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HB 3621

INC TX-OPPORTUNITY ZONES

104th Regular Session Introduced by Justin Slaughter

Illinois offers a state tax credit equal to QOF investment to spur private investment in Opportunity Zones, with up to $10,000 per taxpayer annually.

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 3621

Summary of HB 3621 (Illinois)

Overview

HB 3621, introduced by Rep. Justin Slaughter, adds a new Illinois income tax credit designed to encourage investment in Qualified Opportunity Funds (QOFs) established under Section 1400Z-2 of the Internal Revenue Code. The bill creates a state-level credit equal to the taxpayer’s investment in a QOF, with specific applicability, timing, limits, and transferability rules. The credit is intended to operate alongside federal QOF incentives and is exempt from the state’s automatic sunset provision. The bill is currently in Rule 19(a) / Re-referred to Rules Committee after prior committee steps.

  • Status: Rule 19(a) / Re-referred to Rules Committee
  • Introduced: March 3, 2025
  • Primary Sponsor: Rep. Justin Slaughter
  • Related companion: SB 1820
  • Administering agency: Illinois Department of Commerce and Economic Opportunity (DCEO)

Purpose and Intent

  • To stimulate private investment in economically distressed areas through Qualified Opportunity Funds.
  • To provide a state-level tax incentive that complements federal QOF benefits, aiming to spur job creation, development, and economic activity within Opportunity Zones located in Illinois.

Key Provisions and Changes

  • New Tax Credit: Adds 35 ILCS 5/235 (Qualified Opportunity Fund credit).

    • Credit amount: Equal to the taxpayer’s investment in a Qualified Opportunity Fund in the taxable year.
    • Eligible investments: Investments in QOFs established under IRC 1400Z-2.
    • Start date: Credit may be claimed for investments made on or after the QOF’s creation; no credit for taxable years beginning before January 1, 2025.
    • Credit limit per year: $10,000 per taxpayer per calendar year.
    • Tax liability cap: The credit cannot exceed the taxpayer’s Illinois income tax liability for the year.
    • Carryforward/Carryback: Amounts in excess of the year’s tax liability may be carried forward for up to 5 years or carried back for up to 3 preceding years. Credits are applied to the earliest year with tax liability.
    • Transferability: A credit may be transferred within one year after the credit is awarded, subject to rules adopted by the Department.
    • Allocation order: If multiple credits are available, earlier-year credits are used first.
    • Pass-through treatment: For partnerships, LLCs, S-corporations, etc., the credit is allocated according to standard income allocation rules (Sections 702/704 and Subchapter S).

  • Administration: The Department of Commerce and Economic Opportunity administers the credit and establishes transfer rules.

  • Sunset/Expiration: The credit is exempt from the state’s automatic sunset provision (i.e., it does not automatically expire under existing sunset rules).

  • Effective Date: The act takes effect upon becoming law.

Affected Parties

  • Taxpayers who invest in Qualified Opportunity Funds (corporations, partnerships/LLCs, and natural persons).
  • Investors with Illinois tax liability who may benefit from an Illinois tax credit tied to QOF investments.
  • Pass-through entities (partnerships, S-corporations) receive credit allocations per standard rules.
  • Qualified Opportunity Funds and their sponsors/issuers enabling Illinois credit eligibility.

Procedural and Timeline Highlights

  • Initial filing and first readings occurred in February 2025.
  • Referred to various committees (Income Tax Subcommittee; Revenue & Finance; Trade, Workforce & Economic Development) with action in March 2025.
  • Public hearings and committee activity occurred on April 23, 2025, where the bill remained pending in committee at the time of the latest actions.
  • Status indicates ongoing committee consideration; no final passage as of the latest update.

Potential Impacts and Considerations

  • Economic Impact: Could increase private investment into Illinois Opportunity Zones, potentially spurring development and job creation.
  • Fiscal Impact: Establishes a capped credit (up to $10,000 per taxpayer annually), with carryback/forward provisions that shift tax liabilities across years; the net fiscal effect would depend on taxpayer uptake and QOF activity.
  • Administrative: Requires implementing regulations by the DCEO for transfers and compliance; coordination with federal QOF rules.
  • Equity and Design: The per-taxpayer cap and carryforward rules are designed to manage cost to the state while encouraging multi-year investment activity.

Related Legislation

  • Companion bill: SB 1820 (Senate)

This summary reflects the introduced text and current legislative actions as of the latest available records.

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

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