Authored by Gary Peric
Corporate and individual taxpayers will see a significant increase in their Illinois income taxes with the July 6 passing of the state’s budget and spending bill.
Illinois is expected to generate about $5 billion in revenue by increasing the corporate income tax rate to 7 percent from 5.25 percent and the individual income tax rate to 4.95 percent from 3.75 percent, effective July 1, 2017.
After the state had gone two years without a budget, the Illinois House overrode Gov. Bruce Rauner’s vetoes of a $36 billion budget and $5 billion tax increase, two days after the Senate’s Independence Day override of his vetoes. The move may temporarily stop credit agencies that were looking to further downgrade Illinois debt to junk-bond status.
Other notable changes in the law include:
- Requiring a single combined reporting group even if members use dissimilar industry-specific (transportation, insurance, financial, etc.) apportionment methodologies
- Requiring the add-back of deductions allowed under the IRC 199 deduction
- Reinstating the R&D tax credit and extending it through Jan. 1, 2022
Please contact your Baker Tilly state and local tax advisor to learn more about this new law and how it could affect your business.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.