Illinois 2025-2026 Regular Session

Illinois Senate Bill SB2021 Compare Versions

Only one version of the bill is available at this time.

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1	1	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2021 Introduced 2/6/2025, by Sen. Celina Villanueva SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 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. Effective immediately. LRB104 08335 HLH 18386 b A BILL FOR 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2021 Introduced 2/6/2025, by Sen. Celina Villanueva SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 35 ILCS 5/201 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. Effective immediately. LRB104 08335 HLH 18386 b LRB104 08335 HLH 18386 b A BILL FOR
2	2	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2021 Introduced 2/6/2025, by Sen. Celina Villanueva SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 5/201 35 ILCS 5/201
4	4	35 ILCS 5/201
5	5	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. Effective immediately.
6	6	LRB104 08335 HLH 18386 b LRB104 08335 HLH 18386 b
7	7	LRB104 08335 HLH 18386 b
8	8	A BILL FOR
9	9	SB2021LRB104 08335 HLH 18386 b SB2021 LRB104 08335 HLH 18386 b
10	10	SB2021 LRB104 08335 HLH 18386 b
11	11	1 AN ACT concerning revenue.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Illinois Income Tax Act is amended by
15	15	5 changing Section 201 as follows:
16	16	6 (35 ILCS 5/201)
17	17	7 Sec. 201. Tax imposed.
18	18	8 (a) In general. A tax measured by net income is hereby
19	19	9 imposed on every individual, corporation, trust and estate for
20	20	10 each taxable year ending after July 31, 1969 on the privilege
21	21	11 of earning or receiving income in or as a resident of this
22	22	12 State. Such tax shall be in addition to all other occupation or
23	23	13 privilege taxes imposed by this State or by any municipal
24	24	14 corporation or political subdivision thereof.
25	25	15 (b) Rates. The tax imposed by subsection (a) of this
26	26	16 Section shall be determined as follows, except as adjusted by
27	27	17 subsection (d-1):
28	28	18 (1) In the case of an individual, trust or estate, for
29	29	19 taxable years ending prior to July 1, 1989, an amount
30	30	20 equal to 2 1/2% of the taxpayer's net income for the
31	31	21 taxable year.
32	32	22 (2) In the case of an individual, trust or estate, for
33	33	23 taxable years beginning prior to July 1, 1989 and ending
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37	37	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2021 Introduced 2/6/2025, by Sen. Celina Villanueva SYNOPSIS AS INTRODUCED:
38	38	35 ILCS 5/201 35 ILCS 5/201
39	39	35 ILCS 5/201
40	40	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. Effective immediately.
41	41	LRB104 08335 HLH 18386 b LRB104 08335 HLH 18386 b
42	42	LRB104 08335 HLH 18386 b
43	43	A BILL FOR
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68	68	1 after June 30, 1989, an amount equal to the sum of (i) 2
69	69	2 1/2% of the taxpayer's net income for the period prior to
70	70	3 July 1, 1989, as calculated under Section 202.3, and (ii)
71	71	4 3% of the taxpayer's net income for the period after June
72	72	5 30, 1989, as calculated under Section 202.3.
73	73	6 (3) In the case of an individual, trust or estate, for
74	74	7 taxable years beginning after June 30, 1989, and ending
75	75	8 prior to January 1, 2011, an amount equal to 3% of the
76	76	9 taxpayer's net income for the taxable year.
77	77	10 (4) In the case of an individual, trust, or estate,
78	78	11 for taxable years beginning prior to January 1, 2011, and
79	79	12 ending after December 31, 2010, an amount equal to the sum
80	80	13 of (i) 3% of the taxpayer's net income for the period prior
81	81	14 to January 1, 2011, as calculated under Section 202.5, and
82	82	15 (ii) 5% of the taxpayer's net income for the period after
83	83	16 December 31, 2010, as calculated under Section 202.5.
84	84	17 (5) In the case of an individual, trust, or estate,
85	85	18 for taxable years beginning on or after January 1, 2011,
86	86	19 and ending prior to January 1, 2015, an amount equal to 5%
87	87	20 of the taxpayer's net income for the taxable year.
88	88	21 (5.1) In the case of an individual, trust, or estate,
89	89	22 for taxable years beginning prior to January 1, 2015, and
90	90	23 ending after December 31, 2014, an amount equal to the sum
91	91	24 of (i) 5% of the taxpayer's net income for the period prior
92	92	25 to January 1, 2015, as calculated under Section 202.5, and
93	93	26 (ii) 3.75% of the taxpayer's net income for the period
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104	104	1 after December 31, 2014, as calculated under Section
105	105	2 202.5.
106	106	3 (5.2) In the case of an individual, trust, or estate,
107	107	4 for taxable years beginning on or after January 1, 2015,
108	108	5 and ending prior to July 1, 2017, an amount equal to 3.75%
109	109	6 of the taxpayer's net income for the taxable year.
110	110	7 (5.3) In the case of an individual, trust, or estate,
111	111	8 for taxable years beginning prior to July 1, 2017, and
112	112	9 ending after June 30, 2017, an amount equal to the sum of
113	113	10 (i) 3.75% of the taxpayer's net income for the period
114	114	11 prior to July 1, 2017, as calculated under Section 202.5,
115	115	12 and (ii) 4.95% of the taxpayer's net income for the period
116	116	13 after June 30, 2017, as calculated under Section 202.5.
117	117	14 (5.4) In the case of an individual, trust, or estate,
118	118	15 for taxable years beginning on or after July 1, 2017, an
119	119	16 amount equal to 4.95% of the taxpayer's net income for the
120	120	17 taxable year.
121	121	18 (6) In the case of a corporation, for taxable years
122	122	19 ending prior to July 1, 1989, an amount equal to 4% of the
123	123	20 taxpayer's net income for the taxable year.
124	124	21 (7) In the case of a corporation, for taxable years
125	125	22 beginning prior to July 1, 1989 and ending after June 30,
126	126	23 1989, an amount equal to the sum of (i) 4% of the
127	127	24 taxpayer's net income for the period prior to July 1,
128	128	25 1989, as calculated under Section 202.3, and (ii) 4.8% of
129	129	26 the taxpayer's net income for the period after June 30,
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140	140	1 1989, as calculated under Section 202.3.
141	141	2 (8) In the case of a corporation, for taxable years
142	142	3 beginning after June 30, 1989, and ending prior to January
143	143	4 1, 2011, an amount equal to 4.8% of the taxpayer's net
144	144	5 income for the taxable year.
145	145	6 (9) In the case of a corporation, for taxable years
146	146	7 beginning prior to January 1, 2011, and ending after
147	147	8 December 31, 2010, an amount equal to the sum of (i) 4.8%
148	148	9 of the taxpayer's net income for the period prior to
149	149	10 January 1, 2011, as calculated under Section 202.5, and
150	150	11 (ii) 7% of the taxpayer's net income for the period after
151	151	12 December 31, 2010, as calculated under Section 202.5.
152	152	13 (10) In the case of a corporation, for taxable years
153	153	14 beginning on or after January 1, 2011, and ending prior to
154	154	15 January 1, 2015, an amount equal to 7% of the taxpayer's
155	155	16 net income for the taxable year.
156	156	17 (11) In the case of a corporation, for taxable years
157	157	18 beginning prior to January 1, 2015, and ending after
158	158	19 December 31, 2014, an amount equal to the sum of (i) 7% of
159	159	20 the taxpayer's net income for the period prior to January
160	160	21 1, 2015, as calculated under Section 202.5, and (ii) 5.25%
161	161	22 of the taxpayer's net income for the period after December
162	162	23 31, 2014, as calculated under Section 202.5.
163	163	24 (12) In the case of a corporation, for taxable years
164	164	25 beginning on or after January 1, 2015, and ending prior to
165	165	26 July 1, 2017, an amount equal to 5.25% of the taxpayer's
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176	176	1 net income for the taxable year.
177	177	2 (13) In the case of a corporation, for taxable years
178	178	3 beginning prior to July 1, 2017, and ending after June 30,
179	179	4 2017, an amount equal to the sum of (i) 5.25% of the
180	180	5 taxpayer's net income for the period prior to July 1,
181	181	6 2017, as calculated under Section 202.5, and (ii) 7% of
182	182	7 the taxpayer's net income for the period after June 30,
183	183	8 2017, as calculated under Section 202.5.
184	184	9 (14) In the case of a corporation, for taxable years
185	185	10 beginning on or after July 1, 2017, an amount equal to 7%
186	186	11 of the taxpayer's net income for the taxable year.
187	187	12 The rates under this subsection (b) are subject to the
188	188	13 provisions of Section 201.5.
189	189	14 (b-5) Surcharge; sale or exchange of assets, properties,
190	190	15 and intangibles of organization gaming licensees. For each of
191	191	16 taxable years 2019 through 2027, a surcharge is imposed on all
192	192	17 taxpayers on income arising from the sale or exchange of
193	193	18 capital assets, depreciable business property, real property
194	194	19 used in the trade or business, and Section 197 intangibles (i)
195	195	20 of an organization licensee under the Illinois Horse Racing
196	196	21 Act of 1975 and (ii) of an organization gaming licensee under
197	197	22 the Illinois Gambling Act. The amount of the surcharge is
198	198	23 equal to the amount of federal income tax liability for the
199	199	24 taxable year attributable to those sales and exchanges. The
200	200	25 surcharge imposed shall not apply if:
201	201	26 (1) the organization gaming license, organization
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212	212	1 license, or racetrack property is transferred as a result
213	213	2 of any of the following:
214	214	3 (A) bankruptcy, a receivership, or a debt
215	215	4 adjustment initiated by or against the initial
216	216	5 licensee or the substantial owners of the initial
217	217	6 licensee;
218	218	7 (B) cancellation, revocation, or termination of
219	219	8 any such license by the Illinois Gaming Board or the
220	220	9 Illinois Racing Board;
221	221	10 (C) a determination by the Illinois Gaming Board
222	222	11 that transfer of the license is in the best interests
223	223	12 of Illinois gaming;
224	224	13 (D) the death of an owner of the equity interest in
225	225	14 a licensee;
226	226	15 (E) the acquisition of a controlling interest in
227	227	16 the stock or substantially all of the assets of a
228	228	17 publicly traded company;
229	229	18 (F) a transfer by a parent company to a wholly
230	230	19 owned subsidiary; or
231	231	20 (G) the transfer or sale to or by one person to
232	232	21 another person where both persons were initial owners
233	233	22 of the license when the license was issued; or
234	234	23 (2) the controlling interest in the organization
235	235	24 gaming license, organization license, or racetrack
236	236	25 property is transferred in a transaction to lineal
237	237	26 descendants in which no gain or loss is recognized or as a
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248	248	1 result of a transaction in accordance with Section 351 of
249	249	2 the Internal Revenue Code in which no gain or loss is
250	250	3 recognized; or
251	251	4 (3) live horse racing was not conducted in 2010 at a
252	252	5 racetrack located within 3 miles of the Mississippi River
253	253	6 under a license issued pursuant to the Illinois Horse
254	254	7 Racing Act of 1975.
255	255	8 The transfer of an organization gaming license,
256	256	9 organization license, or racetrack property by a person other
257	257	10 than the initial licensee to receive the organization gaming
258	258	11 license is not subject to a surcharge. The Department shall
259	259	12 adopt rules necessary to implement and administer this
260	260	13 subsection.
261	261	14 (c) Personal Property Tax Replacement Income Tax.
262	262	15 Beginning on July 1, 1979 and thereafter, in addition to such
263	263	16 income tax, there is also hereby imposed the Personal Property
264	264	17 Tax Replacement Income Tax measured by net income on every
265	265	18 corporation (including Subchapter S corporations), partnership
266	266	19 and trust, for each taxable year ending after June 30, 1979.
267	267	20 Such taxes are imposed on the privilege of earning or
268	268	21 receiving income in or as a resident of this State. The
269	269	22 Personal Property Tax Replacement Income Tax shall be in
270	270	23 addition to the income tax imposed by subsections (a) and (b)
271	271	24 of this Section and in addition to all other occupation or
272	272	25 privilege taxes imposed by this State or by any municipal
273	273	26 corporation or political subdivision thereof.
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284	284	1 (d) Additional Personal Property Tax Replacement Income
285	285	2 Tax Rates. The personal property tax replacement income tax
286	286	3 imposed by this subsection and subsection (c) of this Section
287	287	4 in the case of a corporation, other than a Subchapter S
288	288	5 corporation and except as adjusted by subsection (d-1), shall
289	289	6 be an additional amount equal to 2.85% of such taxpayer's net
290	290	7 income for the taxable year, except that beginning on January
291	291	8 1, 1981, and thereafter, the rate of 2.85% specified in this
292	292	9 subsection shall be reduced to 2.5%, and in the case of a
293	293	10 partnership, trust or a Subchapter S corporation shall be an
294	294	11 additional amount equal to 1.5% of such taxpayer's net income
295	295	12 for the taxable year.
296	296	13 (d-1) Rate reduction for certain foreign insurers. In the
297	297	14 case of a foreign insurer, as defined by Section 35A-5 of the
298	298	15 Illinois Insurance Code, whose state or country of domicile
299	299	16 imposes on insurers domiciled in Illinois a retaliatory tax
300	300	17 (excluding any insurer whose premiums from reinsurance assumed
301	301	18 are 50% or more of its total insurance premiums as determined
302	302	19 under paragraph (2) of subsection (b) of Section 304, except
303	303	20 that for purposes of this determination premiums from
304	304	21 reinsurance do not include premiums from inter-affiliate
305	305	22 reinsurance arrangements), beginning with taxable years ending
306	306	23 on or after December 31, 1999, the sum of the rates of tax
307	307	24 imposed by subsections (b) and (d) shall be reduced (but not
308	308	25 increased) to the rate at which the total amount of tax imposed
309	309	26 under this Act, net of all credits allowed under this Act,
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320	320	1 shall equal (i) the total amount of tax that would be imposed
321	321	2 on the foreign insurer's net income allocable to Illinois for
322	322	3 the taxable year by such foreign insurer's state or country of
323	323	4 domicile if that net income were subject to all income taxes
324	324	5 and taxes measured by net income imposed by such foreign
325	325	6 insurer's state or country of domicile, net of all credits
326	326	7 allowed or (ii) a rate of zero if no such tax is imposed on
327	327	8 such income by the foreign insurer's state of domicile. For
328	328	9 the purposes of this subsection (d-1), an inter-affiliate
329	329	10 includes a mutual insurer under common management.
330	330	11 (1) For the purposes of subsection (d-1), in no event
331	331	12 shall the sum of the rates of tax imposed by subsections
332	332	13 (b) and (d) be reduced below the rate at which the sum of:
333	333	14 (A) the total amount of tax imposed on such
334	334	15 foreign insurer under this Act for a taxable year, net
335	335	16 of all credits allowed under this Act, plus
336	336	17 (B) the privilege tax imposed by Section 409 of
337	337	18 the Illinois Insurance Code, the fire insurance
338	338	19 company tax imposed by Section 12 of the Fire
339	339	20 Investigation Act, and the fire department taxes
340	340	21 imposed under Section 11-10-1 of the Illinois
341	341	22 Municipal Code,
342	342	23 equals 1.25% for taxable years ending prior to December
343	343	24 31, 2003, or 1.75% for taxable years ending on or after
344	344	25 December 31, 2003, of the net taxable premiums written for
345	345	26 the taxable year, as described by subsection (1) of
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356	356	1 Section 409 of the Illinois Insurance Code. This paragraph
357	357	2 will in no event increase the rates imposed under
358	358	3 subsections (b) and (d).
359	359	4 (2) Any reduction in the rates of tax imposed by this
360	360	5 subsection shall be applied first against the rates
361	361	6 imposed by subsection (b) and only after the tax imposed
362	362	7 by subsection (a) net of all credits allowed under this
363	363	8 Section other than the credit allowed under subsection (i)
364	364	9 has been reduced to zero, against the rates imposed by
365	365	10 subsection (d).
366	366	11 This subsection (d-1) is exempt from the provisions of
367	367	12 Section 250.
368	368	13 (e) Investment credit. A taxpayer shall be allowed a
369	369	14 credit against the Personal Property Tax Replacement Income
370	370	15 Tax for investment in qualified property.
371	371	16 (1) A taxpayer shall be allowed a credit equal to .5%
372	372	17 of the basis of qualified property placed in service
373	373	18 during the taxable year, provided such property is placed
374	374	19 in service on or after July 1, 1984. There shall be allowed
375	375	20 an additional credit equal to .5% of the basis of
376	376	21 qualified property placed in service during the taxable
377	377	22 year, provided such property is placed in service on or
378	378	23 after July 1, 1986, and the taxpayer's base employment
379	379	24 within Illinois has increased by 1% or more over the
380	380	25 preceding year as determined by the taxpayer's employment
381	381	26 records filed with the Illinois Department of Employment
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392	392	1 Security. Taxpayers who are new to Illinois shall be
393	393	2 deemed to have met the 1% growth in base employment for the
394	394	3 first year in which they file employment records with the
395	395	4 Illinois Department of Employment Security. The provisions
396	396	5 added to this Section by Public Act 85-1200 (and restored
397	397	6 by Public Act 87-895) shall be construed as declaratory of
398	398	7 existing law and not as a new enactment. If, in any year,
399	399	8 the increase in base employment within Illinois over the
400	400	9 preceding year is less than 1%, the additional credit
401	401	10 shall be limited to that percentage times a fraction, the
402	402	11 numerator of which is .5% and the denominator of which is
403	403	12 1%, but shall not exceed .5%. The investment credit shall
404	404	13 not be allowed to the extent that it would reduce a
405	405	14 taxpayer's liability in any tax year below zero, nor may
406	406	15 any credit for qualified property be allowed for any year
407	407	16 other than the year in which the property was placed in
408	408	17 service in Illinois. For tax years ending on or after
409	409	18 December 31, 1987, and on or before December 31, 1988, the
410	410	19 credit shall be allowed for the tax year in which the
411	411	20 property is placed in service, or, if the amount of the
412	412	21 credit exceeds the tax liability for that year, whether it
413	413	22 exceeds the original liability or the liability as later
414	414	23 amended, such excess may be carried forward and applied to
415	415	24 the tax liability of the 5 taxable years following the
416	416	25 excess credit years if the taxpayer (i) makes investments
417	417	26 which cause the creation of a minimum of 2,000 full-time
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428	428	1 equivalent jobs in Illinois, (ii) is located in an
429	429	2 enterprise zone established pursuant to the Illinois
430	430	3 Enterprise Zone Act and (iii) is certified by the
431	431	4 Department of Commerce and Community Affairs (now
432	432	5 Department of Commerce and Economic Opportunity) as
433	433	6 complying with the requirements specified in clause (i)
434	434	7 and (ii) by July 1, 1986. The Department of Commerce and
435	435	8 Community Affairs (now Department of Commerce and Economic
436	436	9 Opportunity) shall notify the Department of Revenue of all
437	437	10 such certifications immediately. For tax years ending
438	438	11 after December 31, 1988, the credit shall be allowed for
439	439	12 the tax year in which the property is placed in service,
440	440	13 or, if the amount of the credit exceeds the tax liability
441	441	14 for that year, whether it exceeds the original liability
442	442	15 or the liability as later amended, such excess may be
443	443	16 carried forward and applied to the tax liability of the 5
444	444	17 taxable years following the excess credit years. The
445	445	18 credit shall be applied to the earliest year for which
446	446	19 there is a liability. If there is credit from more than one
447	447	20 tax year that is available to offset a liability, earlier
448	448	21 credit shall be applied first.
449	449	22 (2) The term "qualified property" means property
450	450	23 which:
451	451	24 (A) is tangible, whether new or used, including
452	452	25 buildings and structural components of buildings and
453	453	26 signs that are real property, but not including land
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464	464	1 or improvements to real property that are not a
465	465	2 structural component of a building such as
466	466	3 landscaping, sewer lines, local access roads, fencing,
467	467	4 parking lots, and other appurtenances;
468	468	5 (B) is depreciable pursuant to Section 167 of the
469	469	6 Internal Revenue Code, except that "3-year property"
470	470	7 as defined in Section 168(c)(2)(A) of that Code is not
471	471	8 eligible for the credit provided by this subsection
472	472	9 (e);
473	473	10 (C) is acquired by purchase as defined in Section
474	474	11 179(d) of the Internal Revenue Code;
475	475	12 (D) is used in Illinois by a taxpayer who is
476	476	13 primarily engaged in manufacturing, or in mining coal
477	477	14 or fluorite, or in retailing, or was placed in service
478	478	15 on or after July 1, 2006 in a River Edge Redevelopment
479	479	16 Zone established pursuant to the River Edge
480	480	17 Redevelopment Zone Act; and
481	481	18 (E) has not previously been used in Illinois in
482	482	19 such a manner and by such a person as would qualify for
483	483	20 the credit provided by this subsection (e) or
484	484	21 subsection (f).
485	485	22 (3) For purposes of this subsection (e),
486	486	23 "manufacturing" means the material staging and production
487	487	24 of tangible personal property by procedures commonly
488	488	25 regarded as manufacturing, processing, fabrication, or
489	489	26 assembling which changes some existing material into new
490	490
491	491
492	492
493	493
494	494
495	495	SB2021 - 13 - LRB104 08335 HLH 18386 b
496	496
497	497
498	498	SB2021- 14 -LRB104 08335 HLH 18386 b SB2021 - 14 - LRB104 08335 HLH 18386 b
499	499	SB2021 - 14 - LRB104 08335 HLH 18386 b
500	500	1 shapes, new qualities, or new combinations. For purposes
501	501	2 of this subsection (e) the term "mining" shall have the
502	502	3 same meaning as the term "mining" in Section 613(c) of the
503	503	4 Internal Revenue Code. For purposes of this subsection
504	504	5 (e), the term "retailing" means the sale of tangible
505	505	6 personal property for use or consumption and not for
506	506	7 resale, or services rendered in conjunction with the sale
507	507	8 of tangible personal property for use or consumption and
508	508	9 not for resale. For purposes of this subsection (e),
509	509	10 "tangible personal property" has the same meaning as when
510	510	11 that term is used in the Retailers' Occupation Tax Act,
511	511	12 and, for taxable years ending after December 31, 2008,
512	512	13 does not include the generation, transmission, or
513	513	14 distribution of electricity.
514	514	15 (4) The basis of qualified property shall be the basis
515	515	16 used to compute the depreciation deduction for federal
516	516	17 income tax purposes.
517	517	18 (5) If the basis of the property for federal income
518	518	19 tax depreciation purposes is increased after it has been
519	519	20 placed in service in Illinois by the taxpayer, the amount
520	520	21 of such increase shall be deemed property placed in
521	521	22 service on the date of such increase in basis.
522	522	23 (6) The term "placed in service" shall have the same
523	523	24 meaning as under Section 46 of the Internal Revenue Code.
524	524	25 (7) If during any taxable year, any property ceases to
525	525	26 be qualified property in the hands of the taxpayer within
526	526
527	527
528	528
529	529
530	530
531	531	SB2021 - 14 - LRB104 08335 HLH 18386 b
532	532
533	533
534	534	SB2021- 15 -LRB104 08335 HLH 18386 b SB2021 - 15 - LRB104 08335 HLH 18386 b
535	535	SB2021 - 15 - LRB104 08335 HLH 18386 b
536	536	1 48 months after being placed in service, or the situs of
537	537	2 any qualified property is moved outside Illinois within 48
538	538	3 months after being placed in service, the Personal
539	539	4 Property Tax Replacement Income Tax for such taxable year
540	540	5 shall be increased. Such increase shall be determined by
541	541	6 (i) recomputing the investment credit which would have
542	542	7 been allowed for the year in which credit for such
543	543	8 property was originally allowed by eliminating such
544	544	9 property from such computation and, (ii) subtracting such
545	545	10 recomputed credit from the amount of credit previously
546	546	11 allowed. For the purposes of this paragraph (7), a
547	547	12 reduction of the basis of qualified property resulting
548	548	13 from a redetermination of the purchase price shall be
549	549	14 deemed a disposition of qualified property to the extent
550	550	15 of such reduction.
551	551	16 (8) Unless the investment credit is extended by law,
552	552	17 the basis of qualified property shall not include costs
553	553	18 incurred after December 31, 2018, except for costs
554	554	19 incurred pursuant to a binding contract entered into on or
555	555	20 before December 31, 2018.
556	556	21 (9) Each taxable year ending before December 31, 2000,
557	557	22 a partnership may elect to pass through to its partners
558	558	23 the credits to which the partnership is entitled under
559	559	24 this subsection (e) for the taxable year. A partner may
560	560	25 use the credit allocated to him or her under this
561	561	26 paragraph only against the tax imposed in subsections (c)
562	562
563	563
564	564
565	565
566	566
567	567	SB2021 - 15 - LRB104 08335 HLH 18386 b
568	568
569	569
570	570	SB2021- 16 -LRB104 08335 HLH 18386 b SB2021 - 16 - LRB104 08335 HLH 18386 b
571	571	SB2021 - 16 - LRB104 08335 HLH 18386 b
572	572	1 and (d) of this Section. If the partnership makes that
573	573	2 election, those credits shall be allocated among the
574	574	3 partners in the partnership in accordance with the rules
575	575	4 set forth in Section 704(b) of the Internal Revenue Code,
576	576	5 and the rules promulgated under that Section, and the
577	577	6 allocated amount of the credits shall be allowed to the
578	578	7 partners for that taxable year. The partnership shall make
579	579	8 this election on its Personal Property Tax Replacement
580	580	9 Income Tax return for that taxable year. The election to
581	581	10 pass through the credits shall be irrevocable.
582	582	11 For taxable years ending on or after December 31,
583	583	12 2000, a partner that qualifies its partnership for a
584	584	13 subtraction under subparagraph (I) of paragraph (2) of
585	585	14 subsection (d) of Section 203 or a shareholder that
586	586	15 qualifies a Subchapter S corporation for a subtraction
587	587	16 under subparagraph (S) of paragraph (2) of subsection (b)
588	588	17 of Section 203 shall be allowed a credit under this
589	589	18 subsection (e) equal to its share of the credit earned
590	590	19 under this subsection (e) during the taxable year by the
591	591	20 partnership or Subchapter S corporation, determined in
592	592	21 accordance with the determination of income and
593	593	22 distributive share of income under Sections 702 and 704
594	594	23 and Subchapter S of the Internal Revenue Code. This
595	595	24 paragraph is exempt from the provisions of Section 250.
596	596	25 (f) Investment credit; Enterprise Zone; River Edge
597	597	26 Redevelopment Zone.
598	598
599	599
600	600
601	601
602	602
603	603	SB2021 - 16 - LRB104 08335 HLH 18386 b
604	604
605	605
606	606	SB2021- 17 -LRB104 08335 HLH 18386 b SB2021 - 17 - LRB104 08335 HLH 18386 b
607	607	SB2021 - 17 - LRB104 08335 HLH 18386 b
608	608	1 (1) A taxpayer shall be allowed a credit against the
609	609	2 tax imposed by subsections (a) and (b) of this Section for
610	610	3 investment in qualified property which is placed in
611	611	4 service in an Enterprise Zone created pursuant to the
612	612	5 Illinois Enterprise Zone Act or, for property placed in
613	613	6 service on or after July 1, 2006, a River Edge
614	614	7 Redevelopment Zone established pursuant to the River Edge
615	615	8 Redevelopment Zone Act. For partners, shareholders of
616	616	9 Subchapter S corporations, and owners of limited liability
617	617	10 companies, if the liability company is treated as a
618	618	11 partnership for purposes of federal and State income
619	619	12 taxation, for taxable years ending before December 31,
620	620	13 2023, there shall be allowed a credit under this
621	621	14 subsection (f) to be determined in accordance with the
622	622	15 determination of income and distributive share of income
623	623	16 under Sections 702 and 704 and Subchapter S of the
624	624	17 Internal Revenue Code. For taxable years ending on or
625	625	18 after December 31, 2023, for partners and shareholders of
626	626	19 Subchapter S corporations, the provisions of Section 251
627	627	20 shall apply with respect to the credit under this
628	628	21 subsection. The credit shall be .5% of the basis for such
629	629	22 property. The credit shall be available only in the
630	630	23 taxable year in which the property is placed in service in
631	631	24 the Enterprise Zone or River Edge Redevelopment Zone and
632	632	25 shall not be allowed to the extent that it would reduce a
633	633	26 taxpayer's liability for the tax imposed by subsections
634	634
635	635
636	636
637	637
638	638
639	639	SB2021 - 17 - LRB104 08335 HLH 18386 b
640	640
641	641
642	642	SB2021- 18 -LRB104 08335 HLH 18386 b SB2021 - 18 - LRB104 08335 HLH 18386 b
643	643	SB2021 - 18 - LRB104 08335 HLH 18386 b
644	644	1 (a) and (b) of this Section to below zero. For tax years
645	645	2 ending on or after December 31, 1985, the credit shall be
646	646	3 allowed for the tax year in which the property is placed in
647	647	4 service, or, if the amount of the credit exceeds the tax
648	648	5 liability for that year, whether it exceeds the original
649	649	6 liability or the liability as later amended, such excess
650	650	7 may be carried forward and applied to the tax liability of
651	651	8 the 5 taxable years following the excess credit year. The
652	652	9 credit shall be applied to the earliest year for which
653	653	10 there is a liability. If there is credit from more than one
654	654	11 tax year that is available to offset a liability, the
655	655	12 credit accruing first in time shall be applied first.
656	656	13 (2) The term qualified property means property which:
657	657	14 (A) is tangible, whether new or used, including
658	658	15 buildings and structural components of buildings;
659	659	16 (B) is depreciable pursuant to Section 167 of the
660	660	17 Internal Revenue Code, except that "3-year property"
661	661	18 as defined in Section 168(c)(2)(A) of that Code is not
662	662	19 eligible for the credit provided by this subsection
663	663	20 (f);
664	664	21 (C) is acquired by purchase as defined in Section
665	665	22 179(d) of the Internal Revenue Code;
666	666	23 (D) is used in the Enterprise Zone or River Edge
667	667	24 Redevelopment Zone by the taxpayer; and
668	668	25 (E) has not been previously used in Illinois in
669	669	26 such a manner and by such a person as would qualify for
670	670
671	671
672	672
673	673
674	674
675	675	SB2021 - 18 - LRB104 08335 HLH 18386 b
676	676
677	677
678	678	SB2021- 19 -LRB104 08335 HLH 18386 b SB2021 - 19 - LRB104 08335 HLH 18386 b
679	679	SB2021 - 19 - LRB104 08335 HLH 18386 b
680	680	1 the credit provided by this subsection (f) or
681	681	2 subsection (e).
682	682	3 (3) The basis of qualified property shall be the basis
683	683	4 used to compute the depreciation deduction for federal
684	684	5 income tax purposes.
685	685	6 (4) If the basis of the property for federal income
686	686	7 tax depreciation purposes is increased after it has been
687	687	8 placed in service in the Enterprise Zone or River Edge
688	688	9 Redevelopment Zone by the taxpayer, the amount of such
689	689	10 increase shall be deemed property placed in service on the
690	690	11 date of such increase in basis.
691	691	12 (5) The term "placed in service" shall have the same
692	692	13 meaning as under Section 46 of the Internal Revenue Code.
693	693	14 (6) If during any taxable year, any property ceases to
694	694	15 be qualified property in the hands of the taxpayer within
695	695	16 48 months after being placed in service, or the situs of
696	696	17 any qualified property is moved outside the Enterprise
697	697	18 Zone or River Edge Redevelopment Zone within 48 months
698	698	19 after being placed in service, the tax imposed under
699	699	20 subsections (a) and (b) of this Section for such taxable
700	700	21 year shall be increased. Such increase shall be determined
701	701	22 by (i) recomputing the investment credit which would have
702	702	23 been allowed for the year in which credit for such
703	703	24 property was originally allowed by eliminating such
704	704	25 property from such computation, and (ii) subtracting such
705	705	26 recomputed credit from the amount of credit previously
706	706
707	707
708	708
709	709
710	710
711	711	SB2021 - 19 - LRB104 08335 HLH 18386 b
712	712
713	713
714	714	SB2021- 20 -LRB104 08335 HLH 18386 b SB2021 - 20 - LRB104 08335 HLH 18386 b
715	715	SB2021 - 20 - LRB104 08335 HLH 18386 b
716	716	1 allowed. For the purposes of this paragraph (6), a
717	717	2 reduction of the basis of qualified property resulting
718	718	3 from a redetermination of the purchase price shall be
719	719	4 deemed a disposition of qualified property to the extent
720	720	5 of such reduction.
721	721	6 (7) There shall be allowed an additional credit equal
722	722	7 to 0.5% of the basis of qualified property placed in
723	723	8 service during the taxable year in a River Edge
724	724	9 Redevelopment Zone, provided such property is placed in
725	725	10 service on or after July 1, 2006, and the taxpayer's base
726	726	11 employment within Illinois has increased by 1% or more
727	727	12 over the preceding year as determined by the taxpayer's
728	728	13 employment records filed with the Illinois Department of
729	729	14 Employment Security. Taxpayers who are new to Illinois
730	730	15 shall be deemed to have met the 1% growth in base
731	731	16 employment for the first year in which they file
732	732	17 employment records with the Illinois Department of
733	733	18 Employment Security. If, in any year, the increase in base
734	734	19 employment within Illinois over the preceding year is less
735	735	20 than 1%, the additional credit shall be limited to that
736	736	21 percentage times a fraction, the numerator of which is
737	737	22 0.5% and the denominator of which is 1%, but shall not
738	738	23 exceed 0.5%.
739	739	24 (8) For taxable years beginning on or after January 1,
740	740	25 2021, there shall be allowed an Enterprise Zone
741	741	26 construction jobs credit against the taxes imposed under
742	742
743	743
744	744
745	745
746	746
747	747	SB2021 - 20 - LRB104 08335 HLH 18386 b
748	748
749	749
750	750	SB2021- 21 -LRB104 08335 HLH 18386 b SB2021 - 21 - LRB104 08335 HLH 18386 b
751	751	SB2021 - 21 - LRB104 08335 HLH 18386 b
752	752	1 subsections (a) and (b) of this Section as provided in
753	753	2 Section 13 of the Illinois Enterprise Zone Act.
754	754	3 The credit or credits may not reduce the taxpayer's
755	755	4 liability to less than zero. If the amount of the credit or
756	756	5 credits exceeds the taxpayer's liability, the excess may
757	757	6 be carried forward and applied against the taxpayer's
758	758	7 liability in succeeding calendar years in the same manner
759	759	8 provided under paragraph (4) of Section 211 of this Act.
760	760	9 The credit or credits shall be applied to the earliest
761	761	10 year for which there is a tax liability. If there are
762	762	11 credits from more than one taxable year that are available
763	763	12 to offset a liability, the earlier credit shall be applied
764	764	13 first.
765	765	14 For partners, shareholders of Subchapter S
766	766	15 corporations, and owners of limited liability companies,
767	767	16 if the liability company is treated as a partnership for
768	768	17 the purposes of federal and State income taxation, for
769	769	18 taxable years ending before December 31, 2023, there shall
770	770	19 be allowed a credit under this Section to be determined in
771	771	20 accordance with the determination of income and
772	772	21 distributive share of income under Sections 702 and 704
773	773	22 and Subchapter S of the Internal Revenue Code. For taxable
774	774	23 years ending on or after December 31, 2023, for partners
775	775	24 and shareholders of Subchapter S corporations, the
776	776	25 provisions of Section 251 shall apply with respect to the
777	777	26 credit under this subsection.
778	778
779	779
780	780
781	781
782	782
783	783	SB2021 - 21 - LRB104 08335 HLH 18386 b
784	784
785	785
786	786	SB2021- 22 -LRB104 08335 HLH 18386 b SB2021 - 22 - LRB104 08335 HLH 18386 b
787	787	SB2021 - 22 - LRB104 08335 HLH 18386 b
788	788	1 The total aggregate amount of credits awarded under
789	789	2 the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
790	790	3 shall not exceed $20,000,000 in any State fiscal year.
791	791	4 This paragraph (8) is exempt from the provisions of
792	792	5 Section 250.
793	793	6 (g) (Blank).
794	794	7 (h) Investment credit; High Impact Business.
795	795	8 (1) Subject to subsections (b) and (b-5) of Section
796	796	9 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
797	797	10 be allowed a credit against the tax imposed by subsections
798	798	11 (a) and (b) of this Section for investment in qualified
799	799	12 property which is placed in service by a Department of
800	800	13 Commerce and Economic Opportunity designated High Impact
801	801	14 Business. The credit shall be .5% of the basis for such
802	802	15 property. The credit shall not be available (i) until the
803	803	16 minimum investments in qualified property set forth in
804	804	17 subdivision (a)(3)(A) of Section 5.5 of the Illinois
805	805	18 Enterprise Zone Act have been satisfied or (ii) until the
806	806	19 time authorized in subsection (b-5) of the Illinois
807	807	20 Enterprise Zone Act for entities designated as High Impact
808	808	21 Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
809	809	22 (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
810	810	23 Act, and shall not be allowed to the extent that it would
811	811	24 reduce a taxpayer's liability for the tax imposed by
812	812	25 subsections (a) and (b) of this Section to below zero. The
813	813	26 credit applicable to such investments shall be taken in
814	814
815	815
816	816
817	817
818	818
819	819	SB2021 - 22 - LRB104 08335 HLH 18386 b
820	820
821	821
822	822	SB2021- 23 -LRB104 08335 HLH 18386 b SB2021 - 23 - LRB104 08335 HLH 18386 b
823	823	SB2021 - 23 - LRB104 08335 HLH 18386 b
824	824	1 the taxable year in which such investments have been
825	825	2 completed. The credit for additional investments beyond
826	826	3 the minimum investment by a designated high impact
827	827	4 business authorized under subdivision (a)(3)(A) of Section
828	828	5 5.5 of the Illinois Enterprise Zone Act shall be available
829	829	6 only in the taxable year in which the property is placed in
830	830	7 service and shall not be allowed to the extent that it
831	831	8 would reduce a taxpayer's liability for the tax imposed by
832	832	9 subsections (a) and (b) of this Section to below zero. For
833	833	10 tax years ending on or after December 31, 1987, the credit
834	834	11 shall be allowed for the tax year in which the property is
835	835	12 placed in service, or, if the amount of the credit exceeds
836	836	13 the tax liability for that year, whether it exceeds the
837	837	14 original liability or the liability as later amended, such
838	838	15 excess may be carried forward and applied to the tax
839	839	16 liability of the 5 taxable years following the excess
840	840	17 credit year. The credit shall be applied to the earliest
841	841	18 year for which there is a liability. If there is credit
842	842	19 from more than one tax year that is available to offset a
843	843	20 liability, the credit accruing first in time shall be
844	844	21 applied first.
845	845	22 Changes made in this subdivision (h)(1) by Public Act
846	846	23 88-670 restore changes made by Public Act 85-1182 and
847	847	24 reflect existing law.
848	848	25 (2) The term qualified property means property which:
849	849	26 (A) is tangible, whether new or used, including
850	850
851	851
852	852
853	853
854	854
855	855	SB2021 - 23 - LRB104 08335 HLH 18386 b
856	856
857	857
858	858	SB2021- 24 -LRB104 08335 HLH 18386 b SB2021 - 24 - LRB104 08335 HLH 18386 b
859	859	SB2021 - 24 - LRB104 08335 HLH 18386 b
860	860	1 buildings and structural components of buildings;
861	861	2 (B) is depreciable pursuant to Section 167 of the
862	862	3 Internal Revenue Code, except that "3-year property"
863	863	4 as defined in Section 168(c)(2)(A) of that Code is not
864	864	5 eligible for the credit provided by this subsection
865	865	6 (h);
866	866	7 (C) is acquired by purchase as defined in Section
867	867	8 179(d) of the Internal Revenue Code; and
868	868	9 (D) is not eligible for the Enterprise Zone
869	869	10 Investment Credit provided by subsection (f) of this
870	870	11 Section.
871	871	12 (3) The basis of qualified property shall be the basis
872	872	13 used to compute the depreciation deduction for federal
873	873	14 income tax purposes.
874	874	15 (4) If the basis of the property for federal income
875	875	16 tax depreciation purposes is increased after it has been
876	876	17 placed in service in a federally designated Foreign Trade
877	877	18 Zone or Sub-Zone located in Illinois by the taxpayer, the
878	878	19 amount of such increase shall be deemed property placed in
879	879	20 service on the date of such increase in basis.
880	880	21 (5) The term "placed in service" shall have the same
881	881	22 meaning as under Section 46 of the Internal Revenue Code.
882	882	23 (6) If during any taxable year ending on or before
883	883	24 December 31, 1996, any property ceases to be qualified
884	884	25 property in the hands of the taxpayer within 48 months
885	885	26 after being placed in service, or the situs of any
886	886
887	887
888	888
889	889
890	890
891	891	SB2021 - 24 - LRB104 08335 HLH 18386 b
892	892
893	893
894	894	SB2021- 25 -LRB104 08335 HLH 18386 b SB2021 - 25 - LRB104 08335 HLH 18386 b
895	895	SB2021 - 25 - LRB104 08335 HLH 18386 b
896	896	1 qualified property is moved outside Illinois within 48
897	897	2 months after being placed in service, the tax imposed
898	898	3 under subsections (a) and (b) of this Section for such
899	899	4 taxable year shall be increased. Such increase shall be
900	900	5 determined by (i) recomputing the investment credit which
901	901	6 would have been allowed for the year in which credit for
902	902	7 such property was originally allowed by eliminating such
903	903	8 property from such computation, and (ii) subtracting such
904	904	9 recomputed credit from the amount of credit previously
905	905	10 allowed. For the purposes of this paragraph (6), a
906	906	11 reduction of the basis of qualified property resulting
907	907	12 from a redetermination of the purchase price shall be
908	908	13 deemed a disposition of qualified property to the extent
909	909	14 of such reduction.
910	910	15 (7) Beginning with tax years ending after December 31,
911	911	16 1996, if a taxpayer qualifies for the credit under this
912	912	17 subsection (h) and thereby is granted a tax abatement and
913	913	18 the taxpayer relocates its entire facility in violation of
914	914	19 the explicit terms and length of the contract under
915	915	20 Section 18-183 of the Property Tax Code, the tax imposed
916	916	21 under subsections (a) and (b) of this Section shall be
917	917	22 increased for the taxable year in which the taxpayer
918	918	23 relocated its facility by an amount equal to the amount of
919	919	24 credit received by the taxpayer under this subsection (h).
920	920	25 (h-5) High Impact Business construction jobs credit. For
921	921	26 taxable years beginning on or after January 1, 2021, there
922	922
923	923
924	924
925	925
926	926
927	927	SB2021 - 25 - LRB104 08335 HLH 18386 b
928	928
929	929
930	930	SB2021- 26 -LRB104 08335 HLH 18386 b SB2021 - 26 - LRB104 08335 HLH 18386 b
931	931	SB2021 - 26 - LRB104 08335 HLH 18386 b
932	932	1 shall also be allowed a High Impact Business construction jobs
933	933	2 credit against the tax imposed under subsections (a) and (b)
934	934	3 of this Section as provided in subsections (i) and (j) of
935	935	4 Section 5.5 of the Illinois Enterprise Zone Act.
936	936	5 The credit or credits may not reduce the taxpayer's
937	937	6 liability to less than zero. If the amount of the credit or
938	938	7 credits exceeds the taxpayer's liability, the excess may be
939	939	8 carried forward and applied against the taxpayer's liability
940	940	9 in succeeding calendar years in the manner provided under
941	941	10 paragraph (4) of Section 211 of this Act. The credit or credits
942	942	11 shall be applied to the earliest year for which there is a tax
943	943	12 liability. If there are credits from more than one taxable
944	944	13 year that are available to offset a liability, the earlier
945	945	14 credit shall be applied first.
946	946	15 For partners, shareholders of Subchapter S corporations,
947	947	16 and owners of limited liability companies, for taxable years
948	948	17 ending before December 31, 2023, if the liability company is
949	949	18 treated as a partnership for the purposes of federal and State
950	950	19 income taxation, there shall be allowed a credit under this
951	951	20 Section to be determined in accordance with the determination
952	952	21 of income and distributive share of income under Sections 702
953	953	22 and 704 and Subchapter S of the Internal Revenue Code. For
954	954	23 taxable years ending on or after December 31, 2023, for
955	955	24 partners and shareholders of Subchapter S corporations, the
956	956	25 provisions of Section 251 shall apply with respect to the
957	957	26 credit under this subsection.
958	958
959	959
960	960
961	961
962	962
963	963	SB2021 - 26 - LRB104 08335 HLH 18386 b
964	964
965	965
966	966	SB2021- 27 -LRB104 08335 HLH 18386 b SB2021 - 27 - LRB104 08335 HLH 18386 b
967	967	SB2021 - 27 - LRB104 08335 HLH 18386 b
968	968	1 The total aggregate amount of credits awarded under the
969	969	2 Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
970	970	3 exceed $20,000,000 in any State fiscal year.
971	971	4 This subsection (h-5) is exempt from the provisions of
972	972	5 Section 250.
973	973	6 (i) Credit for Personal Property Tax Replacement Income
974	974	7 Tax. For tax years ending prior to December 31, 2003, a credit
975	975	8 shall be allowed against the tax imposed by subsections (a)
976	976	9 and (b) of this Section for the tax imposed by subsections (c)
977	977	10 and (d) of this Section. This credit shall be computed by
978	978	11 multiplying the tax imposed by subsections (c) and (d) of this
979	979	12 Section by a fraction, the numerator of which is base income
980	980	13 allocable to Illinois and the denominator of which is Illinois
981	981	14 base income, and further multiplying the product by the tax
982	982	15 rate imposed by subsections (a) and (b) of this Section.
983	983	16 Any credit earned on or after December 31, 1986 under this
984	984	17 subsection which is unused in the year the credit is computed
985	985	18 because it exceeds the tax liability imposed by subsections
986	986	19 (a) and (b) for that year (whether it exceeds the original
987	987	20 liability or the liability as later amended) may be carried
988	988	21 forward and applied to the tax liability imposed by
989	989	22 subsections (a) and (b) of the 5 taxable years following the
990	990	23 excess credit year, provided that no credit may be carried
991	991	24 forward to any year ending on or after December 31, 2003. This
992	992	25 credit shall be applied first to the earliest year for which
993	993	26 there is a liability. If there is a credit under this
994	994
995	995
996	996
997	997
998	998
999	999	SB2021 - 27 - LRB104 08335 HLH 18386 b
1000	1000
1001	1001
1002	1002	SB2021- 28 -LRB104 08335 HLH 18386 b SB2021 - 28 - LRB104 08335 HLH 18386 b
1003	1003	SB2021 - 28 - LRB104 08335 HLH 18386 b
1004	1004	1 subsection from more than one tax year that is available to
1005	1005	2 offset a liability the earliest credit arising under this
1006	1006	3 subsection shall be applied first.
1007	1007	4 If, during any taxable year ending on or after December
1008	1008	5 31, 1986, the tax imposed by subsections (c) and (d) of this
1009	1009	6 Section for which a taxpayer has claimed a credit under this
1010	1010	7 subsection (i) is reduced, the amount of credit for such tax
1011	1011	8 shall also be reduced. Such reduction shall be determined by
1012	1012	9 recomputing the credit to take into account the reduced tax
1013	1013	10 imposed by subsections (c) and (d). If any portion of the
1014	1014	11 reduced amount of credit has been carried to a different
1015	1015	12 taxable year, an amended return shall be filed for such
1016	1016	13 taxable year to reduce the amount of credit claimed.
1017	1017	14 (j) Training expense credit. Beginning with tax years
1018	1018	15 ending on or after December 31, 1986 and prior to December 31,
1019	1019	16 2003, a taxpayer shall be allowed a credit against the tax
1020	1020	17 imposed by subsections (a) and (b) under this Section for all
1021	1021	18 amounts paid or accrued, on behalf of all persons employed by
1022	1022	19 the taxpayer in Illinois or Illinois residents employed
1023	1023	20 outside of Illinois by a taxpayer, for educational or
1024	1024	21 vocational training in semi-technical or technical fields or
1025	1025	22 semi-skilled or skilled fields, which were deducted from gross
1026	1026	23 income in the computation of taxable income. The credit
1027	1027	24 against the tax imposed by subsections (a) and (b) shall be
1028	1028	25 1.6% of such training expenses. For partners, shareholders of
1029	1029	26 subchapter S corporations, and owners of limited liability
1030	1030
1031	1031
1032	1032
1033	1033
1034	1034
1035	1035	SB2021 - 28 - LRB104 08335 HLH 18386 b
1036	1036
1037	1037
1038	1038	SB2021- 29 -LRB104 08335 HLH 18386 b SB2021 - 29 - LRB104 08335 HLH 18386 b
1039	1039	SB2021 - 29 - LRB104 08335 HLH 18386 b
1040	1040	1 companies, if the liability company is treated as a
1041	1041	2 partnership for purposes of federal and State income taxation,
1042	1042	3 for taxable years ending before December 31, 2023, there shall
1043	1043	4 be allowed a credit under this subsection (j) to be determined
1044	1044	5 in accordance with the determination of income and
1045	1045	6 distributive share of income under Sections 702 and 704 and
1046	1046	7 subchapter S of the Internal Revenue Code. For taxable years
1047	1047	8 ending on or after December 31, 2023, for partners and
1048	1048	9 shareholders of Subchapter S corporations, the provisions of
1049	1049	10 Section 251 shall apply with respect to the credit under this
1050	1050	11 subsection.
1051	1051	12 Any credit allowed under this subsection which is unused
1052	1052	13 in the year the credit is earned may be carried forward to each
1053	1053	14 of the 5 taxable years following the year for which the credit
1054	1054	15 is first computed until it is used. This credit shall be
1055	1055	16 applied first to the earliest year for which there is a
1056	1056	17 liability. If there is a credit under this subsection from
1057	1057	18 more than one tax year that is available to offset a liability,
1058	1058	19 the earliest credit arising under this subsection shall be
1059	1059	20 applied first. No carryforward credit may be claimed in any
1060	1060	21 tax year ending on or after December 31, 2003.
1061	1061	22 (k) Research and development credit. For tax years ending
1062	1062	23 after July 1, 1990 and prior to December 31, 2003, and
1063	1063	24 beginning again for tax years ending on or after December 31,
1064	1064	25 2004, and ending prior to January 1, 2032, a taxpayer shall be
1065	1065	26 allowed a credit against the tax imposed by subsections (a)
1066	1066
1067	1067
1068	1068
1069	1069
1070	1070
1071	1071	SB2021 - 29 - LRB104 08335 HLH 18386 b
1072	1072
1073	1073
1074	1074	SB2021- 30 -LRB104 08335 HLH 18386 b SB2021 - 30 - LRB104 08335 HLH 18386 b
1075	1075	SB2021 - 30 - LRB104 08335 HLH 18386 b
1076	1076	1 and (b) of this Section for increasing research activities in
1077	1077	2 this State. The credit allowed against the tax imposed by
1078	1078	3 subsections (a) and (b) shall be equal to 6 1/2% of the
1079	1079	4 qualifying expenditures for increasing research activities in
1080	1080	5 this State. For partners, shareholders of subchapter S
1081	1081	6 corporations, and owners of limited liability companies, if
1082	1082	7 the liability company is treated as a partnership for purposes
1083	1083	8 of federal and State income taxation, for taxable years ending
1084	1084	9 before December 31, 2023, there shall be allowed a credit
1085	1085	10 under this subsection to be determined in accordance with the
1086	1086	11 determination of income and distributive share of income under
1087	1087	12 Sections 702 and 704 and subchapter S of the Internal Revenue
1088	1088	13 Code. For taxable years ending on or after December 31, 2023,
1089	1089	14 for partners and shareholders of Subchapter S corporations,
1090	1090	15 the provisions of Section 251 shall apply with respect to the
1091	1091	16 credit under this subsection.
1092	1092	17 For purposes of this subsection, "qualifying expenditures"
1093	1093	18 means the qualifying expenditures as defined for the federal
1094	1094	19 credit for increasing research activities which would be
1095	1095	20 allowable under Section 41 of the Internal Revenue Code and
1096	1096	21 which are conducted in this State, "qualifying expenditures
1097	1097	22 for increasing research activities in this State" means the
1098	1098	23 excess of qualifying expenditures for the taxable year in
1099	1099	24 which incurred over qualifying expenditures for the base
1100	1100	25 period, "qualifying expenditures for the base period" means
1101	1101	26 the average of the qualifying expenditures for each year in
1102	1102
1103	1103
1104	1104
1105	1105
1106	1106
1107	1107	SB2021 - 30 - LRB104 08335 HLH 18386 b
1108	1108
1109	1109
1110	1110	SB2021- 31 -LRB104 08335 HLH 18386 b SB2021 - 31 - LRB104 08335 HLH 18386 b
1111	1111	SB2021 - 31 - LRB104 08335 HLH 18386 b
1112	1112	1 the base period, and "base period" means the 3 taxable years
1113	1113	2 immediately preceding the taxable year for which the
1114	1114	3 determination is being made.
1115	1115	4 Any credit in excess of the tax liability for the taxable
1116	1116	5 year may be carried forward. A taxpayer may elect to have the
1117	1117	6 unused credit shown on its final completed return carried over
1118	1118	7 as a credit against the tax liability for the following 5
1119	1119	8 taxable years or until it has been fully used, whichever
1120	1120	9 occurs first; provided that no credit earned in a tax year
1121	1121	10 ending prior to December 31, 2003 may be carried forward to any
1122	1122	11 year ending on or after December 31, 2003.
1123	1123	12 If an unused credit is carried forward to a given year from
1124	1124	13 2 or more earlier years, that credit arising in the earliest
1125	1125	14 year will be applied first against the tax liability for the
1126	1126	15 given year. If a tax liability for the given year still
1127	1127	16 remains, the credit from the next earliest year will then be
1128	1128	17 applied, and so on, until all credits have been used or no tax
1129	1129	18 liability for the given year remains. Any remaining unused
1130	1130	19 credit or credits then will be carried forward to the next
1131	1131	20 following year in which a tax liability is incurred, except
1132	1132	21 that no credit can be carried forward to a year which is more
1133	1133	22 than 5 years after the year in which the expense for which the
1134	1134	23 credit is given was incurred.
1135	1135	24 No inference shall be drawn from Public Act 91-644 in
1136	1136	25 construing this Section for taxable years beginning before
1137	1137	26 January 1, 1999.
1138	1138
1139	1139
1140	1140
1141	1141
1142	1142
1143	1143	SB2021 - 31 - LRB104 08335 HLH 18386 b
1144	1144
1145	1145
1146	1146	SB2021- 32 -LRB104 08335 HLH 18386 b SB2021 - 32 - LRB104 08335 HLH 18386 b
1147	1147	SB2021 - 32 - LRB104 08335 HLH 18386 b
1148	1148	1 It is the intent of the General Assembly that the research
1149	1149	2 and development credit under this subsection (k) shall apply
1150	1150	3 continuously for all tax years ending on or after December 31,
1151	1151	4 2004 and ending prior to January 1, 2032, including, but not
1152	1152	5 limited to, the period beginning on January 1, 2016 and ending
1153	1153	6 on July 6, 2017 (the effective date of Public Act 100-22). All
1154	1154	7 actions taken in reliance on the continuation of the credit
1155	1155	8 under this subsection (k) by any taxpayer are hereby
1156	1156	9 validated.
1157	1157	10 (l) Environmental Remediation Tax Credit.
1158	1158	11 (i) For tax years ending after December 31, 1997 and
1159	1159	12 on or before December 31, 2001, a taxpayer shall be
1160	1160	13 allowed a credit against the tax imposed by subsections
1161	1161	14 (a) and (b) of this Section for certain amounts paid for
1162	1162	15 unreimbursed eligible remediation costs, as specified in
1163	1163	16 this subsection. For purposes of this Section,
1164	1164	17 "unreimbursed eligible remediation costs" means costs
1165	1165	18 approved by the Illinois Environmental Protection Agency
1166	1166	19 ("Agency") under Section 58.14 of the Environmental
1167	1167	20 Protection Act that were paid in performing environmental
1168	1168	21 remediation at a site for which a No Further Remediation
1169	1169	22 Letter was issued by the Agency and recorded under Section
1170	1170	23 58.10 of the Environmental Protection Act. The credit must
1171	1171	24 be claimed for the taxable year in which Agency approval
1172	1172	25 of the eligible remediation costs is granted. The credit
1173	1173	26 is not available to any taxpayer if the taxpayer or any
1174	1174
1175	1175
1176	1176
1177	1177
1178	1178
1179	1179	SB2021 - 32 - LRB104 08335 HLH 18386 b
1180	1180
1181	1181
1182	1182	SB2021- 33 -LRB104 08335 HLH 18386 b SB2021 - 33 - LRB104 08335 HLH 18386 b
1183	1183	SB2021 - 33 - LRB104 08335 HLH 18386 b
1184	1184	1 related party caused or contributed to, in any material
1185	1185	2 respect, a release of regulated substances on, in, or
1186	1186	3 under the site that was identified and addressed by the
1187	1187	4 remedial action pursuant to the Site Remediation Program
1188	1188	5 of the Environmental Protection Act. After the Pollution
1189	1189	6 Control Board rules are adopted pursuant to the Illinois
1190	1190	7 Administrative Procedure Act for the administration and
1191	1191	8 enforcement of Section 58.9 of the Environmental
1192	1192	9 Protection Act, determinations as to credit availability
1193	1193	10 for purposes of this Section shall be made consistent with
1194	1194	11 those rules. For purposes of this Section, "taxpayer"
1195	1195	12 includes a person whose tax attributes the taxpayer has
1196	1196	13 succeeded to under Section 381 of the Internal Revenue
1197	1197	14 Code and "related party" includes the persons disallowed a
1198	1198	15 deduction for losses by paragraphs (b), (c), and (f)(1) of
1199	1199	16 Section 267 of the Internal Revenue Code by virtue of
1200	1200	17 being a related taxpayer, as well as any of its partners.
1201	1201	18 The credit allowed against the tax imposed by subsections
1202	1202	19 (a) and (b) shall be equal to 25% of the unreimbursed
1203	1203	20 eligible remediation costs in excess of $100,000 per site,
1204	1204	21 except that the $100,000 threshold shall not apply to any
1205	1205	22 site contained in an enterprise zone as determined by the
1206	1206	23 Department of Commerce and Community Affairs (now
1207	1207	24 Department of Commerce and Economic Opportunity). The
1208	1208	25 total credit allowed shall not exceed $40,000 per year
1209	1209	26 with a maximum total of $150,000 per site. For partners
1210	1210
1211	1211
1212	1212
1213	1213
1214	1214
1215	1215	SB2021 - 33 - LRB104 08335 HLH 18386 b
1216	1216
1217	1217
1218	1218	SB2021- 34 -LRB104 08335 HLH 18386 b SB2021 - 34 - LRB104 08335 HLH 18386 b
1219	1219	SB2021 - 34 - LRB104 08335 HLH 18386 b
1220	1220	1 and shareholders of subchapter S corporations, there shall
1221	1221	2 be allowed a credit under this subsection to be determined
1222	1222	3 in accordance with the determination of income and
1223	1223	4 distributive share of income under Sections 702 and 704
1224	1224	5 and subchapter S of the Internal Revenue Code.
1225	1225	6 (ii) A credit allowed under this subsection that is
1226	1226	7 unused in the year the credit is earned may be carried
1227	1227	8 forward to each of the 5 taxable years following the year
1228	1228	9 for which the credit is first earned until it is used. The
1229	1229	10 term "unused credit" does not include any amounts of
1230	1230	11 unreimbursed eligible remediation costs in excess of the
1231	1231	12 maximum credit per site authorized under paragraph (i).
1232	1232	13 This credit shall be applied first to the earliest year
1233	1233	14 for which there is a liability. If there is a credit under
1234	1234	15 this subsection from more than one tax year that is
1235	1235	16 available to offset a liability, the earliest credit
1236	1236	17 arising under this subsection shall be applied first. A
1237	1237	18 credit allowed under this subsection may be sold to a
1238	1238	19 buyer as part of a sale of all or part of the remediation
1239	1239	20 site for which the credit was granted. The purchaser of a
1240	1240	21 remediation site and the tax credit shall succeed to the
1241	1241	22 unused credit and remaining carry-forward period of the
1242	1242	23 seller. To perfect the transfer, the assignor shall record
1243	1243	24 the transfer in the chain of title for the site and provide
1244	1244	25 written notice to the Director of the Illinois Department
1245	1245	26 of Revenue of the assignor's intent to sell the
1246	1246
1247	1247
1248	1248
1249	1249
1250	1250
1251	1251	SB2021 - 34 - LRB104 08335 HLH 18386 b
1252	1252
1253	1253
1254	1254	SB2021- 35 -LRB104 08335 HLH 18386 b SB2021 - 35 - LRB104 08335 HLH 18386 b
1255	1255	SB2021 - 35 - LRB104 08335 HLH 18386 b
1256	1256	1 remediation site and the amount of the tax credit to be
1257	1257	2 transferred as a portion of the sale. In no event may a
1258	1258	3 credit be transferred to any taxpayer if the taxpayer or a
1259	1259	4 related party would not be eligible under the provisions
1260	1260	5 of subsection (i).
1261	1261	6 (iii) For purposes of this Section, the term "site"
1262	1262	7 shall have the same meaning as under Section 58.2 of the
1263	1263	8 Environmental Protection Act.
1264	1264	9 (m) Education expense credit. Beginning with tax years
1265	1265	10 ending after December 31, 1999, a taxpayer who is the
1266	1266	11 custodian of one or more qualifying pupils shall be allowed a
1267	1267	12 credit against the tax imposed by subsections (a) and (b) of
1268	1268	13 this Section for qualified education expenses incurred on
1269	1269	14 behalf of the qualifying pupils. The credit shall be equal to
1270	1270	15 25% of qualified education expenses, but in no event may the
1271	1271	16 total credit under this subsection claimed by a family that is
1272	1272	17 the custodian of qualifying pupils exceed (i) $500 for tax
1273	1273	18 years ending prior to December 31, 2017, and (ii) $750 for tax
1274	1274	19 years ending on or after December 31, 2017. In no event shall a
1275	1275	20 credit under this subsection reduce the taxpayer's liability
1276	1276	21 under this Act to less than zero. Notwithstanding any other
1277	1277	22 provision of law, for taxable years beginning on or after
1278	1278	23 January 1, 2017, no taxpayer may claim a credit under this
1279	1279	24 subsection (m) if the taxpayer's adjusted gross income for the
1280	1280	25 taxable year exceeds (i) $500,000, in the case of spouses
1281	1281	26 filing a joint federal tax return or (ii) $250,000, in the case
1282	1282
1283	1283
1284	1284
1285	1285
1286	1286
1287	1287	SB2021 - 35 - LRB104 08335 HLH 18386 b
1288	1288
1289	1289
1290	1290	SB2021- 36 -LRB104 08335 HLH 18386 b SB2021 - 36 - LRB104 08335 HLH 18386 b
1291	1291	SB2021 - 36 - LRB104 08335 HLH 18386 b
1292	1292	1 of all other taxpayers. This subsection is exempt from the
1293	1293	2 provisions of Section 250 of this Act.
1294	1294	3 For purposes of this subsection:
1295	1295	4 "Qualifying pupils" means individuals who (i) are
1296	1296	5 residents of the State of Illinois, (ii) are under the age of
1297	1297	6 21 at the close of the school year for which a credit is
1298	1298	7 sought, and (iii) during the school year for which a credit is
1299	1299	8 sought were full-time pupils enrolled in a kindergarten
1300	1300	9 through twelfth grade education program at any school, as
1301	1301	10 defined in this subsection.
1302	1302	11 "Qualified education expense" means the amount incurred on
1303	1303	12 behalf of a qualifying pupil in excess of $250 for tuition,
1304	1304	13 book fees, and lab fees at the school in which the pupil is
1305	1305	14 enrolled during the regular school year.
1306	1306	15 "School" means any public or nonpublic elementary or
1307	1307	16 secondary school in Illinois that is in compliance with Title
1308	1308	17 VI of the Civil Rights Act of 1964 and attendance at which
1309	1309	18 satisfies the requirements of Section 26-1 of the School Code,
1310	1310	19 except that nothing shall be construed to require a child to
1311	1311	20 attend any particular public or nonpublic school to qualify
1312	1312	21 for the credit under this Section.
1313	1313	22 "Custodian" means, with respect to qualifying pupils, an
1314	1314	23 Illinois resident who is a parent, the parents, a legal
1315	1315	24 guardian, or the legal guardians of the qualifying pupils.
1316	1316	25 (n) River Edge Redevelopment Zone site remediation tax
1317	1317	26 credit.
1318	1318
1319	1319
1320	1320
1321	1321
1322	1322
1323	1323	SB2021 - 36 - LRB104 08335 HLH 18386 b
1324	1324
1325	1325
1326	1326	SB2021- 37 -LRB104 08335 HLH 18386 b SB2021 - 37 - LRB104 08335 HLH 18386 b
1327	1327	SB2021 - 37 - LRB104 08335 HLH 18386 b
1328	1328	1 (i) For tax years ending on or after December 31,
1329	1329	2 2006, a taxpayer shall be allowed a credit against the tax
1330	1330	3 imposed by subsections (a) and (b) of this Section for
1331	1331	4 certain amounts paid for unreimbursed eligible remediation
1332	1332	5 costs, as specified in this subsection. For purposes of
1333	1333	6 this Section, "unreimbursed eligible remediation costs"
1334	1334	7 means costs approved by the Illinois Environmental
1335	1335	8 Protection Agency ("Agency") under Section 58.14a of the
1336	1336	9 Environmental Protection Act that were paid in performing
1337	1337	10 environmental remediation at a site within a River Edge
1338	1338	11 Redevelopment Zone for which a No Further Remediation
1339	1339	12 Letter was issued by the Agency and recorded under Section
1340	1340	13 58.10 of the Environmental Protection Act. The credit must
1341	1341	14 be claimed for the taxable year in which Agency approval
1342	1342	15 of the eligible remediation costs is granted. The credit
1343	1343	16 is not available to any taxpayer if the taxpayer or any
1344	1344	17 related party caused or contributed to, in any material
1345	1345	18 respect, a release of regulated substances on, in, or
1346	1346	19 under the site that was identified and addressed by the
1347	1347	20 remedial action pursuant to the Site Remediation Program
1348	1348	21 of the Environmental Protection Act. Determinations as to
1349	1349	22 credit availability for purposes of this Section shall be
1350	1350	23 made consistent with rules adopted by the Pollution
1351	1351	24 Control Board pursuant to the Illinois Administrative
1352	1352	25 Procedure Act for the administration and enforcement of
1353	1353	26 Section 58.9 of the Environmental Protection Act. For
1354	1354
1355	1355
1356	1356
1357	1357
1358	1358
1359	1359	SB2021 - 37 - LRB104 08335 HLH 18386 b
1360	1360
1361	1361
1362	1362	SB2021- 38 -LRB104 08335 HLH 18386 b SB2021 - 38 - LRB104 08335 HLH 18386 b
1363	1363	SB2021 - 38 - LRB104 08335 HLH 18386 b
1364	1364	1 purposes of this Section, "taxpayer" includes a person
1365	1365	2 whose tax attributes the taxpayer has succeeded to under
1366	1366	3 Section 381 of the Internal Revenue Code and "related
1367	1367	4 party" includes the persons disallowed a deduction for
1368	1368	5 losses by paragraphs (b), (c), and (f)(1) of Section 267
1369	1369	6 of the Internal Revenue Code by virtue of being a related
1370	1370	7 taxpayer, as well as any of its partners. The credit
1371	1371	8 allowed against the tax imposed by subsections (a) and (b)
1372	1372	9 shall be equal to 25% of the unreimbursed eligible
1373	1373	10 remediation costs in excess of $100,000 per site.
1374	1374	11 (ii) A credit allowed under this subsection that is
1375	1375	12 unused in the year the credit is earned may be carried
1376	1376	13 forward to each of the 5 taxable years following the year
1377	1377	14 for which the credit is first earned until it is used. This
1378	1378	15 credit shall be applied first to the earliest year for
1379	1379	16 which there is a liability. If there is a credit under this
1380	1380	17 subsection from more than one tax year that is available
1381	1381	18 to offset a liability, the earliest credit arising under
1382	1382	19 this subsection shall be applied first. A credit allowed
1383	1383	20 under this subsection may be sold to a buyer as part of a
1384	1384	21 sale of all or part of the remediation site for which the
1385	1385	22 credit was granted. The purchaser of a remediation site
1386	1386	23 and the tax credit shall succeed to the unused credit and
1387	1387	24 remaining carry-forward period of the seller. To perfect
1388	1388	25 the transfer, the assignor shall record the transfer in
1389	1389	26 the chain of title for the site and provide written notice
1390	1390
1391	1391
1392	1392
1393	1393
1394	1394
1395	1395	SB2021 - 38 - LRB104 08335 HLH 18386 b
1396	1396
1397	1397
1398	1398	SB2021- 39 -LRB104 08335 HLH 18386 b SB2021 - 39 - LRB104 08335 HLH 18386 b
1399	1399	SB2021 - 39 - LRB104 08335 HLH 18386 b
1400	1400	1 to the Director of the Illinois Department of Revenue of
1401	1401	2 the assignor's intent to sell the remediation site and the
1402	1402	3 amount of the tax credit to be transferred as a portion of
1403	1403	4 the sale. In no event may a credit be transferred to any
1404	1404	5 taxpayer if the taxpayer or a related party would not be
1405	1405	6 eligible under the provisions of subsection (i).
1406	1406	7 (iii) For purposes of this Section, the term "site"
1407	1407	8 shall have the same meaning as under Section 58.2 of the
1408	1408	9 Environmental Protection Act.
1409	1409	10 (o) For each of taxable years during the Compassionate Use
1410	1410	11 of Medical Cannabis Program, a surcharge is imposed on all
1411	1411	12 taxpayers on income arising from the sale or exchange of
1412	1412	13 capital assets, depreciable business property, real property
1413	1413	14 used in the trade or business, and Section 197 intangibles of
1414	1414	15 an organization registrant under the Compassionate Use of
1415	1415	16 Medical Cannabis Program Act. The amount of the surcharge is
1416	1416	17 equal to the amount of federal income tax liability for the
1417	1417	18 taxable year attributable to those sales and exchanges. The
1418	1418	19 surcharge imposed does not apply if:
1419	1419	20 (1) the medical cannabis cultivation center
1420	1420	21 registration, medical cannabis dispensary registration, or
1421	1421	22 the property of a registration is transferred as a result
1422	1422	23 of any of the following:
1423	1423	24 (A) bankruptcy, a receivership, or a debt
1424	1424	25 adjustment initiated by or against the initial
1425	1425	26 registration or the substantial owners of the initial
1426	1426
1427	1427
1428	1428
1429	1429
1430	1430
1431	1431	SB2021 - 39 - LRB104 08335 HLH 18386 b
1432	1432
1433	1433
1434	1434	SB2021- 40 -LRB104 08335 HLH 18386 b SB2021 - 40 - LRB104 08335 HLH 18386 b
1435	1435	SB2021 - 40 - LRB104 08335 HLH 18386 b
1436	1436	1 registration;
1437	1437	2 (B) cancellation, revocation, or termination of
1438	1438	3 any registration by the Illinois Department of Public
1439	1439	4 Health;
1440	1440	5 (C) a determination by the Illinois Department of
1441	1441	6 Public Health that transfer of the registration is in
1442	1442	7 the best interests of Illinois qualifying patients as
1443	1443	8 defined by the Compassionate Use of Medical Cannabis
1444	1444	9 Program Act;
1445	1445	10 (D) the death of an owner of the equity interest in
1446	1446	11 a registrant;
1447	1447	12 (E) the acquisition of a controlling interest in
1448	1448	13 the stock or substantially all of the assets of a
1449	1449	14 publicly traded company;
1450	1450	15 (F) a transfer by a parent company to a wholly
1451	1451	16 owned subsidiary; or
1452	1452	17 (G) the transfer or sale to or by one person to
1453	1453	18 another person where both persons were initial owners
1454	1454	19 of the registration when the registration was issued;
1455	1455	20 or
1456	1456	21 (2) the cannabis cultivation center registration,
1457	1457	22 medical cannabis dispensary registration, or the
1458	1458	23 controlling interest in a registrant's property is
1459	1459	24 transferred in a transaction to lineal descendants in
1460	1460	25 which no gain or loss is recognized or as a result of a
1461	1461	26 transaction in accordance with Section 351 of the Internal
1462	1462
1463	1463
1464	1464
1465	1465
1466	1466
1467	1467	SB2021 - 40 - LRB104 08335 HLH 18386 b
1468	1468
1469	1469
1470	1470	SB2021- 41 -LRB104 08335 HLH 18386 b SB2021 - 41 - LRB104 08335 HLH 18386 b
1471	1471	SB2021 - 41 - LRB104 08335 HLH 18386 b
1472	1472	1 Revenue Code in which no gain or loss is recognized.
1473	1473	2 (p) Pass-through entity tax.
1474	1474	3 (1) For taxable years ending on or after December 31,
1475	1475	4 2021 and beginning prior to January 1, 2026, a partnership
1476	1476	5 (other than a publicly traded partnership under Section
1477	1477	6 7704 of the Internal Revenue Code) or Subchapter S
1478	1478	7 corporation may elect to apply the provisions of this
1479	1479	8 subsection. A separate election shall be made for each
1480	1480	9 taxable year. Such election shall be made at such time,
1481	1481	10 and in such form and manner as prescribed by the
1482	1482	11 Department, and, once made, is irrevocable.
1483	1483	12 (2) Entity-level tax. A partnership or Subchapter S
1484	1484	13 corporation electing to apply the provisions of this
1485	1485	14 subsection shall be subject to a tax for the privilege of
1486	1486	15 earning or receiving income in this State in an amount
1487	1487	16 equal to 4.95% of the taxpayer's net income for the
1488	1488	17 taxable year.
1489	1489	18 (3) Net income defined.
1490	1490	19 (A) In general. For purposes of paragraph (2), the
1491	1491	20 term net income has the same meaning as defined in
1492	1492	21 Section 202 of this Act, except that, for tax years
1493	1493	22 ending on or after December 31, 2023, a deduction
1494	1494	23 shall be allowed in computing base income for
1495	1495	24 distributions to a retired partner to the extent that
1496	1496	25 the partner's distributions are exempt from tax under
1497	1497	26 Section 203(a)(2)(F) of this Act. In addition, the
1498	1498
1499	1499
1500	1500
1501	1501
1502	1502
1503	1503	SB2021 - 41 - LRB104 08335 HLH 18386 b
1504	1504
1505	1505
1506	1506	SB2021- 42 -LRB104 08335 HLH 18386 b SB2021 - 42 - LRB104 08335 HLH 18386 b
1507	1507	SB2021 - 42 - LRB104 08335 HLH 18386 b
1508	1508	1 following modifications shall not apply:
1509	1509	2 (i) the standard exemption allowed under
1510	1510	3 Section 204;
1511	1511	4 (ii) the deduction for net losses allowed
1512	1512	5 under Section 207;
1513	1513	6 (iii) in the case of an S corporation, the
1514	1514	7 modification under Section 203(b)(2)(S); and
1515	1515	8 (iv) in the case of a partnership, the
1516	1516	9 modifications under Section 203(d)(2)(H) and
1517	1517	10 Section 203(d)(2)(I).
1518	1518	11 (B) Special rule for tiered partnerships. If a
1519	1519	12 taxpayer making the election under paragraph (1) is a
1520	1520	13 partner of another taxpayer making the election under
1521	1521	14 paragraph (1), net income shall be computed as
1522	1522	15 provided in subparagraph (A), except that the taxpayer
1523	1523	16 shall subtract its distributive share of the net
1524	1524	17 income of the electing partnership (including its
1525	1525	18 distributive share of the net income of the electing
1526	1526	19 partnership derived as a distributive share from
1527	1527	20 electing partnerships in which it is a partner).
1528	1528	21 (4) Credit for entity level tax. Each partner or
1529	1529	22 shareholder of a taxpayer making the election under this
1530	1530	23 Section shall be allowed a credit against the tax imposed
1531	1531	24 under subsections (a) and (b) of Section 201 of this Act
1532	1532	25 for the taxable year of the partnership or Subchapter S
1533	1533	26 corporation for which an election is in effect ending
1534	1534
1535	1535
1536	1536
1537	1537
1538	1538
1539	1539	SB2021 - 42 - LRB104 08335 HLH 18386 b
1540	1540
1541	1541
1542	1542	SB2021- 43 -LRB104 08335 HLH 18386 b SB2021 - 43 - LRB104 08335 HLH 18386 b
1543	1543	SB2021 - 43 - LRB104 08335 HLH 18386 b
1544	1544	1 within or with the taxable year of the partner or
1545	1545	2 shareholder in an amount equal to 4.95% times the partner
1546	1546	3 or shareholder's distributive share of the net income of
1547	1547	4 the electing partnership or Subchapter S corporation, but
1548	1548	5 not to exceed the partner's or shareholder's share of the
1549	1549	6 tax imposed under paragraph (1) which is actually paid by
1550	1550	7 the partnership or Subchapter S corporation. If the
1551	1551	8 taxpayer is a partnership or Subchapter S corporation that
1552	1552	9 is itself a partner of a partnership making the election
1553	1553	10 under paragraph (1), the credit under this paragraph shall
1554	1554	11 be allowed to the taxpayer's partners or shareholders (or
1555	1555	12 if the partner is a partnership or Subchapter S
1556	1556	13 corporation then its partners or shareholders) in
1557	1557	14 accordance with the determination of income and
1558	1558	15 distributive share of income under Sections 702 and 704
1559	1559	16 and Subchapter S of the Internal Revenue Code. If the
1560	1560	17 amount of the credit allowed under this paragraph exceeds
1561	1561	18 the partner's or shareholder's liability for tax imposed
1562	1562	19 under subsections (a) and (b) of Section 201 of this Act
1563	1563	20 for the taxable year, such excess shall be treated as an
1564	1564	21 overpayment for purposes of Section 909 of this Act.
1565	1565	22 (5) Nonresidents. A nonresident individual who is a
1566	1566	23 partner or shareholder of a partnership or Subchapter S
1567	1567	24 corporation for a taxable year for which an election is in
1568	1568	25 effect under paragraph (1) shall not be required to file
1569	1569	26 an income tax return under this Act for such taxable year
1570	1570
1571	1571
1572	1572
1573	1573
1574	1574
1575	1575	SB2021 - 43 - LRB104 08335 HLH 18386 b
1576	1576
1577	1577
1578	1578	SB2021- 44 -LRB104 08335 HLH 18386 b SB2021 - 44 - LRB104 08335 HLH 18386 b
1579	1579	SB2021 - 44 - LRB104 08335 HLH 18386 b
1580	1580	1 if the only source of net income of the individual (or the
1581	1581	2 individual and the individual's spouse in the case of a
1582	1582	3 joint return) is from an entity making the election under
1583	1583	4 paragraph (1) and the credit allowed to the partner or
1584	1584	5 shareholder under paragraph (4) equals or exceeds the
1585	1585	6 individual's liability for the tax imposed under
1586	1586	7 subsections (a) and (b) of Section 201 of this Act for the
1587	1587	8 taxable year.
1588	1588	9 (6) Liability for tax. Except as provided in this
1589	1589	10 paragraph, a partnership or Subchapter S making the
1590	1590	11 election under paragraph (1) is liable for the
1591	1591	12 entity-level tax imposed under paragraph (2). If the
1592	1592	13 electing partnership or corporation fails to pay the full
1593	1593	14 amount of tax deemed assessed under paragraph (2), the
1594	1594	15 partners or shareholders shall be liable to pay the tax
1595	1595	16 assessed (including penalties and interest). Each partner
1596	1596	17 or shareholder shall be liable for the unpaid assessment
1597	1597	18 based on the ratio of the partner's or shareholder's share
1598	1598	19 of the net income of the partnership over the total net
1599	1599	20 income of the partnership. If the partnership or
1600	1600	21 Subchapter S corporation fails to pay the tax assessed
1601	1601	22 (including penalties and interest) and thereafter an
1602	1602	23 amount of such tax is paid by the partners or
1603	1603	24 shareholders, such amount shall not be collected from the
1604	1604	25 partnership or corporation.
1605	1605	26 (7) Foreign tax. For purposes of the credit allowed
1606	1606
1607	1607
1608	1608
1609	1609
1610	1610
1611	1611	SB2021 - 44 - LRB104 08335 HLH 18386 b
1612	1612
1613	1613
1614	1614	SB2021- 45 -LRB104 08335 HLH 18386 b SB2021 - 45 - LRB104 08335 HLH 18386 b
1615	1615	SB2021 - 45 - LRB104 08335 HLH 18386 b
1616	1616	1 under Section 601(b)(3) of this Act, tax paid by a
1617	1617	2 partnership or Subchapter S corporation to another state
1618	1618	3 which, as determined by the Department, is substantially
1619	1619	4 similar to the tax imposed under this subsection, shall be
1620	1620	5 considered tax paid by the partner or shareholder to the
1621	1621	6 extent that the partner's or shareholder's share of the
1622	1622	7 income of the partnership or Subchapter S corporation
1623	1623	8 allocated and apportioned to such other state bears to the
1624	1624	9 total income of the partnership or Subchapter S
1625	1625	10 corporation allocated or apportioned to such other state.
1626	1626	11 (8) Suspension of withholding. The provisions of
1627	1627	12 Section 709.5 of this Act shall not apply to a partnership
1628	1628	13 or Subchapter S corporation for the taxable year for which
1629	1629	14 an election under paragraph (1) is in effect.
1630	1630	15 (9) Requirement to pay estimated tax. For each taxable
1631	1631	16 year for which an election under paragraph (1) is in
1632	1632	17 effect, a partnership or Subchapter S corporation is
1633	1633	18 required to pay estimated tax for such taxable year under
1634	1634	19 Sections 803 and 804 of this Act if the amount payable as
1635	1635	20 estimated tax can reasonably be expected to exceed $500.
1636	1636	21 (10) The provisions of this subsection shall apply
1637	1637	22 only with respect to taxable years for which the
1638	1638	23 limitation on individual deductions applies under Section
1639	1639	24 164(b)(6) of the Internal Revenue Code.
1640	1640	25 (Source: P.A. 102-558, eff. 8-20-21; 102-658, eff. 8-27-21;
1641	1641	26 103-9, eff. 6-7-23; 103-396, eff. 1-1-24; 103-595, eff.
1642	1642
1643	1643
1644	1644
1645	1645
1646	1646
1647	1647	SB2021 - 45 - LRB104 08335 HLH 18386 b
1648	1648
1649	1649
1650	1650	SB2021- 46 -LRB104 08335 HLH 18386 b SB2021 - 46 - LRB104 08335 HLH 18386 b
1651	1651	SB2021 - 46 - LRB104 08335 HLH 18386 b
1652	1652	1 6-26-24; 103-605, eff. 7-1-24.)
1653	1653
1654	1654
1655	1655
1656	1656
1657	1657
1658	1658	SB2021 - 46 - LRB104 08335 HLH 18386 b