Bill
HB 3264
Illinois offers a 25% tax credit (up to $500 per employee) for employer matching contributions to employees’ ABLE accounts for 2025–2030.
HB3264 – INC TX-ABLE ACCOUNTS: Summary
Overview
- Bill number: HB3264
- Title: INC TX-ABLE ACCOUNTS
- Purpose: Establish a new Illinois income tax credit to incentivize employer matching contributions to employee ABLE accounts (Achieving a Better Life Experience).
- Status: Rule 19(a) / Re-referred to Rules Committee. Introduced February 18, 2025 (handled in February–March 2025 committee actions); listed as Rule 19(a) at least by March 21, 2025.
- Effective date: The act takes effect upon becoming law. Tax credit provisions apply to taxable years ending on or after December 31, 2025 and before January 1, 2031.
What the bill does (key provisions)
- New credit: Adds 35 ILCS 5/246 creating a Credit for Illinois ABLE Contributions.
- Eligible contributions: For taxable years 2025–2030, taxpayers who make a contribution to a specified ABLE account under Section 16.6 of the State Treasurer Act in an amount that matches an employee’s contribution to that same ABLE account are eligible for the credit.
- Credit amount: The credit equals 25% of the employee’s matching contribution, up to a maximum of $500 per contributing employee per taxable year.
- Scope for pass-through entities: Partners and shareholders of subchapter S corporations are eligible for the credit consistent with Section 251 (same treatment as other credits for pass-through entities).
- Limitation on use: The credit cannot be carried back. It cannot reduce tax liability below zero. If the credit exceeds current year tax liability, the excess may be carried forward for up to 5 years (applied to the earliest year with a tax liability; earlier credits are prioritized if multiple credits are available).
- Recordkeeping: Taxpayers claiming the credit must maintain and record information about the matching contribution as required by the Office of the State Treasurer or the Illinois Department of Revenue.
- Related program: ABLE accounts referenced are those established under Section 16.6 of the State Treasurer Act.
Who is affected
- Employers that provide or can provide matching contributions to employees’ ABLE accounts.
- Employees who contribute to ABLE accounts and receive matching contributions from their employers.
- Shareholders/partners in S corporations who receive the credit via Section 251 provisions.
- State Revenue and Treasurer authorities responsible for administration and verification of the matching contributions.
Procedural and timeline notes
- Tax year window: Applies to taxable years ending 12/31/2025 through 12/31/2030.
- Carryforward window: Excess credits usable for up to five subsequent tax years.
- Administration: Requires documentation to satisfy Treasurer/Department information requests.
- Status timeline: Introduced in February 2025; moved through committees (Income Tax Subcommittee, Revenue & Finance Committee; Rule 19(a) action noted).
Impact context
- Policy aim: Encourage private employer contributions to ABLE accounts to support individuals with disabilities, leveraging a tax credit to share the cost of disability-related savings.
- Fiscal impact: Not specified in the summary; the credit reduces Illinois tax revenue by the credited amounts during the eligible years, with potential carryforwards affecting future years.
Compiled from official sources — confirm details with the bill’s official record.
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