Insurance; Insurance Act of 2025; effective date.

2025 Regular Session Introduced by Brian Hill

Illinois cuts taxes: top individual rate from 4.95% to 3.75% and corporate rate from 7% to 6% for 2026 onward, with transitional rules for overlapping years.

Second Reading referred to Rules

Summary — HB 2608 (Illinois) — “INC TX — Reduce Individual Rate”

Status and sponsor
- Bill: HB 2608
- Primary sponsor: Rep. Adam M. Niemerg
- Filed/Introduced: February 2025 (filed early February; first reading recorded 2/6/2025 in the document)
- Current status (per provided bill header): Referred to Rules Committee

Purpose
- To lower Illinois income tax rates by amending Section 201 of the Illinois Income Tax Act (35 ILCS 5/201). The stated goal is a permanent reduction in the statutory tax rates for individuals, trusts, estates (and, per the synopsis, certain pass‑through entities) and for corporations.

Key provisions and statutory changes
- Individuals / trusts / estates: reduces the top statutory rate from 4.95% to 3.75%. The bill inserts transitional subsections and specifies that for taxable years beginning on or after January 1, 2026 the applicable rate is 3.75% (with transitional calculations for tax years that span the changeover).
- Corporations: reduces the corporate income tax rate from 7% to 6% for taxable years beginning on or after January 1, 2026 (again with transitional language for periods that overlap the change).
- The bill amends the rate schedule in 35 ILCS 5/201, preserving earlier historical brackets and adding the new rates for the post‑2025 period.
- The bill text contains transitional subsections that compute tax for tax years spanning December 31, 2025 (i.e., prorating the portions of income attributable to pre‑ and post‑change periods).

Effective date
- The statutory rate changes in the text take effect for taxable years beginning on or after January 1, 2026 (with transitional provisions for tax years that begin before 1/1/2026 and end after 12/31/2025). A brief synopsis line in the packet also reads “Effective immediately,” but the statute’s rate table clearly sets application to taxable years beginning on or after 1/1/2026.

Who is affected
- Illinois resident and nonresident taxpayers subject to Illinois individual income tax (including trusts and estates). The synopsis mentions “certain pass‑through entities” (pass‑through income is typically taxed at owner level under state law), so owners of partnerships, S corporations, and similar pass‑through entities would benefit through lower individual rates. All corporations subject to Illinois corporate income tax would be affected by the corporate rate cut.

Likely impacts and considerations
- Revenue: the rate cuts would reduce state income tax receipts beginning in tax year 2026; the document does not include a fiscal estimate. The magnitude of the revenue loss would depend on taxable income growth and behavioral responses.
- Budget & policy: lower revenue could affect funds available for programs unless offset by spending cuts, other revenue increases, or one‑time balances.
- Taxpayers: generally lowers tax liability for affected individuals, estates, trusts, and corporations beginning in 2026 (or prorated in overlapping tax years).

Document note
- The provided document also contains extraneous text from a different HB 2608 (Arizona) about public‑officer photographs. That Arizona language appears unrelated to the Illinois income‑tax amendment and should be treated as misplaced content.