Bill
HB 3738
The bill creates a new nonrefundable Illinois renter’s credit (up to $1,000 for couples or $500 for individuals) to reduce state tax liability for eligible renters starting in 2026
HB3738: Illinois Renters Credit – Summary
Overview
- Bill: HB3738 (INC TX-RENTER CREDIT)
- Introduced: February 18, 2025 by Rep. Abdelnasser Rashid
- Status: Rule 19(a) / Re-referred to Rules Committee
- Effective date: The act itself takes effect immediately upon becoming law. The renter credit, however, applies to taxable years beginning on or after January 1, 2026.
- Topic: Amends the Illinois Income Tax Act to create a nonrefundable renter’s tax credit for eligible Illinois taxpayers.
Purpose and intent
- The bill creates a new nonrefundable renter credit intended to provide financial relief to qualifying taxpayers who rent a personal residence in Illinois, reducing their state income tax liability for eligible years.
Key provisions
- New credit: Section 235 added to 35 ILCS 5 (Illinois Income Tax Act).
- Eligible taxpayers (qualified taxpayers):
- Paid rent on their personal Illinois residence for at least 6 months during the taxable year.
- Were not claimed as a dependent on another person’s federal tax return for the taxable year.
- Have a federal adjusted gross income (FAGI) below specified thresholds.
- Income thresholds:
- If married filing jointly: FAGI less than $83,250.
- If not married filing jointly (single, head of household, etc.): FAGI less than $40,770.
- Credit amounts:
- Married filing jointly: $1,000 credit for both taxpayers as a single unit (i.e., a combined $1,000 credit for the couple).
- Not married filing jointly: $500 credit.
- Interaction with tax liability:
- The credit cannot reduce tax liability below zero.
- Excess credit amounts may not be refunded (nonrefundable).
- Administration:
- The credit is part of the state income tax liability under Section 235.
- The section is exempt from the provisions of Section 250 (specific administrative/substitution provisions apply, not specified here).
- Effective dates:
- The credit is available for taxable years beginning on or after January 1, 2026.
- The act itself takes effect upon becoming law.
Who is affected
- Illinois residents who rent a personal residence and meet the income and dependents criteria.
- Specifically, renters with FAGI under the listed thresholds who are not claimed as a dependent and who pay rent for at least 6 months in the year.
- Couples filing jointly with combined FAGI under $83,250 are eligible for a $1,000 credit; individuals or other filing statuses with FAGI under $40,770 are eligible for a $500 credit.
- Taxpayers with larger incomes or those who owe no tax or have credits exceeding liability will not receive a refund of any excess.
Procedural history and timeline (highlights)
- Filed: February 18, 2025
- First reading: February 18, 2025
- Referred to Rules Committee: February 18, 2025
- Assigned to Revenue & Finance Committee: March 11, 2025
- To Income Tax Subcommittee: March 13, 2025
- Rule 19(a) / Re-referred to Rules Committee: March 21, 2025
- Read first time: March 26, 2025
- Referred to Public Education: March 26, 2025 (note: committee referral shown as Public Education in the action log, though subject matter is tax policy)
Notes for readers
- The credit is nonrefundable and cannot exceed a taxpayer’s liability.
- The income thresholds are based on federal AGI, not Illinois adjusted gross income.
- The immediate effectiveness of the act contrasts with the effective start of the credit in 2026.
Compiled from official sources — confirm details with the bill’s official record.
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