WeVote
Log In

Bill

Bill

SB 3539

INC TAX-MANUFACTURING

104th Regular Session Introduced by Chapin Rose

Illinois offers a nonrefundable state income tax credit for manufacturing capital expenditures, with higher rates and caps for investments in rural/economically challenged areas.

Rule 3-9(a) / Re-referred to Assignments
0
WeVote Research Nonpartisan
Bill Summary · SB 3539

Summary of SB3539 (104th General Assembly) – Illinois

Purpose and intent

SB3539 creates a new manufacturing capital expenditure tax credit under the Illinois Income Tax Act. The credit is designed to encourage manufacturing investment by offsetting a portion of capital expenditures for taxpayers engaged in manufacturing (NAICS 31-33). The credit is targeted to both general manufacturing activity and investment in rural or economically challenged areas.

Key provisions

  • Tax credit type and scope

    • Establishes a nonrefundable income tax credit against the taxes imposed by Illinois General Assembly taxes for individuals and corporations under Section 201 (corporate and personal income tax components).
    • The credit is specifically for capital expenditures related to manufacturing.

  • Credit rate

    • Standard rate: 10% of eligible manufacturing capital expenditures incurred in the taxable year.
    • Rural/economically challenged area rate: 15% of eligible expenditures. Eligibility for the higher rate is determined by the Department of Commerce and Economic Opportunity.

  • Cap on credits per taxpayer

    • General cap: $10,000,000 maximum credit per taxpayer per taxable year.
    • Higher cap for rural/economically challenged investments: $20,000,000 maximum credit per taxpayer per taxable year when the capital investment is made in such areas.

  • Eligibility and limitations

    • Applies to taxable years beginning on or after January 1, 2026 and ending before January 1, 2036.
    • A taxpayer cannot claim this credit for the same capital expenditure if the taxpayer also claims a credit for the same expenditure under any other provision of law.
    • The credit cannot reduce the taxpayer’s liability to less than zero (nonrefundable).
    • The credit may not be carried forward or backward to other years.

  • Industrial scope

    • Applies to taxpayers engaged in manufacturing, defined by North American Industry Classification System (NAICS) code 31-33.

  • Effective date

    • Takes effect upon becoming law.

Affected entities

  • Primary: Illinois businesses engaged in manufacturing (NAICS 31-33).
  • Additional beneficiaries: Businesses investing in rural or economically challenged areas as designated by the Department of Commerce and Economic Opportunity, due to the higher credit rate and cap.

Procedural and timeline aspects

  • Legislative timeline

    • Introduced February 5, 2026.
    • Referred to the Revenue committee, with subsequent rule deadlines established for committee consideration (as of the action history).
    • Floor deadlines indicate a 3rd reading deadline aimed for May 15, 2026, and a committee deadline of April 24, 2026.

  • Jurisdictional notes

    • Amends the Illinois Income Tax Act (35 ILCS 5/235 new).
    • Effective immediately upon becoming law, but applicable to tax years beginning in 2026 through 2035 inclusive.

Practical impact

  • For manufacturing taxpayers, SB3539 provides a potentially substantial year-by-year credit against state income tax liabilities, especially for investments in rural/economically challenged areas due to the higher rate and larger cap.
  • Businesses must carefully track capital expenditures to ensure eligibility and avoid double-claiming credits for the same expenditure under other provisions.
  • Since the credit is nonrefundable and nontransferable, it benefits taxpayers with sufficient tax liability in the year of investment but does not create a cash refund.

This summary reflects the introduced text and current proposed terms. Final bill language, amendments, or legislative actions could modify these details.

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

Sign in to ask a question.