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SB 3785

INC TX-CHILD CARE

104th Regular Session Introduced by Darby Hills and 3 co-sponsors

Starting 2027, the bill boosts Illinois corporate tax credits to 50% of start-up costs and 20% of annual child care payments to encourage employer-provided child care.

Added as Co-Sponsor Sen. Dave Syverson
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Bill Summary · SB 3785

Summary of Bill SB3785 (Illinois, 104th General Assembly)

Purpose and intent

SB3785 proposes to modify the Illinois Income Tax Act to reform the existing “tax credit for employee child care.” Beginning with tax years ending after December 31, 2026, the bill increases the credit available to corporate taxpayers for providing child care facilities for their employees. The overall goal is to encourage employers to establish or expand on-site or affiliated child care, with a larger incentive than currently exists.

Key provisions and changes

  • Current framework (pre-2027): The credit for employee child care is currently 30% of start-up costs plus 5% of annual ongoing costs, with various historical adjustments over time (e.g., 30%/5% structure in earlier periods, later reductions to 25%/3–5% ranges, etc.). The credits are limited to Illinois-established child care facilities for employees’ children and can be used in coordination with joint ventures or independent facilities. The law allows carryforward of unused credits and requires recordkeeping.

  • New framework starting 2027: For tax years ending on or after December 31, 2026, the credit changes to:

    • 50% of the start-up costs incurred by the corporate taxpayer to provide a child care facility for its employees.
    • 20% of the annual amount paid by the corporate taxpayer for child care, which may cover:
    • On-site facilities (employee children),
    • Off-site facilities (employee children),
    • A combination of on-site and off-site care.
    • The bill explicitly notes coordination with independent child care facilities continues to be permissible.

  • Coordination and scope: The corporate taxpayer may independently operate a facility, form a partnership with other corporations to operate a facility, or coordinate with an independent facility to provide care.

  • Effective date and transitional note: The act is effective immediately upon becoming law, with the revised 2027+ credit structure applying to eligible years. The bill also states that it is not intended to change substantive provisions for taxable years ending before December 31, 2026.

  • Administration and compliance: As with existing credits, the bill requires taxpayers seeking the credit to maintain required records and information as the Department may regulate.

Who is affected

  • Corporate taxpayers in Illinois: Eligible to claim the employee child care credit against the corporate income tax for providing child care facilities or services for employees’ children.
  • Employees and their children: Benefit indirectly through greater access to employer-provided child care.
  • Child care providers: May see increased demand if more employers establish on-site facilities or partner with providers.

Procedural and timeline aspects

  • Eligibility period shift: The enhanced credit (50% start-up; 20% annual) applies to tax years ending on or after December 31, 2026.
  • Carryforward rules: As with other credits, any credit in excess of tax liability can be carried forward to future years (the earliest available tax liability year is prioritized).
  • Recordkeeping: Taxpayers must maintain documentation as required by the Department.

Overall takeaway

SB3785 significantly boosts the financial incentive for Illinois corporate taxpayers to create or partner for employee child care facilities starting in 2027, increasing both upfront (start-up) and ongoing (annual) credit percentages from the current framework. The policy aims to expand access to affordable child care for employees and potentially stimulate investments in employer-based or affiliated child care solutions.

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

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