Bill
SB 3710
Illinois makes the R&D credit permanent, allowing ongoing offset against state taxes and carryforwards under existing rules.
Title: INC TX-R AND D CREDIT
Sponsorship: Sen. Doris Turner (co-sponsor)
Purpose
- Permanently extend the Research and Development (R&D) credit under the Illinois Income Tax Act. The bill states the R&D credit applies on a permanent basis and would take effect immediately upon enactment.
Key Provisions
1) R&D Credit (Section 201)
- The R&D credit is made permanent (no sunset).
- The credit is applied against Personal Property Tax Replacement Income Tax (PPRIT) in a manner consistent with the current framework for credits against the Illinois income tax.
- The bill preserves the structure of the credit as a percent of qualifying expenditures (as historically defined in the statute). Details on calculation are embedded in the current statute and follow prior amendments.
2) Interaction with Other Credits and Taxes
- The bill references various existing credits tied to the PPRIT, Enterprise Zones, River Edge Redevelopment Zones, High Impact Businesses, and other programs. The R&D credit remains one of several incentives that reduce a taxpayer’s liability to zero and may be carried forward consistent with the existing carryforward rules (as per the current statute).
3) Other Provisions (context within the statute)
- The comprehensive text of SB3710 largely preserves and references the extensive framework of the Illinois Income Tax Act (35 ILCS 5) with amendments to Section 201.
- The bill does not appear to add new R&D categories or alter the mechanics of the R&D credit beyond making it permanent; it preserves the existing eligibility criteria, calculation methods, caps, carryforwards, and interaction with other credits.
Who Would Be Affected
- Taxpayers who incur qualifying research and development expenditures in Illinois, including:
- Individuals, trusts, estates, and corporations that qualify for the R&D credit against their state income tax.
- Pass-through entities (as applicable) that would pass through the benefit to their partners/shareholders under current rules for Section 251/Section 704 allocations (in line with existing law and recent amendments).
- Businesses engaging in qualified research activities in Illinois, as defined by the federal framework (and the Illinois-specific interpretation of “qualifying expenditures” under Section 41 of the Internal Revenue Code, as reflected in the state's R&D credit provisions).
Effective Date and Procedure
- Effective immediately upon enactment (as stated in the synopsis for the introduced version).
- The act would operate within the ongoing Illinois tax-credit framework, subject to Department of Revenue administration and rules.
Notes on Scope
- The bill’s central thrust is to codify the permanence of the R&D credit, which historically has faced sunsets or periodic renewal. By making it permanent, the state provides ongoing predictability for firms planning R&D investments in Illinois.
Overall Impact
- Reliability and continuity for taxpayers pursuing R&D activities in Illinois.
- Potential long-term budget impact depends on the aggregate utilization of the credit by eligible taxpayers; as a permanent credit, it creates a stable, ongoing asterisk in revenue projections for the state, offset by the resulting tax reductions claimed by eligible taxpayers.
Timeline
- The introduced version indicates immediate effect if enacted; ongoing administration would follow existing Department of Revenue rules and credit carryforward conventions.
Note: This summary reflects the introduced text and the bill’s stated intent to make the R&D credit permanent. For precise numeric parameters (e.g., credit rate, base qualification, caps per year), refer to the current operative sections of 35 ILCS 5 and related amendments as enacted.
Compiled from official sources — confirm details with the bill’s official record.
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