Illinois lawmakers moving fast to pass $1B in tax hikes on small businesses

Illinois lawmakers moving fast to pass $1B in tax hikes on small businesses

Small businesses got federal tax relief to handle the COVID-19 economic downturn. Now Springfield is trying to take away the same break on state taxes, costing the state’s main job creators $1 billion with hundreds of thousands of Illinoisans still out of work.

Illinois Gov. J.B. Pritzker tried once to cancel federal tax relief for small businesses – and failed. Now, state lawmakers are using a shell bill to advance the governor’s unpopular idea once more, even as small businesses continue to struggle and many Illinoisans remain out of work.

On March 17, the House Executive Committee voted 9-6-0 to pass Senate Bill 217, which insiders believe will be the vehicle for the $1 billion small business tax hike the governor has championed since February. The bill is primed to be amended, pass the House and Senate, and be sent to Pritzker for his signature – all in one day.

2020 was one of the worst years on record for the state’s economy, and Illinois’ 440,000 small businesses felt this pain more than most. Luckily, up to $1 billion in state tax relief is on its way thanks to Illinois automatically adopting a federal tax break intended to help struggling businesses.

Leading up to and during his State of the State and budget address on Feb. 17, Pritzker pushed to close what he dubbed “corporate loopholes” in the state’s tax code. One was a provision in the Coronavirus Aid, Relief and Economic Security Act, which Illinois tax code would typically adopt automatically, that would essentially allow struggling small businesses to get an advance on their future tax returns.

Pritzker in January was encouraging state lawmakers to eliminate this provision for S corporations, limited liability corporations and partnerships, the most common tax filing statuses for small businesses. His plan quickly drew opposition from 11 business groups as kicking them with a tax hike as they struggled through a pandemic.

Pritzker failed, but on March 17 was again pushing the change that would effectively strip these small businesses of tax refunds they would be owed by the state of Illinois. The provisions were already eliminated for C corporations, the most common designation for large businesses.

It has been reported that 440,000 small businesses would be impacted by this change. These businesses are set to receive an estimated $500 million to $1 billion in tax refunds from the state. They also create 69% of all new jobs in Illinois.

Illinoisans can contact their state lawmakers to oppose any tax hike on small businesses. Illinois jobs are at stake.

Here’s how to contact your state representative.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!