The Illinois legislature passed a bill that will make it more difficult for small businesses to file their taxes in Illinois.
The measure, HB 1856, was introduced in the Illinois House on December 4th and was signed into law by Governor Bruce Rauner on December 5th.
The bill has been praised by business owners as it would create a “dynamic rate” that will force businesses to increase their taxes by a set percentage.
The new bill does not create any new tax, but it does add new levies to the already existing tax.
In other words, the new bill allows businesses to deduct the cost of the new taxes they are imposing.
The Illinois Department of Revenue will continue to impose new taxes on businesses that are already subject to existing levies.
However, this new bill also requires that businesses that have already paid new taxes to the state be reimbursed for those taxes, which can be a burden for small business owners.
The House bill would increase the maximum effective rate of the current Illinois business tax from 5.25% to 7.5% and impose a new surtax of 0.3% on businesses making less than $1 million.
This new surcharge would add $0.25 to each of the next three years of business income, totaling an estimated $9.8 billion in additional taxes over the next two years.
The proposed tax increases are expected to add nearly $1 billion to the Illinois economy in the first two years of implementation.
As a result, the Illinois Chamber of Commerce estimates that businesses with annual revenue of more than $2 million will pay an additional $1,000 in new taxes.
In addition, small businesses will see their effective state and local tax rates increase by 0.2 percentage points for each additional $5,000 they make in state income tax revenue.
The legislation would also make it illegal for an Illinois resident to “sell, exchange, or offer for sale, directly or indirectly, any goods or services or property to or from a business entity that is not a resident of Illinois.”
The proposed law also mandates that a “business entity” must have a “residential principal place of business” in Illinois and would allow a small business owner to claim a deduction of up to $10,000 for sales taxes paid in Illinois to a business that does not have a home business in Illinois, but does have a physical office in Illinois that is located in Illinois or the U.S. The Department of Finance is currently reviewing the proposed bill.
It is not clear if the new bills changes to the existing business tax will be approved by the General Assembly.
If the bill does pass the General Chamber of Representatives, it will be placed on the November ballot.
If it is not passed, the bill will need to go to Governor Rauners desk before he can sign it into law.
A new bill, HB1857, is also currently in the Senate, which could also impact small businesses in Illinois in the near future.
The General Assembly could also be considering additional levies that would potentially be passed during the legislative session.
One of these levies is a new “federal income tax.”
Under the new law, an individual earning less than about $250,000 per year would pay a federal income tax of 1.25%.
An individual earning $250-500,000 would pay 2.75%.
A family earning $500,001-750,000,000 or more would pay 3.5%.
The proposed new levys will be added to the new income tax in the 2018-19 tax year, which would be filed with the Illinois Secretary of State on October 31st.
The 2017-18 tax year was also a year of economic growth in Illinois due to the recovery from the Great Recession.
However and unlike the 2018 bill, the 2017-2018 levys were not included in the bill that passed the General Senate.
Instead, the General House passed a different bill with the same levies, which also failed to make it to the Governor’s desk.
The bills passed the House and were signed into Law on December 8th.