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HB 3236

INC TAX-MANUFACTURING

104th Regular Session Introduced by Regan Deering

Illinois tax credit for manufacturing capital expenditures provides 10% credit (15% in rural/economically challenged areas) with per-taxpayer caps up to 10M (20M in challenged area

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 3236

Summary of HB 3236 (Illinois)

Overview

HB 3236 aims to create an Illinois income tax credit to encourage manufacturing capital investments. The credit applies to taxable years beginning on or after January 1, 2025 and before January 1, 2036. It is related to manufacturing activities and is intended to stimulate investment, with enhanced benefits for investments in rural or economically challenged areas.

Key Provisions

  • Credit amount: A credit against Illinois income tax equal to:
    • 10% of manufacturing capital expenditures incurred during the taxable year, or
    • 15% for capital expenditures located in a rural or economically challenged area (as determined by the Department of Commerce and Economic Opportunity).
  • Caps:
    • General cap: The total amount of credits awarded to any single taxpayer in a given tax year cannot exceed $10,000,000.
    • Rural/economically challenged area cap: If the investment is in such an area, the maximum credit per taxpayer per year is $20,000,000.
  • Eligibility: Taxpayers engaged in manufacturing (classified under Standard Industrial Classification codes 31-33) are eligible for the credit.
  • Interaction with other credits: A taxpayer may not claim this credit for a capital expenditure if it also claims a manufacturing or other investment credit for the same expenditure under another provision of law.
  • Tax liability limit and carryovers:
    • The credit cannot reduce the taxpayer’s Illinois tax liability below zero.
    • The credit may not be carried forward or carried back to other tax years.
  • Effective period: Applies to taxable years beginning on or after January 1, 2025, and beginning before January 1, 2036.
  • Effective date: Takes effect immediately upon becoming law.

Eligibility and Scope

  • Target activity: Manufacturing expenditures in sectors under SIC codes 31-33.
  • Geographic enhancement: Additional generosity (15% rate; higher $20M cap) for investments in rural or economically challenged areas as designated by the DCEO.

Administrative Details

  • Designation source: Rural/economically challenged area status is determined by the Department of Commerce and Economic Opportunity.
  • Prohibition on double-dipping: Expenditures cannot generate overlapping credits under this and other provisions.

Financial/Impact Notes

  • The bill specifies caps per taxpayer but does not provide aggregate statewide fiscal impact within the text provided. The per-year caps and lack of carryover imply a finite but potentially large annual impact depending on manufacturing capital investment levels.

Related Legislation

  • Companion Bill: SB 826.

Legislative Timeline and Status

  • Filed: February 24, 2025
  • First Reading: February 18, 2025
  • Assigned to Committees: Revenue & Finance; Income Tax Subcommittee
  • Subcommittee Action: March 13, 2025; later referred to Rules Committee
  • Current Status: Rule 19(a) / Re-referred to Rules Committee
  • Related actions: Initial readings and standard committee referrals occurred in March 2025.

Potential Impact

  • Encourages capital investments in manufacturing by providing a tax credit, with enhanced incentives for rural/economically challenged areas.
  • Caps ensure credit exposure remains bounded per taxpayer; the lack of carryover means benefits are realized in the year of expenditure to offset tax liability.
  • Could influence investment planning for manufacturers contemplating large capex projects in Illinois during 2025–2035.

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

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