Relating to vacancies in offices of state officials

2025 Regular Session Introduced by J.B. Akers and 2 co-sponsors

Illinois makes the pass-through entity level tax election permanent, removing the sunset and allowing it for tax years on or after Jan 1, 2026.

To Judiciary

Summary — HB 2702 (Pass‑Through Entity Tax provision)

Note: the document you provided contains text for two different measures both labeled “HB 2702” (an Arizona bill about the Arizona Criminal Justice Commission and an Illinois bill amending the Illinois Income Tax Act). This summary focuses on the Illinois provision matching the title you gave (“INC TX‑PASS‑THROUGH ENTITIES”) — an amendment to the Illinois Income Tax Act (35 ILCS 5/201) that removes a sunset on a pass‑through entity (PTE) election. I also note the presence of the unrelated Arizona bill below.

Purpose

Make the Illinois “entity‑level tax” election for pass‑through entities permanent by removing language that limited the election to tax years beginning before January 1, 2026. The stated effect is to continue allowing partnerships, S corporations and other PTEs to elect to pay tax at the entity level beyond the previously scheduled expiration.

Key provisions

Amends Section 201 of the Illinois Income Tax Act (35 ILCS 5/201).

Removes the provision that limited the PTE‑level election to tax years beginning prior to January 1, 2026.

Makes the election available for tax years beginning on or after January 1, 2026 (i.e., removes the sunset).

Effective immediately (per the bill text).

Who is affected

Pass‑through entities (partnerships, S corporations, LLCs taxed as partnerships/S corps) that make the Illinois PTE election.

Owners of PTEs (individuals, trusts, estates) who previously received a credit for entity‑level tax or were otherwise impacted by the PTE election.

Illinois Department of Revenue (administration, forms, guidance).

State fiscal planners and budget office (potentially impacted revenues).

Potential impacts

Tax filing choice continuity: PTEs and their owners gain certainty that the PTE‑level election remains available after 2025, removing a previously scheduled expiration.

Revenue effects: making the election permanent can alter timing and amount of state income tax receipts (entity‑level payments vs. individual owner payments). Net impact depends on uptake and interactions with credits/deductions; a fiscal note would quantify expected revenue changes.

Compliance and administration: Illinois Department of Revenue may need to update permanent forms, guidance, and audit procedures.

Procedural / timeline notes

Statutory cite changed: 35 ILCS 5/201.

Bill text states “Effective immediately.”

Status reported in the materials: Rule 19(a) / Re‑referred to Rules Committee (dates in package show referral and committee activity). The provided file includes introduction dates (early February 2025) and subsequent committee assignments; consult your legislature’s bill tracker for current status and votes.

Other note

The package also contains an unrelated Arizona draft (also numbered HB 2702) that would terminate/continue the Arizona Criminal Justice Commission. That is a separate measure and not part of the Illinois PTE tax change summarized above. If you want a separate summary of the Arizona text, I can provide one.