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Illinois Budget Bill Increases Income Tax Rates

07.19.2017

The Illinois Senate and House revoked Governor Bruce Rauner's veto and passed the state's budget bill.

The highlights of the budget bill are as follows:

  • Effective July 1, 2017, the individual, trust and estate tax rate is increased from 3.75 percent to 4.95 percent.
  • Effective July 1, 2017, the corporate income tax rate is increased from 5.25 percent to 7 percent.
  • For tax years that end on or after July 1, 2017, two tax rates apply. The amount earned prior to July 1, 2017, is taxed at 3.75 percent (individuals, trusts and estates) or 5.25 percent (corporations). The amount earned on or after July 1, 2017, is taxed at 4.95 percent (individuals, trusts and estates) or 7 percent (corporations). The two tax amounts must be added together to figure the total tax liability.
  • For taxable years ending on or after December 31, 2017, corporate and individual taxpayers must add back an amount equal to the federal deduction taken under IRC §199 - the Qualified Domestic Production Deduction.

Pamela HuelsmanIf you have any questions about the budget bill, please contact your tax advisor or Pamela Huelsman, Principal, Tax Services, at 314.983.1392 or phuelsman@bswllc.com.

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