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1		AN ACT concerning finance.
2		Be it enacted by the People of the State of Illinois,
3		represented in the General Assembly:
4		Section 5. The Illinois Income Tax Act is amended by
5		changing Section 201 as follows:
6		(35 ILCS 5/201) (from Ch. 120, par. 2-201)
7		Sec. 201. Tax Imposed.
8		(a) In general. A tax measured by net income is hereby
9		imposed on every individual, corporation, trust and estate for
10		each taxable year ending after July 31, 1969 on the privilege
11		of earning or receiving income in or as a resident of this
12		State. Such tax shall be in addition to all other occupation or
13		privilege taxes imposed by this State or by any municipal
14		corporation or political subdivision thereof.
15		(b) Rates. The tax imposed by subsection (a) of this
16		Section shall be determined as follows, except as adjusted by
17		subsection (d-1):
18		(1) In the case of an individual, trust or estate, for
19		taxable years ending prior to July 1, 1989, an amount equal
20		to 2 1/2% of the taxpayer's net income for the taxable
21		year.
22		(2) In the case of an individual, trust or estate, for
23		taxable years beginning prior to July 1, 1989 and ending

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1		after June 30, 1989, an amount equal to the sum of (i) 2
2		1/2% of the taxpayer's net income for the period prior to
3		July 1, 1989, as calculated under Section 202.3, and (ii)
4		3% of the taxpayer's net income for the period after June
5		30, 1989, as calculated under Section 202.3.
6		(3) In the case of an individual, trust or estate, for
7		taxable years beginning after June 30, 1989, an amount
8		equal to 3% of the taxpayer's net income for the taxable
9		year.
10		(4) (Blank).
11		(5) (Blank).
12		(6) In the case of a corporation, for taxable years
13		ending prior to July 1, 1989, an amount equal to 4% of the
14		taxpayer's net income for the taxable year.
15		(7) In the case of a corporation, for taxable years
16		beginning prior to July 1, 1989 and ending after June 30,
17		1989, an amount equal to the sum of (i) 4% of the
18		taxpayer's net income for the period prior to July 1, 1989,
19		as calculated under Section 202.3, and (ii) 4.8% of the
20		taxpayer's net income for the period after June 30, 1989,
21		as calculated under Section 202.3.
22		(8) In the case of a corporation, for taxable years
23		beginning after June 30, 1989, an amount equal to 4.8% of
24		the taxpayer's net income for the taxable year.
25		(c) Personal Property Tax Replacement Income Tax.
26		Beginning on July 1, 1979 and thereafter, in addition to such

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1		income tax, there is also hereby imposed the Personal Property
2		Tax Replacement Income Tax measured by net income on every
3		corporation (including Subchapter S corporations), partnership
4		and trust, for each taxable year ending after June 30, 1979.
5		Such taxes are imposed on the privilege of earning or receiving
6		income in or as a resident of this State. The Personal Property
7		Tax Replacement Income Tax shall be in addition to the income
8		tax imposed by subsections (a) and (b) of this Section and in
9		addition to all other occupation or privilege taxes imposed by
10		this State or by any municipal corporation or political
11		subdivision thereof.
12		(d) Additional Personal Property Tax Replacement Income
13		Tax Rates. The personal property tax replacement income tax
14		imposed by this subsection and subsection (c) of this Section
15		in the case of a corporation, other than a Subchapter S
16		corporation and except as adjusted by subsection (d-1), shall
17		be an additional amount equal to 2.85% of such taxpayer's net
18		income for the taxable year, except that beginning on January
19		1, 1981, and thereafter, the rate of 2.85% specified in this
20		subsection shall be reduced to 2.5%, and in the case of a
21		partnership, trust or a Subchapter S corporation shall be an
22		additional amount equal to 1.5% of such taxpayer's net income
23		for the taxable year.
24		(d-1) Rate reduction for certain foreign insurers. In the
25		case of a foreign insurer, as defined by Section 35A-5 of the
26		Illinois Insurance Code, whose state or country of domicile

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1		imposes on insurers domiciled in Illinois a retaliatory tax
2		(excluding any insurer whose premiums from reinsurance assumed
3		are 50% or more of its total insurance premiums as determined
4		under paragraph (2) of subsection (b) of Section 304, except
5		that for purposes of this determination premiums from
6		reinsurance do not include premiums from inter-affiliate
7		reinsurance arrangements), beginning with taxable years ending
8		on or after December 31, 1999, the sum of the rates of tax
9		imposed by subsections (b) and (d) shall be reduced (but not
10		increased) to the rate at which the total amount of tax imposed
11		under this Act, net of all credits allowed under this Act,
12		shall equal (i) the total amount of tax that would be imposed
13		on the foreign insurer's net income allocable to Illinois for
14		the taxable year by such foreign insurer's state or country of
15		domicile if that net income were subject to all income taxes
16		and taxes measured by net income imposed by such foreign
17		insurer's state or country of domicile, net of all credits
18		allowed or (ii) a rate of zero if no such tax is imposed on such
19		income by the foreign insurer's state of domicile. For the
20		purposes of this subsection (d-1), an inter-affiliate includes
21		a mutual insurer under common management.
22		(1) For the purposes of subsection (d-1), in no event
23		shall the sum of the rates of tax imposed by subsections
24		(b) and (d) be reduced below the rate at which the sum of:
25		(A) the total amount of tax imposed on such foreign
26		insurer under this Act for a taxable year, net of all

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1		credits allowed under this Act, plus
2		(B) the privilege tax imposed by Section 409 of the
3		Illinois Insurance Code, the fire insurance company
4		tax imposed by Section 12 of the Fire Investigation
5		Act, and the fire department taxes imposed under
6		Section 11-10-1 of the Illinois Municipal Code,
7		equals 1.25% for taxable years ending prior to December 31,
8		2003, or 1.75% for taxable years ending on or after
9		December 31, 2003, of the net taxable premiums written for
10		the taxable year, as described by subsection (1) of Section
11		409 of the Illinois Insurance Code. This paragraph will in
12		no event increase the rates imposed under subsections (b)
13		and (d).
14		(2) Any reduction in the rates of tax imposed by this
15		subsection shall be applied first against the rates imposed
16		by subsection (b) and only after the tax imposed by
17		subsection (a) net of all credits allowed under this
18		Section other than the credit allowed under subsection (i)
19		has been reduced to zero, against the rates imposed by
20		subsection (d).
21		This subsection (d-1) is exempt from the provisions of
22		Section 250.
23		(e) Investment credit. A taxpayer shall be allowed a credit
24		against the Personal Property Tax Replacement Income Tax for
25		investment in qualified property.
26		(1) A taxpayer shall be allowed a credit equal to .5%

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1		of the basis of qualified property placed in service during
2		the taxable year, provided such property is placed in
3		service on or after July 1, 1984. There shall be allowed an
4		additional credit equal to .5% of the basis of qualified
5		property placed in service during the taxable year,
6		provided such property is placed in service on or after
7		July 1, 1986, and the taxpayer's base employment within
8		Illinois has increased by 1% or more over the preceding
9		year as determined by the taxpayer's employment records
10		filed with the Illinois Department of Employment Security.
11		Taxpayers who are new to Illinois shall be deemed to have
12		met the 1% growth in base employment for the first year in
13		which they file employment records with the Illinois
14		Department of Employment Security. The provisions added to
15		this Section by Public Act 85-1200 (and restored by Public
16		Act 87-895) shall be construed as declaratory of existing
17		law and not as a new enactment. If, in any year, the
18		increase in base employment within Illinois over the
19		preceding year is less than 1%, the additional credit shall
20		be limited to that percentage times a fraction, the
21		numerator of which is .5% and the denominator of which is
22		1%, but shall not exceed .5%. The investment credit shall
23		not be allowed to the extent that it would reduce a
24		taxpayer's liability in any tax year below zero, nor may
25		any credit for qualified property be allowed for any year
26		other than the year in which the property was placed in

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1		service in Illinois. For tax years ending on or after
2		December 31, 1987, and on or before December 31, 1988, the
3		credit shall be allowed for the tax year in which the
4		property is placed in service, or, if the amount of the
5		credit exceeds the tax liability for that year, whether it
6		exceeds the original liability or the liability as later
7		amended, such excess may be carried forward and applied to
8		the tax liability of the 5 taxable years following the
9		excess credit years if the taxpayer (i) makes investments
10		which cause the creation of a minimum of 2,000 full-time
11		equivalent jobs in Illinois, (ii) is located in an
12		enterprise zone established pursuant to the Illinois
13		Enterprise Zone Act and (iii) is certified by the
14		Department of Commerce and Community Affairs (now
15		Department of Commerce and Economic Opportunity) as
16		complying with the requirements specified in clause (i) and
17		(ii) by July 1, 1986. The Department of Commerce and
18		Community Affairs (now Department of Commerce and Economic
19		Opportunity) shall notify the Department of Revenue of all
20		such certifications immediately. For tax years ending
21		after December 31, 1988, the credit shall be allowed for
22		the tax year in which the property is placed in service,
23		or, if the amount of the credit exceeds the tax liability
24		for that year, whether it exceeds the original liability or
25		the liability as later amended, such excess may be carried
26		forward and applied to the tax liability of the 5 taxable

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1		years following the excess credit years. The credit shall
2		be applied to the earliest year for which there is a
3		liability. If there is credit from more than one tax year
4		that is available to offset a liability, earlier credit
5		shall be applied first.
6		(2) The term "qualified property" means property
7		which:
8		(A) is tangible, whether new or used, including
9		buildings and structural components of buildings and
10		signs that are real property, but not including land or
11		improvements to real property that are not a structural
12		component of a building such as landscaping, sewer
13		lines, local access roads, fencing, parking lots, and
14		other appurtenances;
15		(B) is depreciable pursuant to Section 167 of the
16		Internal Revenue Code, except that "3-year property"
17		as defined in Section 168(c)(2)(A) of that Code is not
18		eligible for the credit provided by this subsection
19		(e);
20		(C) is acquired by purchase as defined in Section
21		179(d) of the Internal Revenue Code;
22		(D) is used in Illinois by a taxpayer who is
23		primarily engaged in manufacturing, or in mining coal
24		or fluorite, or in retailing, or was placed in service
25		on or after July 1, 2006 in a River Edge Redevelopment
26		Zone established pursuant to the River Edge

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1		Redevelopment Zone Act; and
2		(E) has not previously been used in Illinois in
3		such a manner and by such a person as would qualify for
4		the credit provided by this subsection (e) or
5		subsection (f).
6		(3) For purposes of this subsection (e),
7		"manufacturing" means the material staging and production
8		of tangible personal property by procedures commonly
9		regarded as manufacturing, processing, fabrication, or
10		assembling which changes some existing material into new
11		shapes, new qualities, or new combinations. For purposes of
12		this subsection (e) the term "mining" shall have the same
13		meaning as the term "mining" in Section 613(c) of the
14		Internal Revenue Code. For purposes of this subsection (e),
15		the term "retailing" means the sale of tangible personal
16		property for use or consumption and not for resale, or
17		services rendered in conjunction with the sale of tangible
18		personal property for use or consumption and not for
19		resale. For purposes of this subsection (e), "tangible
20		personal property" has the same meaning as when that term
21		is used in the Retailers' Occupation Tax Act, and, for
22		taxable years ending after December 31, 2008, does not
23		include the generation, transmission, or distribution of
24		electricity.
25		(4) The basis of qualified property shall be the basis
26		used to compute the depreciation deduction for federal

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1		income tax purposes.
2		(5) If the basis of the property for federal income tax
3		depreciation purposes is increased after it has been placed
4		in service in Illinois by the taxpayer, the amount of such
5		increase shall be deemed property placed in service on the
6		date of such increase in basis.
7		(6) The term "placed in service" shall have the same
8		meaning as under Section 46 of the Internal Revenue Code.
9		(7) If during any taxable year, any property ceases to
10		be qualified property in the hands of the taxpayer within
11		48 months after being placed in service, or the situs of
12		any qualified property is moved outside Illinois within 48
13		months after being placed in service, the Personal Property
14		Tax Replacement Income Tax for such taxable year shall be
15		increased. Such increase shall be determined by (i)
16		recomputing the investment credit which would have been
17		allowed for the year in which credit for such property was
18		originally allowed by eliminating such property from such
19		computation and, (ii) subtracting such recomputed credit
20		from the amount of credit previously allowed. For the
21		purposes of this paragraph (7), a reduction of the basis of
22		qualified property resulting from a redetermination of the
23		purchase price shall be deemed a disposition of qualified
24		property to the extent of such reduction.
25		(8) Unless the investment credit is extended by law,
26		the basis of qualified property shall not include costs

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1		incurred after December 31, 2013, except for costs incurred
2		pursuant to a binding contract entered into on or before
3		December 31, 2013.
4		(9) Each taxable year ending before December 31, 2000,
5		a partnership may elect to pass through to its partners the
6		credits to which the partnership is entitled under this
7		subsection (e) for the taxable year. A partner may use the
8		credit allocated to him or her under this paragraph only
9		against the tax imposed in subsections (c) and (d) of this
10		Section. If the partnership makes that election, those
11		credits shall be allocated among the partners in the
12		partnership in accordance with the rules set forth in
13		Section 704(b) of the Internal Revenue Code, and the rules
14		promulgated under that Section, and the allocated amount of
15		the credits shall be allowed to the partners for that
16		taxable year. The partnership shall make this election on
17		its Personal Property Tax Replacement Income Tax return for
18		that taxable year. The election to pass through the credits
19		shall be irrevocable.
20		For taxable years ending on or after December 31, 2000,
21		a partner that qualifies its partnership for a subtraction
22		under subparagraph (I) of paragraph (2) of subsection (d)
23		of Section 203 or a shareholder that qualifies a Subchapter
24		S corporation for a subtraction under subparagraph (S) of
25		paragraph (2) of subsection (b) of Section 203 shall be
26		allowed a credit under this subsection (e) equal to its

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1		share of the credit earned under this subsection (e) during
2		the taxable year by the partnership or Subchapter S
3		corporation, determined in accordance with the
4		determination of income and distributive share of income
5		under Sections 702 and 704 and Subchapter S of the Internal
6		Revenue Code. This paragraph is exempt from the provisions
7		of Section 250.
8		(f) Investment credit; Enterprise Zone; River Edge
9		Redevelopment Zone.
10		(1) A taxpayer shall be allowed a credit against the
11		tax imposed by subsections (a) and (b) of this Section for
12		investment in qualified property which is placed in service
13		in an Enterprise Zone created pursuant to the Illinois
14		Enterprise Zone Act or, for property placed in service on
15		or after July 1, 2006, a River Edge Redevelopment Zone
16		established pursuant to the River Edge Redevelopment Zone
17		Act. For partners, shareholders of Subchapter S
18		corporations, and owners of limited liability companies,
19		if the liability company is treated as a partnership for
20		purposes of federal and State income taxation, there shall
21		be allowed a credit under this subsection (f) to be
22		determined in accordance with the determination of income
23		and distributive share of income under Sections 702 and 704
24		and Subchapter S of the Internal Revenue Code. The credit
25		shall be .5% of the basis for such property. The credit
26		shall be available only in the taxable year in which the

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1		property is placed in service in the Enterprise Zone or
2		River Edge Redevelopment Zone and shall not be allowed to
3		the extent that it would reduce a taxpayer's liability for
4		the tax imposed by subsections (a) and (b) of this Section
5		to below zero. For tax years ending on or after December
6		31, 1985, the credit shall be allowed for the tax year in
7		which the property is placed in service, or, if the amount
8		of the credit exceeds the tax liability for that year,
9		whether it exceeds the original liability or the liability
10		as later amended, such excess may be carried forward and
11		applied to the tax liability of the 5 taxable years
12		following the excess credit year. The credit shall be
13		applied to the earliest year for which there is a
14		liability. If there is credit from more than one tax year
15		that is available to offset a liability, the credit
16		accruing first in time shall be applied first.
17		(2) The term qualified property means property which:
18		(A) is tangible, whether new or used, including
19		buildings and structural components of buildings;
20		(B) is depreciable pursuant to Section 167 of the
21		Internal Revenue Code, except that "3-year property"
22		as defined in Section 168(c)(2)(A) of that Code is not
23		eligible for the credit provided by this subsection
24		(f);
25		(C) is acquired by purchase as defined in Section
26		179(d) of the Internal Revenue Code;

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

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

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1		Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
2		(1) A taxpayer conducting a trade or business in an
3		enterprise zone or a High Impact Business designated by the
4		Department of Commerce and Economic Opportunity or for
5		taxable years ending on or after December 31, 2006, in a
6		River Edge Redevelopment Zone conducting a trade or
7		business in a federally designated Foreign Trade Zone or
8		Sub-Zone shall be allowed a credit against the tax imposed
9		by subsections (a) and (b) of this Section in the amount of
10		$500 per eligible employee hired to work in the zone during
11		the taxable year.
12		(2) To qualify for the credit:
13		(A) the taxpayer must hire 5 or more eligible
14		employees to work in an enterprise zone, River Edge
15		Redevelopment Zone, or federally designated Foreign
16		Trade Zone or Sub-Zone during the taxable year;
17		(B) the taxpayer's total employment within the
18		enterprise zone, River Edge Redevelopment Zone, or
19		federally designated Foreign Trade Zone or Sub-Zone
20		must increase by 5 or more full-time employees beyond
21		the total employed in that zone at the end of the
22		previous tax year for which a jobs tax credit under
23		this Section was taken, or beyond the total employed by
24		the taxpayer as of December 31, 1985, whichever is
25		later; and
26		(C) the eligible employees must be employed 180

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1		consecutive days in order to be deemed hired for
2		purposes of this subsection.
3		(3) An "eligible employee" means an employee who is:
4		(A) Certified by the Department of Commerce and
5		Economic Opportunity as "eligible for services"
6		pursuant to regulations promulgated in accordance with
7		Title II of the Job Training Partnership Act, Training
8		Services for the Disadvantaged or Title III of the Job
9		Training Partnership Act, Employment and Training
10		Assistance for Dislocated Workers Program.
11		(B) Hired after the enterprise zone, River Edge
12		Redevelopment Zone, or federally designated Foreign
13		Trade Zone or Sub-Zone was designated or the trade or
14		business was located in that zone, whichever is later.
15		(C) Employed in the enterprise zone, River Edge
16		Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
17		An employee is employed in an enterprise zone or
18		federally designated Foreign Trade Zone or Sub-Zone if
19		his services are rendered there or it is the base of
20		operations for the services performed.
21		(D) A full-time employee working 30 or more hours
22		per week.
23		(4) For tax years ending on or after December 31, 1985
24		and prior to December 31, 1988, the credit shall be allowed
25		for the tax year in which the eligible employees are hired.
26		For tax years ending on or after December 31, 1988, the

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1		credit shall be allowed for the tax year immediately
2		following the tax year in which the eligible employees are
3		hired. If the amount of the credit exceeds the tax
4		liability for that year, whether it exceeds the original
5		liability or the liability as later amended, such excess
6		may be carried forward and applied to the tax liability of
7		the 5 taxable years following the excess credit year. The
8		credit shall be applied to the earliest year for which
9		there is a liability. If there is credit from more than one
10		tax year that is available to offset a liability, earlier
11		credit shall be applied first.
12		(5) The Department of Revenue shall promulgate such
13		rules and regulations as may be deemed necessary to carry
14		out the purposes of this subsection (g).
15		(6) The credit shall be available for eligible
16		employees hired on or after January 1, 1986.
17		(h) Investment credit; High Impact Business.
18		(1) Subject to subsections (b) and (b-5) of Section 5.5
19		of the Illinois Enterprise Zone Act, a taxpayer shall be
20		allowed a credit against the tax imposed by subsections (a)
21		and (b) of this Section for investment in qualified
22		property which is placed in service by a Department of
23		Commerce and Economic Opportunity designated High Impact
24		Business. The credit shall be .5% of the basis for such
25		property. The credit shall not be available (i) until the
26		minimum investments in qualified property set forth in

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1		subdivision (a)(3)(A) of Section 5.5 of the Illinois
2		Enterprise Zone Act have been satisfied or (ii) until the
3		time authorized in subsection (b-5) of the Illinois
4		Enterprise Zone Act for entities designated as High Impact
5		Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
6		(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
7		Act, and shall not be allowed to the extent that it would
8		reduce a taxpayer's liability for the tax imposed by
9		subsections (a) and (b) of this Section to below zero. The
10		credit applicable to such investments shall be taken in the
11		taxable year in which such investments have been completed.
12		The credit for additional investments beyond the minimum
13		investment by a designated high impact business authorized
14		under subdivision (a)(3)(A) of Section 5.5 of the Illinois
15		Enterprise Zone Act shall be available only in the taxable
16		year in which the property is placed in service and shall
17		not be allowed to the extent that it would reduce a
18		taxpayer's liability for the tax imposed by subsections (a)
19		and (b) of this Section to below zero. For tax years ending
20		on or after December 31, 1987, the credit shall be allowed
21		for the tax year in which the property is placed in
22		service, or, if the amount of the credit exceeds the tax
23		liability for that year, whether it exceeds the original
24		liability or the liability as later amended, such excess
25		may be carried forward and applied to the tax liability of
26		the 5 taxable years following the excess credit year. The

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

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1		Sub-Zone located in Illinois by the taxpayer, the amount of
2		such increase shall be deemed property placed in service on
3		the date of such increase in basis.
4		(5) The term "placed in service" shall have the same
5		meaning as under Section 46 of the Internal Revenue Code.
6		(6) If during any taxable year ending on or before
7		December 31, 1996, any property ceases to be qualified
8		property in the hands of the taxpayer within 48 months
9		after being placed in service, or the situs of any
10		qualified property is moved outside Illinois within 48
11		months after being placed in service, the tax imposed under
12		subsections (a) and (b) of this Section for such taxable
13		year shall be increased. Such increase shall be determined
14		by (i) recomputing the investment credit which would have
15		been allowed for the year in which credit for such property
16		was originally allowed by eliminating such property from
17		such computation, and (ii) subtracting such recomputed
18		credit from the amount of credit previously allowed. For
19		the purposes of this paragraph (6), a reduction of the
20		basis of qualified property resulting from a
21		redetermination of the purchase price shall be deemed a
22		disposition of qualified property to the extent of such
23		reduction.
24		(7) Beginning with tax years ending after December 31,
25		1996, if a taxpayer qualifies for the credit under this
26		subsection (h) and thereby is granted a tax abatement and

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1		the taxpayer relocates its entire facility in violation of
2		the explicit terms and length of the contract under Section
3		18-183 of the Property Tax Code, the tax imposed under
4		subsections (a) and (b) of this Section shall be increased
5		for the taxable year in which the taxpayer relocated its
6		facility by an amount equal to the amount of credit
7		received by the taxpayer under this subsection (h).
8		(i) Credit for Personal Property Tax Replacement Income
9		Tax. For tax years ending prior to December 31, 2003, a credit
10		shall be allowed against the tax imposed by subsections (a) and
11		(b) of this Section for the tax imposed by subsections (c) and
12		(d) of this Section. This credit shall be computed by
13		multiplying the tax imposed by subsections (c) and (d) of this
14		Section by a fraction, the numerator of which is base income
15		allocable to Illinois and the denominator of which is Illinois
16		base income, and further multiplying the product by the tax
17		rate imposed by subsections (a) and (b) of this Section.
18		Any credit earned on or after December 31, 1986 under this
19		subsection which is unused in the year the credit is computed
20		because it exceeds the tax liability imposed by subsections (a)
21		and (b) for that year (whether it exceeds the original
22		liability or the liability as later amended) may be carried
23		forward and applied to the tax liability imposed by subsections
24		(a) and (b) of the 5 taxable years following the excess credit
25		year, provided that no credit may be carried forward to any
26		year ending on or after December 31, 2003. This credit shall be

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1		applied first to the earliest year for which there is a
2		liability. If there is a credit under this subsection from more
3		than one tax year that is available to offset a liability the
4		earliest credit arising under this subsection shall be applied
5		first.
6		If, during any taxable year ending on or after December 31,
7		1986, the tax imposed by subsections (c) and (d) of this
8		Section for which a taxpayer has claimed a credit under this
9		subsection (i) is reduced, the amount of credit for such tax
10		shall also be reduced. Such reduction shall be determined by
11		recomputing the credit to take into account the reduced tax
12		imposed by subsections (c) and (d). If any portion of the
13		reduced amount of credit has been carried to a different
14		taxable year, an amended return shall be filed for such taxable
15		year to reduce the amount of credit claimed.
16		(j) Training expense credit. Beginning with tax years
17		ending on or after December 31, 1986 and prior to December 31,
18		2003, a taxpayer shall be allowed a credit against the tax
19		imposed by subsections (a) and (b) under this Section for all
20		amounts paid or accrued, on behalf of all persons employed by
21		the taxpayer in Illinois or Illinois residents employed outside
22		of Illinois by a taxpayer, for educational or vocational
23		training in semi-technical or technical fields or semi-skilled
24		or skilled fields, which were deducted from gross income in the
25		computation of taxable income. The credit against the tax
26		imposed by subsections (a) and (b) shall be 1.6% of such

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1		training expenses. For partners, shareholders of subchapter S
2		corporations, and owners of limited liability companies, if the
3		liability company is treated as a partnership for purposes of
4		federal and State income taxation, there shall be allowed a
5		credit under this subsection (j) to be determined in accordance
6		with the determination of income and distributive share of
7		income under Sections 702 and 704 and subchapter S of the
8		Internal Revenue Code.
9		Any credit allowed under this subsection which is unused in
10		the year the credit is earned may be carried forward to each of
11		the 5 taxable years following the year for which the credit is
12		first computed until it is used. This credit shall be applied
13		first to the earliest year for which there is a liability. If
14		there is a credit under this subsection from more than one tax
15		year that is available to offset a liability the earliest
16		credit arising under this subsection shall be applied first. No
17		carryforward credit may be claimed in any tax year ending on or
18		after December 31, 2003.
19		(k) Research and development credit.
20		For tax years ending after July 1, 1990 and prior to
21		December 31, 2003, and beginning again for tax years ending on
22		or after December 31, 2004, and ending prior to January 1,
23		2011, a taxpayer shall be allowed a credit against the tax
24		imposed by subsections (a) and (b) of this Section for
25		increasing research activities in this State. The credit
26		allowed against the tax imposed by subsections (a) and (b)

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

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1		as a credit against the tax liability for the following 5
2		taxable years or until it has been fully used, whichever occurs
3		first; provided that no credit earned in a tax year ending
4		prior to December 31, 2003 may be carried forward to any year
5		ending on or after December 31, 2003, and no credit may be
6		carried forward to any taxable year ending on or after January
7		1, 2011.
8		If an unused credit is carried forward to a given year from
9		2 or more earlier years, that credit arising in the earliest
10		year will be applied first against the tax liability for the
11		given year. If a tax liability for the given year still
12		remains, the credit from the next earliest year will then be
13		applied, and so on, until all credits have been used or no tax
14		liability for the given year remains. Any remaining unused
15		credit or credits then will be carried forward to the next
16		following year in which a tax liability is incurred, except
17		that no credit can be carried forward to a year which is more
18		than 5 years after the year in which the expense for which the
19		credit is given was incurred.
20		No inference shall be drawn from this amendatory Act of the
21		91st General Assembly in construing this Section for taxable
22		years beginning before January 1, 1999.
23		(l) Environmental Remediation Tax Credit.
24		(i) For tax years ending after December 31, 1997 and on
25		or before December 31, 2001, a taxpayer shall be allowed a
26		credit against the tax imposed by subsections (a) and (b)

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

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1		and "related party" includes the persons disallowed a
2		deduction for losses by paragraphs (b), (c), and (f)(1) of
3		Section 267 of the Internal Revenue Code by virtue of being
4		a related taxpayer, as well as any of its partners. The
5		credit allowed against the tax imposed by subsections (a)
6		and (b) shall be equal to 25% of the unreimbursed eligible
7		remediation costs in excess of $100,000 per site, except
8		that the $100,000 threshold shall not apply to any site
9		contained in an enterprise zone as determined by the
10		Department of Commerce and Community Affairs (now
11		Department of Commerce and Economic Opportunity). The
12		total credit allowed shall not exceed $40,000 per year with
13		a maximum total of $150,000 per site. For partners and
14		shareholders of subchapter S corporations, there shall be
15		allowed a credit under this subsection to be determined in
16		accordance with the determination of income and
17		distributive share of income under Sections 702 and 704 and
18		subchapter S of the Internal Revenue Code.
19		(ii) A credit allowed under this subsection that is
20		unused in the year the credit is earned may be carried
21		forward to each of the 5 taxable years following the year
22		for which the credit is first earned until it is used. The
23		term "unused credit" does not include any amounts of
24		unreimbursed eligible remediation costs in excess of the
25		maximum credit per site authorized under paragraph (i).
26		This credit shall be applied first to the earliest year for

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1		which there is a liability. If there is a credit under this
2		subsection from more than one tax year that is available to
3		offset a liability, the earliest credit arising under this
4		subsection shall be applied first. A credit allowed under
5		this subsection may be sold to a buyer as part of a sale of
6		all or part of the remediation site for which the credit
7		was granted. The purchaser of a remediation site and the
8		tax credit shall succeed to the unused credit and remaining
9		carry-forward period of the seller. To perfect the
10		transfer, the assignor shall record the transfer in the
11		chain of title for the site and provide written notice to
12		the Director of the Illinois Department of Revenue of the
13		assignor's intent to sell the remediation site and the
14		amount of the tax credit to be transferred as a portion of
15		the sale. In no event may a credit be transferred to any
16		taxpayer if the taxpayer or a related party would not be
17		eligible under the provisions of subsection (i).
18		(iii) For purposes of this Section, the term "site"
19		shall have the same meaning as under Section 58.2 of the
20		Environmental Protection Act.
21		(m) Education expense credit. Beginning with tax years
22		ending after December 31, 1999, a taxpayer who is the custodian
23		of one or more qualifying pupils shall be allowed a credit
24		against the tax imposed by subsections (a) and (b) of this
25		Section for qualified education expenses incurred on behalf of
26		the qualifying pupils. The credit shall be equal to 25% of

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

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

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

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1		tax credit shall succeed to the unused credit and remaining
2		carry-forward period of the seller. To perfect the
3		transfer, the assignor shall record the transfer in the
4		chain of title for the site and provide written notice to
5		the Director of the Illinois Department of Revenue of the
6		assignor's intent to sell the remediation site and the
7		amount of the tax credit to be transferred as a portion of
8		the sale. In no event may a credit be transferred to any
9		taxpayer if the taxpayer or a related party would not be
10		eligible under the provisions of subsection (i).
11		(iii) For purposes of this Section, the term "site"
12		shall have the same meaning as under Section 58.2 of the
13		Environmental Protection Act.
14		(iv) This subsection is exempt from the provisions of
15		Section 250.
16		(Source: P.A. 95-454, eff. 8-27-07; 96-115, eff. 7-31-09;
17		96-116, eff. 7-31-09; revised 8-20-09.)
18		Section 99. Effective date. This Act takes effect upon
19		becoming law.