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HB 2897

INC TX-INCREASE LGDF

104th Regular Session Introduced by Matt Hanson

The bill directs 10% of net Illinois income tax receipts to the Local Government Distributive Fund as revenue is realized, boosting local funding.

Referred to Rules Committee
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WeVote Research Nonpartisan
Bill Summary · HB 2897

Summary — HB 2897 (Illinois) — "INC TX — INCREASE LGDF"

Status: Introduced (House), referred to Rules Committee
Introduced: February 6, 2025
Sponsor: Rep. Matt Hanson

Note: The materials provided also include an unrelated Arizona bill (also numbered HB 2897) about braille literacy. This summary covers the Illinois measure titled INC TX‑INCREASE LGDF.

Purpose / Intent

The bill amends the Illinois Income Tax Act (35 ILCS 5/901) to increase and formalize the amount of income tax revenue deposited into the Local Government Distributive Fund (LGDF). Beginning in mid‑2025, the Department of Revenue would deposit a fixed share — 10% of certain net income tax receipts — directly into the LGDF as those revenues are realized.

Key provisions

  • Amends Section 901 (Collection authority) of the Illinois Income Tax Act.
  • Beginning July 1, 2025, the Department of Revenue shall deposit 10% of the net revenue realized from the income taxes imposed under the Act (specifically taxes under subsections (a), (b), and (p) of Section 201) directly into the Local Government Distributive Fund as the revenue is realized.
    • Subsections referenced generally cover individual, corporate, and electing pass‑through entity income taxes.
  • Defines "net revenue realized for a month" as the revenue from the referenced taxes deposited into designated funds (General Revenue Fund, Education Assistance Fund, Income Tax Surcharge Local Government Distributive Fund, Fund for the Advancement of Education, Commitment to Human Services Fund) during the month minus refunds (State warrants) paid from the General Revenue Fund that same month.
  • Reaffirms the practice begun in 2017 of directly depositing the LGDF share as revenue is realized (rather than transferring later from the General Revenue Fund).
  • The bill updates previous, phased percentage transfer provisions (which covered 2017–2025) by setting the ongoing 10% deposit starting July 1, 2025.

Who is affected

  • Local governments (municipalities, counties, other LGDF beneficiaries): stand to receive a larger, steady share of income tax receipts (10% of specified net revenues).
  • State General Revenue Fund and other state funds: would receive correspondingly less of those income tax receipts because 10% would be routed directly to the LGDF.
  • Taxpayers: no change to tax rates in this bill; impacts are fiscal allocation/transferary rather than taxpayer obligations.
  • State budget planners and programs funded from General Revenue may experience reduced receipts, potentially affecting state spending priorities.

Fiscal and procedural notes

  • The bill changes how and when revenue is allocated (direct deposit as realized), which can improve cash flow predictability for local governments but reduces fungibility of state General Revenue.
  • No dollar amounts or official revenue estimates are included in the text; actual fiscal impact depends on total income tax receipts and refund activity.
  • Legislative status: introduced Feb 6, 2025 and referred to Rules Committee.

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

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