The implications of SB0163 suggest a significant shift in how the state encourages R&D activities. By lowering the threshold from 100% to 50%, the bill intends to make it easier for companies to qualify for the tax credit. This change could lead to a more favorable environment for companies that invest in innovative practices and bolster economic growth. The provision for a permanent credit is expected to provide stability and encourage firms to commit to R&D initiatives without fearing the loss of support due to temporary measures.
Summary
SB0163, introduced by Senator Donald P. DeWitte, amends the Illinois Income Tax Act specifically to increase the research and development (R&D) credit. The bill outlines that the increase in R&D activities will be determined based on an increase over 50% of the average of the qualifying expenditures for each year in the base period, as opposed to the previous method which was based on 100%. Furthermore, this enhanced R&D credit is proposed to be applied on a permanent basis, aiming to incentivize long-term investment in research and development by businesses within Illinois.
Contention
Activities surrounding the bill may raise discussions concerning its fiscal impact on state tax revenues. While proponents argue that enhancing the R&D credit will stimulate economic growth and job creation, opponents might raise concerns about the immediate fiscal costs and argue that such tax breaks favor larger enterprises over small businesses that may not have the same capacity for expansive R&D investments. Legislators may also debate the effectiveness of tax credits as tools for economic development in the state, and whether different strategies may achieve similar results without direct costs to state revenue.