Page 15 - 3Q 2017 Reporter

Illinois tax changes and the

impact on your institution

by Michelle St. Ours, CPA, Tax Senior Manager,
Michelle.stours@plantemoran.com
10 S. Riverside Plaza, Ste. 900,
Michelle Chicago, IL 60606
St. Ours

In July, Senate Bill 9 was passed through an rates when making future estimate and extension
override of Governor Rauner’s veto. A few of the items tax payments.
in the bill will have an impact on financial institutions n Employers need to adjust withholding for the rate
doing business in Illinois. Here’s what to keep in mind. changes and changes to the personal standard
Tax rate changes exemption and residential real property tax credit,
Net income tax rates for all types of taxpayers discussed below. An updated Booklet IL-700-T,
were permanently increased by the bill. The rate for C Illinois Withholding Tax Tables, is available on the
corporations increased to 9.5 percent (including the 2.5 Department of Revenue’s website.
percent replacement tax) for the period beginning after n Taxpayers should note the replacement tax, which
June 30, 2017. The C corporation income tax rate for is imposed on net income, remained the same at
the period through June 30, 2017, is 7.75% (including 2.5 percent for C corporations and 1.5 percent for
2.5% replacement tax). For S-corporation banks doing pass-through entities.
business in Illinois, the tax rates for their individual,
Other changes
trust, and estate shareholders increased to 4.95 percent
The bill eliminates the restriction that the unitary
for the period beginning after June 30, 2017. The rate
business group include only entities that use the same
for the period through June 30, 2017, is 3.75 percent.
apportionment formula for tax years ending on or after
Taxpayers whose tax rates overlap with June 30, December 31, 2017. Prior to the passage of the bill,
2017, can compute their tax by prorating their income a unitary business group could include only members
between the period through June 30 and the period that used the same apportionment formula. This will
after June 30 through the end of the taxpayer’s year. allow groups with an insurance company subsidiary
Using this method, income attributable to the period to file one unitary Illinois return instead of separate
through June 30, 2017, is computed by multiplying the returns.
total income for the year by the ratio of the number
Another notable change includes the research and
of days in the taxpayer’s year through June 30 over
development credit being retroactively reinstated for
the total number of days in the tax year. For ease of
2016. It will expire for tax years ending after December
computation, the Department of Revenue has provided
31, 2021.
a blended tax rate schedule that can be applied to
For tax years beginning on or after January 1,
taxpayers’ taxable income (see the Department of
2017, the personal standard exemption and the
Revenue’s Informational Bulletin FY 2018-2).
residential real property tax credit are both eliminated
Alternatively, taxpayers can make an irrevocable
for married filing jointly taxpayers with greater than
election to use the specific accounting method instead
$500,000 of adjusted gross income and greater than
of prorating income between periods. For taxpayers
$250,000 of adjusted gross income for others.
who choose this approach, the computation must
It’s important to review the changes since they may
be reported on Schedule SA, which should be made
very well have a meaningful impact on your institution
available on the Department of Revenue’s website.
and its customers. If you have questions about the
Because the tax rates impact 2017:
changes, or their implementation, feel free to reach out.
n Taxpayers should take into account the increased
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Third QuarTer 2017 IllInoIs RepoRteR