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IL tax updates

The new Illinois Income Tax Act and revisions to the Retailers’ Occupation Tax means more money out of your pocket.

Beginning January 1, 2017

  • Taxpayers with an AGI* that exceeds $500,000 for married filing jointly returns and $250,000 for all other returns may not claim the following: the personal exemption allowance, the K-12 education expense credit or the Illinois property tax credit.

Effective July 1, 2017

  • The Illinois income tax rates for individuals, trusts and estates increases from 3.75% to 4.95%. Employers must immediately adjust withholding tax rates to reflect the new income tax rate.
  • Illinois income tax rate is increased from 5.25% to 7.00% for corporations (excluding S-Corporations).
  • For sales and use tax purposes, the manufacturing and assembling machinery as well as equipment exemption is expanded to include graphic arts machinery and equipment.
  • The 20% exemption associated with the sale of gasohol* is eliminated. Therefore the tax is now imposed on 100% of the proceeds from the sale of gasohol.


  • The 100% exemption for the majority blended ethanol fuel, 100% biodiesel, and biodiesel blends with more than 10% but no more than the 99% biodiesel, is extended to December 31, 2023.
  • For tax years ending on or after December 31, 2017, the Domestic Production Activities Deduction allowed under IRC* section 199 must be added back to AGI for individuals or taxable income for all other taxpayers.

As you can see, your taxes are going up in Illinois in a number of ways. Don’t be surprised if there are additional taxes assessed to deal with the backlog of unpaid bills and the pension liabilities that await the citizens of the State of Illinois.

AGI = adjusted gross income

IRC = Internal Revenue Code

Gasohol = gas and ethyl alcohol blend

Kevin J. Richter is a founding shareholder at Mathis, Marifian & Richter, Ltd. He practices from the Belleville, Illinois location focusing his practice in business law, taxation, estate planning, employee benefits, employment law and real estate law. To learn more about Kevin, click here.

Professional Services Disclaimer: Please note that the information presented here is as an educational service, and while it contains information about legal issues, it is not legal advice. No warranty is made regarding the applicability of the information presented to a particular client situation, and the information set forth is not a substitute for original legal research, analysis and drafting for a particular client situation.