
164(b)(6) of the Internal Revenue Code.
(Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21;
103-9, eff. 6-7-23; 103-396, eff. 1-1-24; 103-595, eff.
6-26-24; 103-605, eff. 7-1-24.)
(35 ILCS 5/203) (from Ch. 120, par. 2-203)
Sec. 203. Base income defined.

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(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by paragraph
(2).
(2) Modifications. The adjusted gross income referred
to in paragraph (1) shall be modified by adding thereto
the sum of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of adjusted gross income, except
stock dividends of qualified public utilities
described in Section 305(e) of the Internal Revenue
Code;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of adjusted gross income for the
taxable year;
(C) An amount equal to the amount received during
the taxable year as a recovery or refund of real
property taxes paid with respect to the taxpayer's
principal residence under the Revenue Act of 1939 and
for which a deduction was previously taken under
subparagraph (L) of this paragraph (2) prior to July
1, 1991, the retrospective application date of Article

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4 of Public Act 87-17. In the case of multi-unit or
multi-use structures and farm dwellings, the taxes on
the taxpayer's principal residence shall be that
portion of the total taxes for the entire property
which is attributable to such principal residence;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of adjusted gross income;
(D-5) An amount, to the extent not included in
adjusted gross income, equal to the amount of money
withdrawn by the taxpayer in the taxable year from a
medical care savings account and the interest earned
on the account in the taxable year of a withdrawal
pursuant to subsection (b) of Section 20 of the
Medical Care Savings Account Act or subsection (b) of
Section 20 of the Medical Care Savings Account Act of
2000;
(D-10) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the individual deducted in computing
adjusted gross income and for which the individual
claims a credit under subsection (l) of Section 201;
(D-15) For taxable years 2001 through 2025 and
thereafter, an amount equal to the bonus depreciation
deduction taken on the taxpayer's federal income tax

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return for the taxable year under subsection (k) of
Section 168 of the Internal Revenue Code; for taxable
years 2026 and thereafter, an amount equal to the
bonus depreciation deduction taken on the taxpayer's
federal income tax return for the taxable year under
subsection (k) or (n) of Section 168 of the Internal
Revenue Code;
(D-16) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (Z) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (Z) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (Z), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for

SB1911 Enrolled - 137 - LRB104 09605 HLH 19670 b
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income under Sections 951 through
964 of the Internal Revenue Code and amounts included
in gross income under Section 78 of the Internal
Revenue Code) with respect to the stock of the same
person to whom the interest was paid, accrued, or
incurred. For taxable years ending on and after
December 31, 2025, for purposes of applying this

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paragraph in the case of a taxpayer to which Section
163(j) of the Internal Revenue Code applies for the
taxable year, the reduction in the amount of interest
for which a deduction is allowed by reason of Section
163(j) shall be treated as allocable first to persons
who are not foreign persons referred to in this
paragraph and then to such foreign persons.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the

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avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable

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year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(D-18) An amount equal to the amount of intangible

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expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal
Revenue Code and amounts included in gross income
under Section 78 of the Internal Revenue Code) with
respect to the stock of the same person to whom the
intangible expenses and costs were directly or

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indirectly paid, incurred, or accrued. The preceding
sentence does not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income

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with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);

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For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section

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304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(D-19) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group

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(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
Act;
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal
to the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from

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the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under
Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials
comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing
Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;

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(D-20.5) For taxable years beginning on or after
January 1, 2018, in the case of a distribution from a
qualified ABLE program under Section 529A of the
Internal Revenue Code, other than a distribution from
a qualified ABLE program created under Section 16.6 of
the State Treasurer Act, an amount equal to the amount
excluded from gross income under Section 529A(c)(1)(B)
of the Internal Revenue Code;
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the
State to an out-of-state program, an amount equal to
the amount of moneys previously deducted from base
income under subsection (a)(2)(Y) of this Section;
(D-21.5) For taxable years beginning on or after
January 1, 2018, in the case of the transfer of moneys
from a qualified tuition program under Section 529 or
a qualified ABLE program under Section 529A of the
Internal Revenue Code that is administered by this
State to an ABLE account established under an
out-of-state ABLE account program, an amount equal to
the contribution component of the transferred amount
that was previously deducted from base income under
subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
Section;

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(D-22) For taxable years beginning on or after
January 1, 2009, and prior to January 1, 2018, in the
case of a nonqualified withdrawal or refund of moneys
from a qualified tuition program under Section 529 of
the Internal Revenue Code administered by the State
that is not used for qualified expenses at an eligible
education institution, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(y) of this Section,
provided that the withdrawal or refund did not result
from the beneficiary's death or disability. For
taxable years beginning on or after January 1, 2018:
(1) in the case of a nonqualified withdrawal or
refund, as defined under Section 16.5 of the State
Treasurer Act, of moneys from a qualified tuition
program under Section 529 of the Internal Revenue Code
administered by the State, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(Y) of this Section, and
(2) in the case of a nonqualified withdrawal or refund
from a qualified ABLE program under Section 529A of
the Internal Revenue Code administered by the State
that is not used for qualified disability expenses, an
amount equal to the contribution component of the

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nonqualified withdrawal or refund that was previously
deducted from base income under subsection (a)(2)(HH)
of this Section;
(D-23) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-24) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(D-25) In the case of a resident, an amount equal
to the amount of tax for which a credit is allowed
pursuant to Section 201(p)(7) of this Act;
and by deducting from the total so obtained the sum of the
following amounts:
(E) For taxable years ending before December 31,
2001, any amount included in such total in respect of
any compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a
resident by reason of being on active duty in the Armed
Forces of the United States and in respect of any
compensation paid or accrued to a resident who as a
governmental employee was a prisoner of war or missing
in action, and in respect of any compensation paid to a

SB1911 Enrolled - 151 - LRB104 09605 HLH 19670 b
resident in 1971 or thereafter for annual training
performed pursuant to Sections 502 and 503, Title 32,
United States Code as a member of the Illinois
National Guard or, beginning with taxable years ending
on or after December 31, 2007, the National Guard of
any other state. For taxable years ending on or after
December 31, 2001, any amount included in such total
in respect of any compensation (including but not
limited to any compensation paid or accrued to a
serviceman while a prisoner of war or missing in
action) paid to a resident by reason of being a member
of any component of the Armed Forces of the United
States and in respect of any compensation paid or
accrued to a resident who as a governmental employee
was a prisoner of war or missing in action, and in
respect of any compensation paid to a resident in 2001
or thereafter by reason of being a member of the
Illinois National Guard or, beginning with taxable
years ending on or after December 31, 2007, the
National Guard of any other state. The provisions of
this subparagraph (E) are exempt from the provisions
of Section 250;
(F) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
408 of the Internal Revenue Code, or included in such

SB1911 Enrolled - 152 - LRB104 09605 HLH 19670 b
total as distributions under the provisions of any
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in
computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(I) An amount equal to all amounts included in
such total pursuant to the provisions of Section 111
of the Internal Revenue Code as a recovery of items
previously deducted from adjusted gross income in the
computation of taxable income;
(J) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act, and conducts
substantially all of its operations in a River Edge
Redevelopment Zone or zones. This subparagraph (J) is
exempt from the provisions of Section 250;
(K) An amount equal to those dividends included in
such total that were paid by a corporation that

SB1911 Enrolled - 153 - LRB104 09605 HLH 19670 b
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (J) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (K);
(L) For taxable years ending after December 31,
1983, an amount equal to all social security benefits
and railroad retirement benefits included in such
total pursuant to Sections 72(r) and 86 of the
Internal Revenue Code;
(M) With the exception of any amounts subtracted
under subparagraph (N), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, for taxable years ending
on or after December 31, 2011, Section 45G(e)(3) of
the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the

SB1911 Enrolled - 154 - LRB104 09605 HLH 19670 b
Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(N) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(O) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts
held under claim of right for the taxable year;
(Q) An amount equal to any amounts included in
such total, received by the taxpayer as an
acceleration in the payment of life, endowment or

SB1911 Enrolled - 155 - LRB104 09605 HLH 19670 b
annuity benefits in advance of the time they would
otherwise be payable as an indemnity for a terminal
illness;
(R) An amount equal to the amount of any federal or
State bonus paid to veterans of the Persian Gulf War;
(S) An amount, to the extent included in adjusted
gross income, equal to the amount of a contribution
made in the taxable year on behalf of the taxpayer to a
medical care savings account established under the
Medical Care Savings Account Act or the Medical Care
Savings Account Act of 2000 to the extent the
contribution is accepted by the account administrator
as provided in that Act;
(T) An amount, to the extent included in adjusted
gross income, equal to the amount of interest earned
in the taxable year on a medical care savings account
established under the Medical Care Savings Account Act
or the Medical Care Savings Account Act of 2000 on
behalf of the taxpayer, other than interest added
pursuant to item (D-5) of this paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount of
tax imposed and paid under subsections (a) and (b) of
Section 201 of this Act on grant amounts received by
the taxpayer under the Nursing Home Grant Assistance
Act during the taxpayer's taxable years 1992 and 1993;

SB1911 Enrolled - 156 - LRB104 09605 HLH 19670 b
(V) Beginning with tax years ending on or after
December 31, 1995 and ending with tax years ending on
or before December 31, 2004, an amount equal to the
amount paid by a taxpayer who is a self-employed
taxpayer, a partner of a partnership, or a shareholder
in a Subchapter S corporation for health insurance or
long-term care insurance for that taxpayer or that
taxpayer's spouse or dependents, to the extent that
the amount paid for that health insurance or long-term
care insurance may be deducted under Section 213 of
the Internal Revenue Code, has not been deducted on
the federal income tax return of the taxpayer, and
does not exceed the taxable income attributable to
that taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if the
taxpayer is eligible to participate in any health
insurance or long-term care insurance plan of an
employer of the taxpayer or the taxpayer's spouse. The
amount of the health insurance and long-term care
insurance subtracted under this item (V) shall be
determined by multiplying total health insurance and
long-term care insurance premiums paid by the taxpayer
times a number that represents the fractional
percentage of eligible medical expenses under Section
213 of the Internal Revenue Code of 1986 not actually

SB1911 Enrolled - 157 - LRB104 09605 HLH 19670 b
deducted on the taxpayer's federal income tax return;
(W) For taxable years beginning on or after
January 1, 1998, all amounts included in the
taxpayer's federal gross income in the taxable year
from amounts converted from a regular IRA to a Roth
IRA. This paragraph is exempt from the provisions of
Section 250;
(X) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during

SB1911 Enrolled - 158 - LRB104 09605 HLH 19670 b
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(Y) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2004, moneys contributed in the taxable year to a
College Savings Pool account under Section 16.5 of the
State Treasurer Act, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid

SB1911 Enrolled - 159 - LRB104 09605 HLH 19670 b
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For purposes
of this subparagraph, contributions made by an
employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as
made by the employee. This subparagraph (Y) is exempt
from the provisions of Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) or (n) of Section 168 of the
Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) or (n) of
Section 168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and

SB1911 Enrolled - 160 - LRB104 09605 HLH 19670 b
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) or Section
168(n)(6) of the Internal Revenue Code to not
claim bonus depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation

SB1911 Enrolled - 161 - LRB104 09605 HLH 19670 b
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) or (n) of Section 168 of the Internal Revenue Code.
This subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (Z) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (D-15), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any

SB1911 Enrolled - 162 - LRB104 09605 HLH 19670 b
one piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,
other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to

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transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-17) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (DD) is exempt from the provisions
of Section 250;
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for

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taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-18) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (EE) is
exempt from the provisions of Section 250;
(FF) An amount equal to any amount awarded to the
taxpayer during the taxable year by the Court of
Claims under subsection (c) of Section 8 of the Court
of Claims Act for time unjustly served in a State
prison. This subparagraph (FF) is exempt from the
provisions of Section 250;
(GG) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance

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company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(GG), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (GG). This
subparagraph (GG) is exempt from the provisions of
Section 250;
(HH) For taxable years beginning on or after
January 1, 2018 and prior to January 1, 2028, a maximum
of $10,000 contributed in the taxable year to a
qualified ABLE account under Section 16.6 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) or Section
529A(c)(1)(C) of the Internal Revenue Code shall not
be considered moneys contributed under this
subparagraph (HH). For purposes of this subparagraph
(HH), contributions made by an employer on behalf of
an employee, or matching contributions made by an
employee, shall be treated as made by the employee;
(II) For taxable years that begin on or after
January 1, 2021 and begin before January 1, 2026, the
amount that is included in the taxpayer's federal
adjusted gross income pursuant to Section 61 of the
Internal Revenue Code as discharge of indebtedness

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attributable to student loan forgiveness and that is
not excluded from the taxpayer's federal adjusted
gross income pursuant to paragraph (5) of subsection
(f) of Section 108 of the Internal Revenue Code;
(JJ) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (JJ) are exempt from the provisions
of Section 250;
(KK) To the extent includible in gross income for
federal income tax purposes, any amount awarded or
paid to the taxpayer as a result of a judgment or
settlement for fertility fraud as provided in Section
15 of the Illinois Fertility Fraud Act, donor
fertility fraud as provided in Section 20 of the
Illinois Fertility Fraud Act, or similar action in
another state;
(LL) For taxable years beginning on or after

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January 1, 2026, if the taxpayer is a qualified
worker, as defined in the Workforce Development
through Charitable Loan Repayment Act, an amount equal
to the amount included in the taxpayer's federal
adjusted gross income that is attributable to student
loan repayment assistance received by the taxpayer
during the taxable year from a qualified community
foundation under the provisions of the Workforce
Development through Charitable Loan Repayment Act.
This subparagraph (LL) is exempt from the
provisions of Section 250; and
(MM) For taxable years beginning on or after
January 1, 2025, if the taxpayer is an eligible
resident as defined in the Medical Debt Relief Act, an
amount equal to the amount included in the taxpayer's
federal adjusted gross income that is attributable to
medical debt relief received by the taxpayer during
the taxable year from a nonprofit medical debt relief
coordinator under the provisions of the Medical Debt
Relief Act. This subparagraph (MM) is exempt from the
provisions of Section 250.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).

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(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest and all distributions
received from regulated investment companies during
the taxable year to the extent excluded from gross
income in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(C) In the case of a regulated investment company,
an amount equal to the excess of (i) the net long-term
capital gain for the taxable year, over (ii) the
amount of the capital gain dividends designated as
such in accordance with Section 852(b)(3)(C) of the
Internal Revenue Code and any amount designated under
Section 852(b)(3)(D) of the Internal Revenue Code,
attributable to the taxable year (this amendatory Act
of 1995 (Public Act 89-89) is declarative of existing
law and is not a new enactment);
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;

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(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such earlier taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December

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31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(E-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the corporation deducted in computing
adjusted gross income and for which the corporation
claims a credit under subsection (l) of Section 201;
(E-10) For taxable years 2001 through 2025 and
thereafter, an amount equal to the bonus depreciation
deduction taken on the taxpayer's federal income tax
return for the taxable year under subsection (k) of
Section 168 of the Internal Revenue Code; for taxable
years 2026 and thereafter, an amount equal to the
bonus depreciation deduction taken on the taxpayer's
federal income tax return for the taxable year under
subsection (k) or (n) of Section 168 of the Internal
Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.

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If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (T) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (T), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(E-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification

SB1911 Enrolled - 172 - LRB104 09605 HLH 19670 b
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred. For taxable years ending on and
after December 31, 2025, for purposes of applying this
paragraph in the case of a taxpayer to which Section
163(j) of the Internal Revenue Code applies for the
taxable year, the reduction in the amount of interest
for which a deduction is allowed by reason of Section
163(j) shall be treated as allocable first to persons
who are not foreign persons referred to in this
paragraph and then to such foreign persons.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income

SB1911 Enrolled - 173 - LRB104 09605 HLH 19670 b
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing

SB1911 Enrolled - 174 - LRB104 09605 HLH 19670 b
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing

SB1911 Enrolled - 175 - LRB104 09605 HLH 19670 b
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion

SB1911 Enrolled - 176 - LRB104 09605 HLH 19670 b
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this

SB1911 Enrolled - 177 - LRB104 09605 HLH 19670 b
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois

SB1911 Enrolled - 178 - LRB104 09605 HLH 19670 b
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a

SB1911 Enrolled - 179 - LRB104 09605 HLH 19670 b
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were

SB1911 Enrolled - 180 - LRB104 09605 HLH 19670 b
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
Act;
(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a
captive real estate investment trust that is allowed

SB1911 Enrolled - 181 - LRB104 09605 HLH 19670 b
to a real estate investment trust under Section
857(b)(2)(B) of the Internal Revenue Code for
dividends paid;
(E-16) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(E-17) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(E-18) for taxable years beginning after December
31, 2018, an amount equal to the deduction allowed
under Section 250(a)(1)(A) of the Internal Revenue
Code for the taxable year;
(E-19) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Section 250(a)(1)(B)(i) of the Internal Revenue
Code for the taxable year;
(E-20) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Sections 243(e) and 245A(a) of the Internal
Revenue Code for the taxable year;
(E-21) the amount that is claimed as a federal
deduction when computing the taxpayer's federal
taxable income for the taxable year and that is

SB1911 Enrolled - 182 - LRB104 09605 HLH 19670 b
attributable to an endowment gift for which the
taxpayer receives a credit under the Illinois Gives
Tax Credit Act;
and by deducting from the total so obtained the sum of the
following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to any amount included in such
total under Section 78 of the Internal Revenue Code;
(H) In the case of a regulated investment company,
an amount equal to the amount of exempt interest
dividends as defined in subsection (b)(5) of Section
852 of the Internal Revenue Code, paid to shareholders
for the taxable year;
(I) With the exception of any amounts subtracted
under subparagraph (J), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) and amounts disallowed as
interest expense by Section 291(a)(3) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) of the Internal Revenue Code; and (ii) for
taxable years ending on or after August 13, 1999,
Sections 171(a)(2), 265, 280C, 291(a)(3), and
832(b)(5)(B)(i) of the Internal Revenue Code, plus,

SB1911 Enrolled - 183 - LRB104 09605 HLH 19670 b
for tax years ending on or after December 31, 2011,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code and the policyholders' share of
tax-exempt interest of a life insurance company under
Section 807(a)(2)(B) of the Internal Revenue Code (in
the case of a life insurance company with gross income
from a decrease in reserves for the tax year) or
Section 807(b)(1)(B) of the Internal Revenue Code (in
the case of a life insurance company allowed a
deduction for an increase in reserves for the tax
year); the provisions of this subparagraph are exempt
from the provisions of Section 250;
(J) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which

SB1911 Enrolled - 184 - LRB104 09605 HLH 19670 b
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;
(L) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph 2 of this subsection
shall not be eligible for the deduction provided under
this subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the River Edge
Redevelopment Zone Investment Credit. To determine the
portion of a loan or loans that is secured by property
eligible for a Section 201(f) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be

SB1911 Enrolled - 185 - LRB104 09605 HLH 19670 b
divided into the basis of the Section 201(f)
investment credit property which secures the loan or
loans, using for this purpose the original basis of
such property on the date that it was placed in service
in the River Edge Redevelopment Zone. The subtraction
modification available to the taxpayer in any year
under this subsection shall be that portion of the
total interest paid by the borrower with respect to
such loan attributable to the eligible property as
calculated under the previous sentence. This
subparagraph (M) is exempt from the provisions of
Section 250;
(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the High Impact
Business Investment Credit. To determine the portion
of a loan or loans that is secured by property eligible
for a Section 201(h) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(h)
investment credit property which secures the loan or
loans, using for this purpose the original basis of

SB1911 Enrolled - 186 - LRB104 09605 HLH 19670 b
such property on the date that it was placed in service
in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois. No taxpayer that is
eligible for the deduction provided in subparagraph
(M) of paragraph (2) of this subsection shall be
eligible for the deduction provided under this
subparagraph (M-1). The subtraction modification
available to taxpayers in any year under this
subsection shall be that portion of the total interest
paid by the borrower with respect to such loan
attributable to the eligible property as calculated
under the previous sentence;
(N) Two times any contribution made during the
taxable year to a designated zone organization to the
extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii)
must, by its terms, be used for a project approved by
the Department of Commerce and Economic Opportunity
under Section 11 of the Illinois Enterprise Zone Act
or under Section 10-10 of the River Edge Redevelopment
Zone Act. This subparagraph (N) is exempt from the
provisions of Section 250;
(O) An amount equal to: (i) 85% for taxable years
ending on or before December 31, 1992, or, a
percentage equal to the percentage allowable under

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Section 243(a)(1) of the Internal Revenue Code of 1986
for taxable years ending after December 31, 1992, of
the amount by which dividends included in taxable
income and received from a corporation that is not
created or organized under the laws of the United
States or any state or political subdivision thereof,
including, for taxable years ending on or after
December 31, 1988, dividends received or deemed
received or paid or deemed paid under Sections 951
through 965 of the Internal Revenue Code, exceed the
amount of the modification provided under subparagraph
(G) of paragraph (2) of this subsection (b) which is
related to such dividends, and including, for taxable
years ending on or after December 31, 2008, dividends
received from a captive real estate investment trust;
plus (ii) 100% of the amount by which dividends,
included in taxable income and received, including,
for taxable years ending on or after December 31,
1988, dividends received or deemed received or paid or
deemed paid under Sections 951 through 964 of the
Internal Revenue Code and including, for taxable years
ending on or after December 31, 2008, dividends
received from a captive real estate investment trust,
from any such corporation specified in clause (i) that
would but for the provisions of Section 1504(b)(3) of
the Internal Revenue Code be treated as a member of the

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affiliated group which includes the dividend
recipient, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such
dividends. For taxable years ending on or after June
30, 2021, (i) for purposes of this subparagraph, the
term "dividend" does not include any amount treated as
a dividend under Section 1248 of the Internal Revenue
Code, and (ii) this subparagraph shall not apply to
dividends for which a deduction is allowed under
Section 245(a) of the Internal Revenue Code. For
taxable years ending on or after December 31, 2025,
50% of the amount of global intangible low-taxed
income or net controlled foreign corporation (CFC)
tested income received or deemed received or paid or
deemed paid under Sections 951 through 965 Section
951A of the Internal Revenue Code. This subparagraph
(O) is exempt from the provisions of Section 250 of
this Act;
(P) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of

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the Internal Revenue Code;
(R) On and after July 20, 1999, in the case of an
attorney-in-fact with respect to whom an interinsurer
or a reciprocal insurer has made the election under
Section 835 of the Internal Revenue Code, 26 U.S.C.
835, an amount equal to the excess, if any, of the
amounts paid or incurred by that interinsurer or
reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to that
interinsurer or reciprocal insurer with respect to the
attorney-in-fact under Section 835(b) of the Internal
Revenue Code for the taxable year; the provisions of
this subparagraph are exempt from the provisions of
Section 250;
(S) For taxable years ending on or after December
31, 1997, in the case of a Subchapter S corporation, an
amount equal to all amounts of income allocable to a
shareholder subject to the Personal Property Tax
Replacement Income Tax imposed by subsections (c) and
(d) of Section 201 of this Act, including amounts
allocable to organizations exempt from federal income
tax by reason of Section 501(a) of the Internal
Revenue Code. This subparagraph (S) is exempt from the
provisions of Section 250;
(T) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction

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is taken on the taxpayer's federal income tax return
under subsection (k) or (n) of Section 168 of the
Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) or (n) of
Section 168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;

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(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) or Section
168(n)(6) of the Internal Revenue Code to not
claim bonus depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) or (n) of Section 168 of the Internal Revenue Code.
This subparagraph (T) is exempt from the provisions of

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Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (T) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;
(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any

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income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto) taken
into account for the taxable year with respect to a
transaction with a taxpayer that is required to make
an addition modification with respect to such
transaction under Section 203(a)(2)(D-19), Section
203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
203(d)(2)(D-9), but not to exceed the amount of that
addition modification. This subparagraph (V) is exempt
from the provisions of Section 250;
(W) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to

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a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-12) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (W) is exempt from the provisions of
Section 250;
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business

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income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(Z) The difference between the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code over the

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taxable income of the taxpayer, computed without
regard to Section 965(e)(2)(A) of the Internal Revenue
Code, and without regard to any net operating loss
deduction. This subparagraph (Z) is exempt from the
provisions of Section 250; and
(AA) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (AA) are exempt from the provisions
of Section 250.
(3) Special rule. For purposes of paragraph (2)(A),
"gross income" in the case of a life insurance company,
for tax years ending on and after December 31, 1994, and
prior to December 31, 2011, shall mean the gross
investment income for the taxable year and, for tax years
ending on or after December 31, 2011, shall mean all
amounts included in life insurance gross income under
Section 803(a)(3) of the Internal Revenue Code.

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(c) Trusts and estates.
(1) In general. In the case of a trust or estate, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in paragraph
(1) shall be modified by adding thereto the sum of the
following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each such
case, only to the extent such amount was deducted in
the computation of taxable income;
(C) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year

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ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such taxable year, with
the following limitations applied in the order that
they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more

SB1911 Enrolled - 199 - LRB104 09605 HLH 19670 b
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(F) For taxable years ending on or after January
1, 1989, an amount equal to the tax deducted pursuant
to Section 164 of the Internal Revenue Code if the
trust or estate is claiming the same tax for purposes
of the Illinois foreign tax credit under Section 601
of this Act;
(G) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(G-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the trust or estate deducted in computing
adjusted gross income and for which the trust or
estate claims a credit under subsection (l) of Section
201;
(G-10) For taxable years 2001 through 2025 and
thereafter, an amount equal to the bonus depreciation
deduction taken on the taxpayer's federal income tax
return for the taxable year under subsection (k) of
Section 168 of the Internal Revenue Code; for taxable

SB1911 Enrolled - 200 - LRB104 09605 HLH 19670 b
years 2026 and thereafter, an amount equal to the
bonus depreciation deduction taken on the taxpayer's
federal income tax return for the taxable year under
subsection (k) or (n) of Section 168 of the Internal
Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (R) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (R), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after

SB1911 Enrolled - 201 - LRB104 09605 HLH 19670 b
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred. For taxable years ending on and
after December 31, 2025, for purposes of applying this
paragraph in the case of a taxpayer to which Section
163(j) of the Internal Revenue Code applies for the

SB1911 Enrolled - 202 - LRB104 09605 HLH 19670 b
taxable year, the reduction in the amount of interest
for which a deduction is allowed by reason of Section
163(j) shall be treated as allocable first to persons
who are not foreign persons referred to in this
paragraph and then to such foreign persons.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that

SB1911 Enrolled - 203 - LRB104 09605 HLH 19670 b
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and

SB1911 Enrolled - 204 - LRB104 09605 HLH 19670 b
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or

SB1911 Enrolled - 205 - LRB104 09605 HLH 19670 b
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same

SB1911 Enrolled - 206 - LRB104 09605 HLH 19670 b
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost

SB1911 Enrolled - 207 - LRB104 09605 HLH 19670 b
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:

SB1911 Enrolled - 208 - LRB104 09605 HLH 19670 b
(i) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f).
Nothing in this subsection shall preclude the

SB1911 Enrolled - 209 - LRB104 09605 HLH 19670 b
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code

SB1911 Enrolled - 210 - LRB104 09605 HLH 19670 b
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
Act;
(G-15) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(G-16) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(G-17) the amount that is claimed as a federal
deduction when computing the taxpayer's federal
taxable income for the taxable year and that is
attributable to an endowment gift for which the
taxpayer receives a credit under the Illinois Gives
Tax Credit Act;
and by deducting from the total so obtained the sum of the
following amounts:
(H) An amount equal to all amounts included in

SB1911 Enrolled - 211 - LRB104 09605 HLH 19670 b
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
of the Internal Revenue Code or included in such total
as distributions under the provisions of any
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in
computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C), (D), (E), (F) and (G) which are exempt from
taxation by this State either by reason of its
statutes or Constitution or by reason of the
Constitution, treaties or statutes of the United
States; provided that, in the case of any statute of
this State that exempts income derived from bonds or
other obligations from the tax imposed under this Act,
the amount exempted shall be the interest net of bond
premium amortization;
(L) With the exception of any amounts subtracted

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under subparagraph (K), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(M) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (M) is exempt from
the provisions of Section 250;
(N) An amount equal to any contribution made to a
job training project established pursuant to the Tax

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Increment Allocation Redevelopment Act;
(O) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (M) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (O);
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(Q) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of

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persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) or (n) of Section 168 of the

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Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) or (n) of
Section 168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted

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basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) or Section
168(n)(6) of the Internal Revenue Code to not
claim bonus depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) or (n) of Section 168 of the Internal Revenue Code.
This subparagraph (R) is exempt from the provisions of
Section 250;
(S) If the taxpayer sells, transfers, abandons, or

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otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (R) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (S) is exempt from the
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable

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year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (U)

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is exempt from the provisions of Section 250;
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(c)(2)(G-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (V) is
exempt from the provisions of Section 250;
(W) in the case of an estate, an amount equal to
all amounts included in such total pursuant to the
provisions of Section 111 of the Internal Revenue Code
as a recovery of items previously deducted by the

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decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt
from Section 250;
(X) an amount equal to the refund included in such
total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(Z) For taxable years beginning after December 31,
2018 and before January 1, 2026, the amount of excess

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business loss of the taxpayer disallowed as a
deduction by Section 461(l)(1)(B) of the Internal
Revenue Code; and
(AA) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (AA) are exempt from the provisions
of Section 250.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently
set aside for charitable purposes pursuant to Internal
Revenue Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base

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income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income for
the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the
Internal Revenue Code in calculating its taxable
income;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(D-5) For taxable years 2001 through 2025 and
thereafter, an amount equal to the bonus depreciation
deduction taken on the taxpayer's federal income tax
return for the taxable year under subsection (k) of
Section 168 of the Internal Revenue Code; for taxable
years 2026 and thereafter, an amount equal to the

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bonus depreciation deduction taken on the taxpayer's
federal income tax return for the taxable year under
subsection (k) or (n) of Section 168 of the Internal
Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (O) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (O), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a

SB1911 Enrolled - 224 - LRB104 09605 HLH 19670 b
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred. For taxable years ending on and
after December 31, 2025, for purposes of applying this
paragraph in the case of a taxpayer to which Section
163(j) of the Internal Revenue Code applies for the
taxable year, the reduction in the amount of interest

SB1911 Enrolled - 225 - LRB104 09605 HLH 19670 b
for which a deduction is allowed by reason of Section
163(j) shall be treated as allocable first to persons
who are not foreign persons referred to in this
paragraph and then to such foreign persons.
For taxable years ending before December 31, 2025,
this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and

SB1911 Enrolled - 226 - LRB104 09605 HLH 19670 b
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the

SB1911 Enrolled - 227 - LRB104 09605 HLH 19670 b
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable

SB1911 Enrolled - 228 - LRB104 09605 HLH 19670 b
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition

SB1911 Enrolled - 229 - LRB104 09605 HLH 19670 b
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or

SB1911 Enrolled - 230 - LRB104 09605 HLH 19670 b
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
For taxable years ending on or after December 31,
2025, this paragraph shall not apply to the following:
(i) any item of intangible expense or cost

SB1911 Enrolled - 231 - LRB104 09605 HLH 19670 b
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment otherwise

SB1911 Enrolled - 232 - LRB104 09605 HLH 19670 b
allowed under Section 404 of this Act for any tax year
beginning after the effective date of this amendment
provided such adjustment is made pursuant to
regulation adopted by the Department and such
regulations provide methods and standards by which the
Department will utilize its authority under Section
404 of this Act;
(D-9) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78

SB1911 Enrolled - 233 - LRB104 09605 HLH 19670 b
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
(D-10) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-11) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(D-12) the amount that is claimed as a federal
deduction when computing the taxpayer's federal
taxable income for the taxable year and that is
attributable to an endowment gift for which the
taxpayer receives a credit under the Illinois Gives
Tax Credit Act;
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer

SB1911 Enrolled - 234 - LRB104 09605 HLH 19670 b
and included in such total for the taxable year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C) and (D) which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348(b)(1) of the Internal Revenue Code (as in
effect December 31, 1981) or a reasonable allowance
for compensation paid or accrued for services rendered
by partners to the partnership, whichever is greater;
this subparagraph (H) is exempt from the provisions of
Section 250;
(I) An amount equal to all amounts of income
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code; this subparagraph

SB1911 Enrolled - 235 - LRB104 09605 HLH 19670 b
(I) is exempt from the provisions of Section 250;
(J) With the exception of any amounts subtracted
under subparagraph (G), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations from a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;

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(L) An amount equal to any contribution made to a
job training project established pursuant to the Real
Property Tax Increment Allocation Redevelopment Act;
(M) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (M);
(N) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(O) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) or (n) of Section 168 of the
Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property

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for which the bonus depreciation deduction was
taken in any year under subsection (k) or (n) of
Section 168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) or Section

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168(n)(6) of the Internal Revenue Code to not
claim bonus depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) or (n) of Section 168 of the Internal Revenue Code.
This subparagraph (O) is exempt from the provisions of
Section 250;
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through

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the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (O) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;
(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such

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addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(d)(2)(D-7) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (R) is exempt from Section 250;
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a

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member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(d)(2)(D-8) for intangible expenses and costs paid,
accrued, or incurred, directly or indirectly, to the
same person. This subparagraph (S) is exempt from
Section 250;
(T) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the

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expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(T), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (T). This
subparagraph (T) is exempt from the provisions of
Section 250; and
(U) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (U) are exempt from the provisions
of Section 250.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of paragraph
(2) and subsection (b)(3), for purposes of this Section
and Section 803(e), a taxpayer's gross income, adjusted
gross income, or taxable income for the taxable year shall

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mean the amount of gross income, adjusted gross income or
taxable income properly reportable for federal income tax
purposes for the taxable year under the provisions of the
Internal Revenue Code. Taxable income may be less than
zero. However, for taxable years ending on or after
December 31, 1986, net operating loss carryforwards from
taxable years ending prior to December 31, 1986, may not
exceed the sum of federal taxable income for the taxable
year before net operating loss deduction, plus the excess
of addition modifications over subtraction modifications
for the taxable year. For taxable years ending prior to
December 31, 1986, taxable income may never be an amount
in excess of the net operating loss for the taxable year as
defined in subsections (c) and (d) of Section 172 of the
Internal Revenue Code, provided that when taxable income
of a corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations or
subparagraph (E) of paragraph (2) of subsection (c) for
trusts and estates, exceed subtraction modifications, an
addition modification must be made under those
subparagraphs for any other taxable year to which the
taxable income less than zero (net operating loss) is
applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this subsection

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(e) applied in conjunction with Section 172 of the
Internal Revenue Code.
(2) Special rule. For purposes of paragraph (1) of
this subsection, the taxable income properly reportable
for federal income tax purposes shall mean:
(A) Certain life insurance companies. In the case
of a life insurance company subject to the tax imposed
by Section 801 of the Internal Revenue Code, life
insurance company taxable income, plus the amount of
distribution from pre-1984 policyholder surplus
accounts as calculated under Section 815a of the
Internal Revenue Code;
(B) Certain other insurance companies. In the case
of mutual insurance companies subject to the tax
imposed by Section 831 of the Internal Revenue Code,
insurance company taxable income;
(C) Regulated investment companies. In the case of
a regulated investment company subject to the tax
imposed by Section 852 of the Internal Revenue Code,
investment company taxable income;
(D) Real estate investment trusts. In the case of
a real estate investment trust subject to the tax
imposed by Section 857 of the Internal Revenue Code,
real estate investment trust taxable income;
(E) Consolidated corporations. In the case of a
corporation which is a member of an affiliated group

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of corporations filing a consolidated income tax
return for the taxable year for federal income tax
purposes, taxable income determined as if such
corporation had filed a separate return for federal
income tax purposes for the taxable year and each
preceding taxable year for which it was a member of an
affiliated group. For purposes of this subparagraph,
the taxpayer's separate taxable income shall be
determined as if the election provided by Section
243(b)(2) of the Internal Revenue Code had been in
effect for all such years;
(F) Cooperatives. In the case of a cooperative
corporation or association, the taxable income of such
organization determined in accordance with the
provisions of Section 1381 through 1388 of the
Internal Revenue Code, but without regard to the
prohibition against offsetting losses from patronage
activities against income from nonpatronage
activities; except that a cooperative corporation or
association may make an election to follow its federal
income tax treatment of patronage losses and
nonpatronage losses. In the event such election is
made, such losses shall be computed and carried over
in a manner consistent with subsection (a) of Section
207 of this Act and apportioned by the apportionment
factor reported by the cooperative on its Illinois

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income tax return filed for the taxable year in which
the losses are incurred. The election shall be
effective for all taxable years with original returns
due on or after the date of the election. In addition,
the cooperative may file an amended return or returns,
as allowed under this Act, to provide that the
election shall be effective for losses incurred or
carried forward for taxable years occurring prior to
the date of the election. Once made, the election may
only be revoked upon approval of the Director. The
Department shall adopt rules setting forth
requirements for documenting the elections and any
resulting Illinois net loss and the standards to be
used by the Director in evaluating requests to revoke
elections. Public Act 96-932 is declaratory of
existing law;
(G) Subchapter S corporations. In the case of: (i)
a Subchapter S corporation for which there is in
effect an election for the taxable year under Section
1362 of the Internal Revenue Code, the taxable income
of such corporation determined in accordance with
Section 1363(b) of the Internal Revenue Code, except
that taxable income shall take into account those
items which are required by Section 1363(b)(1) of the
Internal Revenue Code to be separately stated; and
(ii) a Subchapter S corporation for which there is in

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effect a federal election to opt out of the provisions
of the Subchapter S Revision Act of 1982 and have
applied instead the prior federal Subchapter S rules
as in effect on July 1, 1982, the taxable income of
such corporation determined in accordance with the
federal Subchapter S rules as in effect on July 1,
1982; and
(H) Partnerships. In the case of a partnership,
taxable income determined in accordance with Section
703 of the Internal Revenue Code, except that taxable
income shall take into account those items which are
required by Section 703(a)(1) to be separately stated
but which would be taken into account by an individual
in calculating his taxable income.
(3) Recapture of business expenses on disposition of
asset or business. Notwithstanding any other law to the
contrary, if in prior years income from an asset or
business has been classified as business income and in a
later year is demonstrated to be non-business income, then
all expenses, without limitation, deducted in such later
year and in the 2 immediately preceding taxable years
related to that asset or business that generated the
non-business income shall be added back and recaptured as
business income in the year of the disposition of the
asset or business. Such amount shall be apportioned to
Illinois using the greater of the apportionment fraction

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computed for the business under Section 304 of this Act
for the taxable year or the average of the apportionment
fractions computed for the business under Section 304 of
this Act for the taxable year and for the 2 immediately
preceding taxable years.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
referred to in subsections (a)(2)(G), (c)(2)(I) and
(d)(2)(E) is an amount equal to:
(A) The sum of the pre-August 1, 1969 appreciation
amounts (to the extent consisting of gain reportable
under the provisions of Section 1245 or 1250 of the
Internal Revenue Code) for all property in respect of
which such gain was reported for the taxable year;
plus
(B) The lesser of (i) the sum of the pre-August 1,
1969 appreciation amounts (to the extent consisting of
capital gain) for all property in respect of which
such gain was reported for federal income tax purposes
for the taxable year, or (ii) the net capital gain for
the taxable year, reduced in either case by any amount
of such gain included in the amount determined under
subsection (a)(2)(F) or (c)(2)(H).
(2) Pre-August 1, 1969 appreciation amount.
(A) If the fair market value of property referred

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to in paragraph (1) was readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is the lesser of (i) the
excess of such fair market value over the taxpayer's
basis (for determining gain) for such property on that
date (determined under the Internal Revenue Code as in
effect on that date), or (ii) the total gain realized
and reportable for federal income tax purposes in
respect of the sale, exchange or other disposition of
such property.
(B) If the fair market value of property referred
to in paragraph (1) was not readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is that amount which bears
the same ratio to the total gain reported in respect of
the property for federal income tax purposes for the
taxable year, as the number of full calendar months in
that part of the taxpayer's holding period for the
property ending July 31, 1969 bears to the number of
full calendar months in the taxpayer's entire holding
period for the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.
(g) Double deductions. Unless specifically provided

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otherwise, nothing in this Section shall permit the same item
to be deducted more than once.
(h) Legislative intention. Except as expressly provided by
this Section there shall be no modifications or limitations on
the amounts of income, gain, loss or deduction taken into
account in determining gross income, adjusted gross income or
taxable income for federal income tax purposes for the taxable
year, or in the amount of such items entering into the
computation of base income and net income under this Act for
such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 103-8, eff. 6-7-23; 103-478, eff. 1-1-24;
103-592, Article 10, Section 10-900, eff. 6-7-24; 103-592,
Article 170, Section 170-90, eff. 6-7-24; 103-605, eff.
7-1-24; 103-647, eff. 7-1-24; 104-6, eff. 6-16-25; 104-417,
eff. 8-15-25.)
(35 ILCS 5/701) (from Ch. 120, par. 7-701)
Sec. 701. Requirement and amount of withholding.
(a) In General. Every employer maintaining an office or
transacting business within this State and required under the
provisions of the Internal Revenue Code to withhold a tax on:
(1) compensation paid in this State (as determined
under Section 304(a)(2)(B)) to an individual; or
(2) payments described in subsection (b) shall deduct

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and withhold from such compensation for each payroll
period (as defined in Section 3401 of the Internal Revenue
Code) an amount equal to the amount by which such
individual's compensation exceeds the proportionate part
of this withholding exemption (computed as provided in
Section 702) attributable to the payroll period for which
such compensation is payable multiplied by a percentage
equal to the percentage tax rate for individuals provided
in subsection (b) of Section 201.
(a-5) Withholding from nonresident employees. For taxable
years beginning on or after January 1, 2020, for purposes of
determining compensation paid in this State under paragraph
(B) of item (2) of subsection (a) of Section 304:
(1) If an employer maintains a time and attendance
system that tracks where employees perform services on a
daily basis, then data from the time and attendance system
shall be used. For purposes of this paragraph, time and
attendance system means a system:
(A) in which the employee is required, on a
contemporaneous basis, to record the work location for
every day worked outside of the State where the
employment duties are primarily performed; and
(B) that is designed to allow the employer to
allocate the employee's wages for income tax purposes
among all states in which the employee performs
services.

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(2) In all other cases, the employer shall obtain a
written statement from the employee of the number of days
reasonably expected to be spent performing services in
this State during the taxable year. Absent the employer's
actual knowledge of fraud or gross negligence by the
employee in making the determination or collusion between
the employer and the employee to evade tax, the
certification so made by the employee and maintained in
the employer's books and records shall be prima facie
evidence and constitute a rebuttable presumption of the
number of days spent performing services in this State.
(a-10) If the compensation is paid to a loan out company,
as defined under Section 10 of the Film Production Services
Tax Credit Act of 2008, if the compensation is considered
compensation paid in this State under paragraph (B) of item
(2) of subsection (a) of Section 304, and if the compensation
is for in-State services performed for a production that is
accredited under Section 10 of the Film Production Services
Tax Credit Act of 2008 and commences on or after the effective
date of this amendatory Act of the 104th General Assembly,
then the production company or its authorized payroll service
company shall withhold tax on that compensation under this
Article 7 and shall withhold at the tax rate provided in
subsection (b) of Section 201 on all payments to loan out
companies for services performed in Illinois by the loan out
company's employees. Notwithstanding any other provision of

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law, nonresident employees of loan out companies who perform
services in Illinois shall be considered taxable nonresidents
and shall be subject to the tax under this Act in the taxable
year in which the employee performs services in Illinois.
(b) Payment to Residents. Any payment (including
compensation, but not including a payment from which
withholding is required under Section 710 of this Act) to a
resident by a payor maintaining an office or transacting
business within this State (including any agency, officer, or
employee of this State or of any political subdivision of this
State) and on which withholding of tax is required under the
provisions of the Internal Revenue Code shall be deemed to be
compensation paid in this State by an employer to an employee
for the purposes of Article 7 and Section 601(b)(1) to the
extent such payment is included in the recipient's base income
and not subjected to withholding by another state.
Notwithstanding any other provision to the contrary, no amount
shall be withheld from unemployment insurance benefit payments
made to an individual pursuant to the Unemployment Insurance
Act unless the individual has voluntarily elected the
withholding pursuant to rules promulgated by the Director of
Employment Security.
(c) Special Definitions. Withholding shall be considered
required under the provisions of the Internal Revenue Code to
the extent the Internal Revenue Code either requires
withholding or allows for voluntary withholding the payor and

SB1911 Enrolled - 254 - LRB104 09605 HLH 19670 b
recipient have entered into such a voluntary withholding
agreement. For the purposes of Article 7 and Section 1002(c)
the term "employer" includes any payor who is required to
withhold tax pursuant to this Section.
(d) Reciprocal Exemption. The Director may enter into an
agreement with the taxing authorities of any state which
imposes a tax on or measured by income to provide that
compensation paid in such state to residents of this State
shall be exempt from withholding of such tax; in such case, any
compensation paid in this State to residents of such state
shall be exempt from withholding. All reciprocal agreements
shall be subject to the requirements of Section 2505-575 of
the Department of Revenue Law (20 ILCS 2505/2505-575).
(e) Notwithstanding subsection (a)(2) of this Section, no
withholding is required on payments for which withholding is
required under Section 3405 or 3406 of the Internal Revenue
Code.
(Source: P.A. 101-585, eff. 8-26-19; 102-558, eff. 8-20-21.)
Section 10-15. The Film Production Services Tax Credit Act
of 2008 is amended by changing Sections 10 and 42 as follows:
(35 ILCS 16/10)
Sec. 10. Definitions. As used in this Act:
"Above-the-line spending" means all salary, wages, fees,
and fringe benefits paid for services performed by personnel

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of the production that are considered above-the-line services
in the film and television industry, including, but not
limited to, services performed by a producer, executive
producer, co-producer, director, screenwriter, lead cast,
supporting cast, or day player.
"Accredited production" means: (i) for productions
commencing before May 1, 2006, a film, video, or television
production that has been certified by the Department in which
the aggregate Illinois labor expenditures included in the cost
of the production, in the period that ends 12 months after the
time principal filming or taping of the production began,
exceed $100,000 for productions of 30 minutes or longer, or
$50,000 for productions of less than 30 minutes; and (ii) for
productions commencing on or after May 1, 2006, a film, video,
or television production that has been certified by the
Department in which the Illinois production spending included
in the cost of production in the period that ends 12 months
after the time principal filming or taping of the production
began exceeds $100,000 for productions of 30 minutes or longer
or exceeds $50,000 for productions of less than 30 minutes.
"Accredited production" does not include a production that:
(1) is news, current events, or public programming, or
a program that includes weather or market reports;
(2) is a talk show produced for local or regional
markets;
(3) (blank);

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(4) is a sports event or activity;
(5) is a gala presentation or awards show;
(6) is a finished production that solicits funds;
(7) is a production produced by a film production
company if records, as required by 18 U.S.C. 2257, are to
be maintained by that film production company with respect
to any performer portrayed in that single media or
multimedia program; or
(8) is a production produced primarily for industrial,
corporate, or institutional purposes.
"Accredited animated production" means an accredited
production in which movement and characters' performances are
created using a frame-by-frame technique and a significant
number of major characters are animated. Motion capture by
itself is not an animation technique.
"Accredited production certificate" means a certificate
issued by the Department certifying that the production is an
accredited production that meets the guidelines of this Act.
"Applicant" means a taxpayer that is a film production
company that is operating or has operated an accredited
production located within the State of Illinois and that (i)
owns the copyright in the accredited production throughout the
Illinois production period or (ii) has contracted directly
with the owner of the copyright in the accredited production
or a person acting on behalf of the owner to provide services
for the production, where the owner of the copyright is not an

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eligible production corporation.
"Below-the-line spending" means salary, wages, fees, and
fringe benefits paid for services performed by a person in a
position that is off camera and who provides technical
services during the physical production of a film.
"Below-the-line spending" does not include salary, wages,
fees, or fringe benefits paid to a person who is a producer,
executive producer, co-producer, director, screenwriter, lead
cast, supporting cast, or day player, or who performs other
services that are customarily considered above-the-line
services in the film and television industry.
"Credit" means:
(1) for an accredited production approved by the
Department on or before January 1, 2005 and commencing
before May 1, 2006, the amount equal to 25% of the Illinois
labor expenditure approved by the Department. The
applicant is deemed to have paid, on its balance due day
for the year, an amount equal to 25% of its qualified
Illinois labor expenditure for the tax year. For Illinois
labor expenditures generated by the employment of
residents of geographic areas of high poverty or high
unemployment, as determined by the Department, in an
accredited production commencing before May 1, 2006 and
approved by the Department after January 1, 2005, the
applicant shall receive an enhanced credit of 10% in
addition to the 25% credit; and

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(2) for an accredited production commencing on or
after May 1, 2006 and before January 1, 2009, the amount
equal to:
(i) 20% of the Illinois production spending for
the taxable year; plus
(ii) 15% of the Illinois labor expenditures
generated by the employment of residents of geographic
areas of high poverty or high unemployment, as
determined by the Department; and
(3) for an accredited production commencing on or
after January 1, 2009 and before July 1, 2025, the amount
equal to:
(i) 30% of the Illinois production spending for
the taxable year; plus
(ii) 15% of the Illinois labor expenditures
generated by the employment of residents of geographic
areas of high poverty or high unemployment, as
determined by the Department; and .
(4) for an accredited production commencing on or
after July 1, 2025, the amount equal to:
(i) 35% of the Illinois production spending for
the use of tangible personal property or the expenses
to acquire services from vendors in Illinois and for
Illinois labor expenditures generated by the
employment of Illinois residents; plus
(ii) 30% of the wages paid to nonresidents for

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services performed on an accredited production,
subject to the limitations in Section 10; plus
(iii) 15% of the Illinois labor expenditures
generated by the employment of residents of geographic
areas of high poverty or high unemployment, as
determined by the Department; plus
(iv) 5% of the Illinois labor expenditures
generated by the employment of Illinois residents for
services performed for an accredited production in one
or more Illinois counties outside of Cook, DuPage,
Kane, Lake, McHenry, and Will Counties; plus
(v) 5% of the Illinois production spending for
television series relocating to Illinois from another
jurisdiction. To qualify under this subparagraph (v),
the production must be a television series in which
all prior seasons of the series were filmed outside of
Illinois; plus
(vi) 5% of the Illinois production spending for
productions certified as green by the Department.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of Commerce and Economic
Opportunity.
"Fair market value" means:
(1) for unrelated parties, the value established
through comparable transactions between unrelated parties

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for substantially similar goods and services considering
the geographic market and other pertinent variables as
specified by the Department by rule; and
(2) for related parties, the value established through
the related party's historical dealings with unrelated
parties or established by comparable transactions between
other unrelated parties for substantially similar goods
and services considering the geographic market and other
pertinent variables as specified by the Department by
rule.
"Illinois labor expenditure" means salary or wages paid to
employees of the applicant for services on the accredited
production, subject to the following limitations: .
To qualify as an Illinois labor expenditure, the
expenditure must be:
(1) The expenditure must be reasonable Reasonable in
the circumstances.
(2) The expenditure must be included Included in the
federal income tax basis of the property.
(3) The expenditure must be incurred Incurred by the
applicant for services on or after January 1, 2004.
(4) The expenditure must be incurred Incurred for the
production stages of the accredited production, from the
final script stage to the end of the post-production
stage.
(5) The expenditure is limited Limited to the first

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$25,000 of wages paid or incurred to each employee of a
production commencing before May 1, 2006 and the first
$100,000 of wages paid or incurred to each employee of a
production commencing on or after May 1, 2006 and prior to
July 1, 2022. For productions commencing on or after July
1, 2022, the expenditure is limited to the first $500,000
of wages paid or incurred to each eligible nonresident or
resident employee of a production company or loan out
company that provides in-State services to a production,
whether those wages are paid or incurred by the production
company, loan out company, or both, subject to withholding
payments provided for in Article 7 of the Illinois Income
Tax Act, including, for accredited productions commencing
on or after the effective date of this amendatory Act of
the 104th General Assembly, amounts withheld under
subsection (a-10) of Section 701 of the Illinois Income
Tax Act. For purposes of calculating Illinois labor
expenditures for a television series, the eligible
nonresident wage limitations provided under this
subparagraph are applied per episode to the entire season.
For the purpose of this paragraph (5), an eligible
nonresident is a nonresident whose wages qualify as an
Illinois labor expenditure under the provisions of
paragraphs paragraph (9) through (9.3) that apply to that
production.
(6) For a production commencing before May 1, 2006,

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Illinois labor expenditures are exclusive of the salary or
wages paid to or incurred for the 2 highest paid employees
of the production.
(7) The expenditure must be directly Directly
attributable to the accredited production.
(8) (Blank).
(8.5) For a production commencing on or after July 1,
2025, subject to the other limitations of this definition,
wages paid to no more than 2 executive producers per
accredited production may be considered Illinois labor
expenditures. Notwithstanding that limitation, if an
executive producer receives compensation for another
position on the accredited production for services
performed, including, but not limited to, writing
services, and that compensation is otherwise considered an
Illinois labor expenditure under the provisions of this
definition, then, subject to the other limitations of this
definition, that person's salary or wages may be
considered an Illinois labor expenditure, and that person
shall not be considered one of the 2 executive producers
for the purposes of the limitation under this paragraph
(8.5). In addition, line producers are not subject to the
2-producer limit of this paragraph (8.5). As used in this
paragraph (8.5), the term "executive producer" means a
person who is responsible for overseeing the creative and
managerial process of an accredited production. As used in

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this paragraph (8.5), the term "line producer" means a
person who is responsible for the day-to-day operational
management of the accredited production.
(9) Prior to July 1, 2022, the expenditure must be
paid to persons resident in Illinois at the time the
payments were made. For a production commencing on or
after July 1, 2022, subject to the limitations of
paragraphs (9.1) through (9.3), the expenditure may be
paid to a person who is a persons resident in Illinois at
the time the payment is made or to a person who is a
nonresident and nonresidents at the time the payment is
payments were made.
(9.1) For purposes of paragraph (9) this subparagraph,
if the production is accredited by the Department before
the effective date of this amendatory Act of the 102nd
General Assembly, only wages paid to nonresidents working
in the following positions shall be considered Illinois
labor expenditures: Writer, Director, Director of
Photography, Production Designer, Costume Designer,
Production Accountant, VFX Supervisor, Editor, Composer,
and Actor, subject to the limitations set forth under this
subparagraph. For an accredited Illinois production
spending of $25,000,000 or less, no more than 2
nonresident actors' wages shall qualify as an Illinois
labor expenditure. For an accredited production with
Illinois production spending of more than $25,000,000, no

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more than 4 nonresident actor's wages shall qualify as
Illinois labor expenditures.
(9.2) For purposes of paragraph (9) this subparagraph,
if the production is accredited by the Department on or
after the effective date of this amendatory Act of the
102nd General Assembly and before July 1, 2025, wages paid
to nonresidents shall qualify as Illinois labor
expenditures only under the following conditions:
(A) the nonresident must be employed in a
qualified position;
(B) for each of those accredited productions, the
wages of not more than 9 nonresidents who are employed
in a qualified position other than Actor shall qualify
as Illinois labor expenditures;
(C) for an accredited production with Illinois
production spending of $25,000,000 or less, no more
than 2 nonresident actors' wages shall qualify as
Illinois labor expenditures; and
(D) for an accredited production with Illinois
production spending of more than $25,000,000, no more
than 4 nonresident actors' wages shall qualify as
Illinois labor expenditures.
As used in this paragraph (9.2) (9), "qualified
position" means: Writer, Director, Director of
Photography, Production Designer, Costume Designer,
Production Accountant, VFX Supervisor, Editor, Composer,

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or Actor.
(9.3) For the purposes of paragraph (9), in the case
of a production that commences on or after July 1, 2025,
wages paid to nonresidents shall qualify as Illinois labor
expenditures only under the following conditions:
(A) the wages of not more than 13 nonresidents who
are selected by the accredited production and employed
in a position other than Actor shall qualify as
Illinois labor expenditures;
(B) for an accredited production with Illinois
production spending of less than $20,000,000, no more
than 4 nonresident actors' wages shall qualify as
Illinois labor expenditures; and
(C) for an accredited production with Illinois
production spending of more than $20,000,000 and less
than $40,000,000, no more than 5 nonresident actors'
wages shall qualify as Illinois labor expenditures;
and
(D) for an accredited production with Illinois
production spending of $40,000,000 or more, no more
than 6 nonresident actors' wages shall qualify as
Illinois labor expenditures.
(10) Paid for services rendered in Illinois.
For a production commencing on or after the effective date
of this amendatory Act of the 104th General Assembly,
"Illinois labor expenditure" does not include:

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(1) above-the-line spending exceeding 40% of the total
Illinois production spending for the production, unless
the Department determines, through a process specified by
administrative rule, that inclusion as an Illinois labor
expenditure of above-the-line spending for the production
in an amount that exceeds 40% of the production's total
Illinois production spending is necessary for the
production to meet the conditions set forth in subsection
(a) of Section 30;
(2) above-the-line spending paid to related parties
that exceeds, in the aggregate, 12% of the total Illinois
production spending for the production; or
(3) below-the-line spending paid to a related party
that exceeds the fair market value of the transaction.
"Illinois production spending" means the expenses incurred
by the applicant for an accredited production that are
reasonable under the circumstances, but does not include any
monetary prize or the cost of any non-monetary prize awarded
pursuant to a production in respect of a game, questionnaire,
or contest. "Illinois production spending" includes, without
limitation, unless otherwise specified in this definition, all
of the following:
(1) expenses to purchase, from vendors within
Illinois, tangible personal property that is used in the
accredited production;
(2) expenses to acquire services, from vendors in

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Illinois, for film production, editing, or processing;
(2.1) airfare, if purchased from an airline domiciled
in Illinois;
(3) for a production commencing before July 1, 2022,
the compensation, not to exceed $100,000 for any one
employee, for contractual or salaried employees who are
Illinois residents performing services with respect to the
accredited production. For a production commencing on or
after July 1, 2022, Illinois labor expenditure
compensation, not to exceed $500,000 for any one employee,
for contractual or salaried employees who are Illinois
residents or nonresident employees, subject to the
limitations set forth under Section 10 of this Act; and
(4) for a production commencing on or after the
effective date of this amendatory Act of the 104th General
Assembly, the fair market value of any transaction that
(i) is entered into between the taxpayer and a related
party or the taxpayer and an unrelated party, (ii) is for
the accredited production, and (iii) has terms that
reflect the fair market value of the transaction.
"Loan out company" means a personal service corporation or
other entity that is under contract with the taxpayer to
provide specified individual personnel, such as artists, crew,
actors, producers, or directors for the performance of
services used directly in a production. "Loan out company"
does not include entities contracted with by the taxpayer to

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provide goods or ancillary contractor services such as
catering, construction, trailers, equipment, or
transportation.
"Qualified production facility" means stage facilities in
the State in which television shows and films are or are
intended to be regularly produced and that contain at least
one sound stage of at least 15,000 square feet.
"Related party" means a party that is deemed to be related
to the taxpayer by common ownership or control according to
generally accepted accounting standards and generally accepted
accounting principles.
"Unrelated party" means a party that is not a related
party with respect to the taxpayer.
The Department shall adopt rules to implement the changes
made to this Section within one year after the effective date
of this amendatory Act of the 104th General Assembly.
(Source: P.A. 103-595, eff. 6-26-24; 104-6, eff. 6-16-25.)
(35 ILCS 16/42)
Sec. 42. Sunset of credits. The application of credits
awarded pursuant to this Act shall be limited by a reasonable
and appropriate sunset date. A taxpayer shall not be awarded
any new credits pursuant to this Act for tax years beginning on
or after January 1, 2039 2033.
(Source: P.A. 101-178, eff. 8-1-19; 102-700, eff. 4-19-22;
102-1125, eff. 2-3-23.)

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