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SB 3853

INC TX-MINIMUM WAGE

104th Regular Session Introduced by John Curran

The bill makes a minimum-wage withholding credit permanent for Illinois employers, extending and stabilizing a credit that reduces withholding per eligible employee.

Rule 3-9(a) / Re-referred to Assignments
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Bill Summary · SB 3853

Summary of SB 3853 (Illinois, 104th General Assembly)

Purpose and Intent

SB 3853 proposes making permanent a withholding credit tied to the minimum wage. The current structure provides a minimum-wage-based credit that sunsets for certain employer sizes (end of 2026 for employers with 5–50 employees; end of 2027 for employers with 5 or fewer) but this bill would extend and permanentize the credit. The measure is effective immediately upon becoming law.

Key Provisions and Changes

  • Withholding Credit Basis: The bill amends the Illinois Income Tax Act (35 ILCS 5/704A) to establish a permanent withholding credit based on an employer’s minimum wage-related compensation. The credit is designed to offset some Illinois tax withholding obligations.

  • Credit Structure and Eligibility:

    • The credit is specifically targeted at employers that withhold Illinois income tax from employees.
    • A notable provision is the annual/quarterly limitation tied to the employer’s tax withholding liability; the credit cannot reduce the employer’s payments below zero.
    • The credit is available to various programs and credits already existing in Illinois tax law, with several cross-references to other acts (Economic Development for a Growing Economy Tax Credit Act, REV Illinois Act, MICRO Act, Live Theater Production Tax Credit Act, Local Journalism Sustainability Act).

  • Temporary Credits Extended/Made Permanent (Inevitably implied by text):

    • The existing sunset provisions for the minimum-wage credit (2026 for larger small employers and 2027 for very small employers) are replaced by a permanent credit structure, per the introductory language.

  • Credit Amounts and Phases (Subdivision (i)):

    • Employers with 50 or fewer full-time equivalent employees may claim a credit for each qualified employee. The credit amount per reporting period equals the maximum allowable credit under the statute, subject to the employee’s tenure (no credit for employees who were not employed for 90 consecutive days prior to the period; accrual allowed for those 90 days).
    • The maximum credit percentages by year are tiered, decreasing from 25% in 2020 to 5% by 2025, with continued eligibility for subsequent periods depending on employer size (more than 5 vs. 5 or fewer employees).

  • Qualifying Employee and Wage Measures:

    • A “qualified employee” is paid at or below the required minimum wage and has an average wage per hour during the reporting period that meets or exceeds their average wage in the preceding 12 months.
    • Aggregation rules apply for employers operating multiple establishments or within a unitary group.

  • Interplay with Other Credits and Provisions:

    • The bill contains several "subsections" (g, g-1, g-2, i, j, k, l) addressing credits against withholding for various economic development programs, organ donation leave, nonprofit theater credits, local journalism incentives, and manufacturing-related credits (MICRO Act). Each subsection maintains rules about carryforward of any excess credits, order of application, and documentation requirements.

  • Administrative Details:

    • Provisions reference electronic filing and reporting requirements, with possible department-by-rule implementations for administration, timing, and depository designations.

Who Is Affected

  • Employers with Illinois tax withholding obligations: Particularly those with up to 50 full-time equivalent employees, though the provisions impact broader withholding credit interactions.
  • Employees: Those who are paid at or near the minimum wage, and whose wage patterns influence the credit calculations.
  • Businesses participating in related economic development or sector-specific credits: Live Theater, Local Journalism, MICRO Act, organ donation leave, and other credits may interact with the withholding credit through carryforwards and application order.

Procedural and Timeline Aspects

  • Effective Date: Immediate upon becoming law.
  • Reporting Periods: Credits apply to quarterly reporting periods; specific timing for the transition to permanent status is embedded in the bill’s structure.
  • Administration: Department of Revenue authority to adopt rules for compliance, electronic filing, and administration.

Overall, SB 3853 aims to stabilize and extend a minimum-wage–based withholding credit, ensuring it remains available permanently while coordinating with other tax credits and employer obligations.

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

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