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SB 3692

EDGE-AMOUNT OF CREDIT

104th Regular Session Introduced by Dave Koehler

The bill adds a 100% withholding-offset tax credit for certain steel recycling/melting and steel wire/rod manufacturers.

Senate Committee Amendment No. 1 Rule 3-9(a) / Re-referred to Assignments
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Bill Summary · SB 3692

Legislative Summary — SB 3692 (104th General Assembly, Illinois)

Title: EDGE-AMOUNT OF CREDIT

Jurisdiction: Illinois

Primary Sponsor: Sen. David Koehler

Date Introduced: February 5, 2026

Subject: Amends the Economic Development for a Growing Economy Tax Credit Act (35 ILCS 10/5-15)

intent of the bill:
- The bill expands and, in one key provision, flatly increases the value of a specific tax credit awarded under the Act for certain qualifying taxpayers. Specifically, it authorizes a 100% credit against withholding for a designated subset of businesses involved in steel recycling/melting and steel wire/rod manufacturing, and it preserves broader statutory framework for eligibility, awards, and use of credits.

Key provisions and changes

1) New withholding-based credit for specific steel-recycling/melting and steel-wire/rod manufacturers
- The bill provides that the credit awarded to taxpayers primarily engaged in:
- Recycling and melting of steel products, and
- Manufacturing of new steel wire and rod products
shall be 100% of the amount of withholding.
- This is a significant expansion of the utility of the credit, shifting the incentive to a complete offset of withholding tax for these qualifying entities.

2) Ongoing framework of the Economic Development for a Growing Economy Tax Credit Act (35 ILCS 10/5-15) preserved and clarified
- The Act continues to operate with:
- Eligibility: Taxpayers must be awarded a Credit by the Department to support job creation/retention in Illinois.
- Agreement requirement: Taxpayers seeking the credit must enter into an Agreement with the Department.
- Timing: Credits are claimed for the taxable years specified in the Agreement.
- Cap: The credit cannot exceed the incremental Illinois income tax attributable to the project.

3) Withholding election option (subsection (f))
- The Act already provides, in certain prior-year contexts, an election to claim credits against withholding (instead of against income tax) for eligible taxpayers.
- The bill reiterates and clarifies the possibility of electing to claim the credit against withholding for certain pre-2015 agreements (and related amendments), subject to multiple detailed criteria (subparagraphs (1) through (1.10)) that apply to various historic qualification scenarios tied to:
- Specific industries (e.g., water purification, automobile manufacturing, etc.)
- Historical qualification requirements (e.g., 2009-2011-era criteria)
- Job creation/retention thresholds
- Capital investment thresholds
- Timing for applying for Agreements and other compliance criteria
- The election to claim against withholdings is irrevocable once made, and if elected, the Agreement terms may not be amended for the duration of the Agreement.

4) Additional subparagraphs under (f) providing alternative elections
- The bill includes several enumerated scenarios (1.5 through 1.10) that extend or adapt withholding-election eligibility to specific historic agreements or targeted industries, including:
- Inner tubes/tires (1.5)
- Discount department stores and related criteria (1.6)
- Earlier-start agreements with specific job/capital thresholds (1.7, 1.9)
- Startup taxpayers (1.8)
- Recycling/steel manufacturing special eligibility (1.10) with 15-year credit duration and 100% withholding-offset cap

5) Pass-through entities (section (g))
- Pass-through entities awarded credits, or their shareholders/partners, may treat all or part of the credit as a tax payment for Illinois income tax purposes (as described in Article 6 or Article 8 and composite payments), with the rule that the credit cannot exceed the pass-through entity’s or its owners’ Illinois tax liability for the taxable year.

Procedural and timeline aspects

  • Effective date: Not stated explicitly in the excerpt; the bill references existing provisions and amendments already in the Act. Certain subparagraphs (1.5)-(1.10) pertain to historic agreements and applications tied to specific dates (e.g., 2009-2012 windows), indicating ongoing interaction with prior Act provisions.
  • Rulemaking/implementation: The Department of Revenue remains the administering agency for award and election processes; the form and manner of the election are set by the Department.
  • Irrevocability: Once an election to apply the credit against withholding is made under subsection (f), the agreement terms may not be amended during the term of the agreement.

Potential impact

  • For qualifying steel recycling/melting and steel wire/rod manufacturers, the bill offers a 100% withholding-offset credit, which could meaningfully reduce payroll withholding tax obligations and improve cash flow.
  • The broader withholding-election provisions (with various historical criteria) provide additional flexibility for established, large- scale manufacturing/retail entities to secure credits in a manner aligned with their past agreements.
  • Pass-through entities can leverage credits against tax payments to members, aligning incentive effects with owners’ tax liabilities.

Note: This summary focuses on substantive changes and context, not on the entire legal framework of the Act. For precise eligibility, application procedures, and interaction with other tax provisions, consult the bill text and related Department of Revenue regulations.

Compiled from official sources — confirm details with the bill’s official record.

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