The Taxpayer Accountability and Budget Stabilization Act (the Act) has passed both chambers of the Illinois legislature and has gone to Governor Quinn, who is expected to sign the bill into law. The Act raises Illinois income tax rates for individuals and corporations and limits the State budget over the next four years, all to try to combat the State’s financial shortfalls.
The Act raises personal income tax from 3% to 5%. It will remain at those levels until 2015 when it will fall to 3.75%. On the corporate side, the Act brings the rate from 4.8% to 7%, also until 2015 when it will fall to 5.25%. The Act provides that in 2025 the personal and corporate income tax rates will fall to 3.25% and 4.8% respectively.
The provisions in the Act are effective retroactively to January 1st. For taxable years beginning before January 1st, 2011 and ending after December 31st, 2010, taxes are determined at a rate of 3% prior to January 1st and 5% after. The same split will be in effect for applicable tax years straddling January 1, 2015 and January 1, 2025.
The Act does not include an increased tax on cigarettes, a piece of the original bill, and a property tax relief component has also been removed.
For more information on this or other tax concerns, contact the Illinois tax attorneys at Horowitz & Weinstein.