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SB 3425

INC TX-STANDARD EXEMPTION

104th Regular Session Introduced by Darby Hills and 1 co-sponsor

Illinois raises the 65+ additional standard exemption to $2,000 (from $1,000) for 2026 and beyond for individual or joint filers.

Added as Co-Sponsor Sen. Darby A. Hills
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WeVote Research Nonpartisan
Bill Summary · SB 3425

Summary of SB 3425 (104th General Assembly, Illinois)

Purpose and intent

  • SB 3425 proposes to modify Illinois’ personal income tax standard exemption for tax years beginning on or after January 1, 2026.
  • The core change is to increase the additional standard exemption for taxpayers who are age 65 or older (and for their spouses) from $1,000 to $2,000. The bill makes the higher exemption effectively permanent starting in 2026, with immediate effect upon law.

Key provisions and changes

  • Amends 35 ILCS 5/204 (Standard exemption) to adjust the additional exemption for age 65+:
    • Taxpayers aged 65 or older: An additional exemption increases from $1,000 (pre-2026) to $2,000 for taxable years beginning on or after January 1, 2026. For taxable years before 2026, the exemption remains $1,000.
    • Spouse in a joint return (where applicable): If the spouse is 65+ and the taxpayer files a joint return, the same $2,000 additional exemption applies to the spouse beginning 2026; prior to 2026 the amount is $1,000.
  • Other existing components of the standard exemption continue:
    • Basic amount: Sets a baseline exemption amount (historically around $1,000, with periodic adjustments and specific historical values shown in the statute). The basic amount treatment remains, including corporations’ treatment and dependency-related rules.
    • Blindness exemption: An additional $1,000 exemption for the taxpayer and for the spouse (if applicable and meeting conditions) who are blind, with the spouse rules and definition of blindness as outlined.
    • Cost-of-living adjustment (COLA): The statute retains COLA provisions for the basic/exemption amounts, including how COLA is calculated and rounded.
  • Income threshold for exemptions: The bill does not change the existing cap that, for tax years beginning after 2017, no exemption may be claimed if adjusted gross income exceeds $500,000 for joint filers or $250,000 for all other taxpayers.
  • Effective date: The act takes effect immediately upon becoming law, with the change to the 65+ additional exemption applicable to taxable years beginning on or after January 1, 2026.

Who is affected

  • Individual taxpayers who are 65 or older (and their spouses, on joint returns) will see a larger additional exemption under the Illinois income tax, increasing the benefit by $1,000 in 2026 and beyond.
  • Blind taxpayers and their spouses retain the separate $1,000 blindness exemption, subject to the same eligibility criteria.
  • Taxpayers subject to the existing income cap on exemptions due to AGI thresholds remain governed by those limits.

Procedural and timeline notes

  • The bill is introduced for the 2025-2026 session and would become law upon enactment and publication.
  • For the 2026 tax year, the key change—raising the 65+ additional exemption to $2,000—becomes effective.
  • The bill’s analysis and fiscal impact would typically consider increased exemptions against state revenue, taking into account COLA adjustments and AGI cap interactions.

If you’d like, I can provide a side-by-side comparison of 2025 vs. 2026 exemption amounts or a fiscal impact note based on assumed take-up.

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

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