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HB 3474

INC TX-COVER CROPS

104th Regular Session Introduced by Murri Briel

Illinois offers a nonrefundable personal income tax credit to individuals who plant cover crops, equal to their planting costs, effective 2026 with a 5-year carryforward.

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 3474

Summary — HB 3474 (INC TX‑COVER CROPS)

Status: Enacted — Signed by Governor 5/29/2025; effective 9/1/2025.
Introduced: Rep. Amy Briel (2/18/2025). Adds Section 246 to the Illinois Income Tax Act (35 ILCS 5/246).

Purpose

To encourage the planting of cover crops in Illinois by creating an individual income tax credit equal to the taxpayer’s costs of planting cover crops, thereby promoting soil conservation and related environmental benefits.

Key provisions

  • Credit created: For taxable years beginning on or after January 1, 2026, individual taxpayers who plant cover crops at an Illinois location are entitled to a credit against the individual income tax (subsections (a) and (b) of Section 201).
  • Amount: Credit equals the cost incurred by the taxpayer in planting those cover crops (no per-acre or per-taxpayer cap specified in the text).
  • Carryforward and nonrefundable: The credit cannot reduce tax liability below zero. Excess credit may be carried forward up to 5 taxable years following the excess year. Credits are applied to the earliest taxable year with liability; older credits are applied first.
  • Definition: “Cover crop” means a plant planted to cover the soil rather than to be harvested — examples listed include grasses, legumes, and wheat.
  • Statutory placement: New Section 246 of the Illinois Income Tax Act (35 ILCS 5/246).

Who is affected

  • Primary beneficiaries: Individual taxpayers (natural persons) who plant cover crops on land in Illinois — includes farmers, landowners, and possibly tenants who incur planting costs and can claim the credit.
  • Not covered explicitly: Corporations, partnerships, or other non‑individual entities are not included under the bill’s language as written.
  • State government: Potential reduction in individual income tax receipts (fiscal impact depends on uptake and aggregate planting costs).

Implementation and timeline

  • Enactment: Passed both chambers in May 2025, sent to and signed by the Governor on 5/29/2025.
  • Effective date of the Act: 9/1/2025.
  • Credit applicability: Applies to taxable years beginning on or after 1/1/2026 (first tax year able to claim the credit).
  • Administration: The Department of Revenue would administer the credit; the statute does not specify documentation requirements or verification procedures — guidance or rulemaking may be needed for claims and cost substantiation.

Notes and considerations

  • The bill does not set a maximum credit per taxpayer, per acre, or overall program cap, nor does it specify eligible cost categories (seed, labor, equipment, custom rates), leaving those details to administrative guidance or future amendment.
  • Environmental and farm‑economic benefits are likely motives; fiscal impact depends on program uptake and average planting costs claimed.

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

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