Legislative Update – Economic Recovery and Budget Reform


As financial advisors, we like to keep our clients and friends informed of timely accounting and tax information that may affect their financial situation. To that end, we want to make you aware of the new State Senate Bill 2505 - Economic Recovery and Budget Reform. The Bill includes both temporary and permanent increases in Illinois' corporate and individual income taxes. Below are key points of the new legislation:

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Our Business Matters newsletter is comprised of important and informative articles related to businesses, entrepreneurs and individuals. The articles cover a broad range of topics from retirement to new accounting laws and regulations. Each newsletter is sent by email every eight weeks.
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  • Illinois Personal Income Tax rate is increased from 3% to 5% between January 1, 2011 and December 31, 2014
  • Corporate Income Tax rate is increased from the current 7.3% rate to 9.5% starting January 1, 2011 through December 31, 2014
  • Net Operating Loss absorption was suspended (except for S-corporations) for tax years ending after December 31, 2010 and prior to December 31, 2014
  • Property tax rebate program that was included in the original bill was eliminated in the final bill and the elimination produced the reduction in the out year tax rates
  • State spending limitation and tax reduction
  • Local Government Distributive Fund (LGDF) - Currently 10% of the collections under the Illinois Income Tax Act are deposited in the LGDF for distribution to counties and municipalities based on their proportionate share of the state's population. They will not share in collections from the additional taxes that are imposed under this act
  • Illinois Estate and Generation-Skipping Transfer Tax Act has been reinstated for deaths occurring after December 31, 2010
For more information about the new legislation, please visit the following websites.
If you have any questions about the state income tax increase, please contact Rice Sullivan + Co.'s tax professionals at 618-233-0186.