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HB 2732

Relating to tax credits for crop donation; prescribing an effective date.

2025 Regular Session Introduced by Court Boice and 9 co-sponsors

Raises Illinois instructional materials tax credit to $500 per semester for eligible educators (900+ hours) starting 2026, easing out-of-pocket costs but reducing state revenue.

In committee upon adjournment.
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Bill Summary · HB 2732

Summary — HB 2732 (Instructional Materials Tax Credit, Illinois)

Note: The packet provided includes two different bills both labeled “HB 2732” (one Arizona bill about homeowner associations and shade structures and one Illinois bill about an income tax credit). This summary focuses on the Illinois bill titled “INC TX‑INSTRUCTIONAL MATERIALS,” which appears to be the primary subject. A brief note about the Arizona provision is provided at the end.

Main purpose

To increase the maximum Illinois income tax credit available to eligible educators for out‑of‑pocket purchases of instructional materials and supplies by changing the cap from a single annual amount to a per‑semester amount—effectively allowing up to $500 per semester beginning with taxable years starting on or after January 1, 2026 (potentially up to $1,000 per calendar year).

Key provisions

  • Amends Section 225 of the Illinois Income Tax Act (35 ILCS 5/225).
  • Eligibility: Taxpayers who are teachers, instructors, counselors, principals, or aides working at least 900 hours during a school year in a “qualified school.”
    • “Qualified school” is defined as a public or non‑public school located in Illinois.
    • “Materials and supplies” are those designated for classroom use.
  • Credit amount:
    • Retains prior tiering: $250 for years before Jan 1, 2023; $500 for taxable years beginning Jan 1, 2023 and before Jan 1, 2026.
    • For taxable years beginning on or after Jan 1, 2026, increases the “maximum credit amount” to $500 for each semester in the taxable year (i.e., $500 per semester).
  • Tax treatment:
    • Credit cannot be carried back.
    • Credit cannot reduce tax liability below zero.
    • Excess credit may be carried forward up to five taxable years following the excess credit year.
    • When multiple years’ credits are available, earlier credits are applied first.
  • Administrative: The provision is exempt from Section 250 (per the bill text).
  • Effective date:
    • The substantive change applies to taxable years beginning on or after January 1, 2026.
    • The act takes effect upon becoming law.

Who is affected

  • Primary beneficiaries: Illinois educators (teachers, instructors, counselors, principals, aides) who spend personal funds on classroom instructional materials and meet the 900‑hour threshold.
  • Secondary effects: School districts and families may benefit indirectly if educators supplement classroom materials more frequently; state revenue will be reduced to the extent the expanded credit is claimed.

Potential fiscal and policy impacts

  • Fiscal: Expanding the allowable credit to $500 per semester could increase state tax expenditures (reduced revenue) depending on uptake. The bill allows carryforward of excess credits, which can delay full revenue effects.
  • Policy: Aims to reduce out‑of‑pocket burdens on educators and encourage replenishment of classroom supplies.

Procedural status (as provided)

  • Introduced in early February 2025 (filed/first reading dates in early February 2025).
  • Referred to Revenue & Finance / Tax Policy subcommittee and later to Rules Committee; status listed as “Rule 19(a) / Re‑referred to Rules Committee.”
  • If enacted, change applies to taxable years beginning on or after Jan 1, 2026 and the act takes effect upon becoming law.

Additional note: The materials also include an unrelated Arizona draft (also labeled HB 2732) proposing a new Section 33‑1816.01 allowing homeowners to install backyard shade structures despite HOA prohibitions. If you want a separate summary of that Arizona proposal, I can provide one.

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

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