Budget & Taxes (Income Tax)

Amends the Illinois Income Tax Act. Creates a deduction for amounts that are disallowed as a deduction on the taxpayer's federal income tax return because of the $10,000 limitation under the federal Internal Revenue Code on deductions for certain State and local taxes. Effective immediately.

HB 2605 increases Illinois' standard income tax exemption for individual taxpayers from $2,050 to $150,000, effective immediately. This change directly affects individual Illinois residents by raising the income threshold before state income tax applies. The bill amends Section 204 of the Illinois Income Tax Act, specifically updating the "basic amount" provision in subsection (b)(8) for taxable years ending after December 31, 2025. This represents a significant policy shift from the prior $2,050 standard, reducing the tax burden for many middle- and lower-income earners.

Amends the Illinois Income Tax Act. Provides that, for taxable years beginning on or after January 1, 2026, a taxpayer who is an eligible member of the judiciary is allowed an income tax credit in an amount equal to the qualified security expenses incurred by the taxpayer during the taxable year. Specifies that the credit may not be carried back and may not reduce the taxpayer's liability to less than zero. Provides that, if the amount of the credit exceeds the taxpayer's tax liability for the taxable year, then the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. Requires the tax credit to be applied to the earliest year for which there is a tax liability. Provides that, if there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first. Defines the terms "eligible member of the judiciary", "federal judge", and "qualified security expense". Effective immediately.

Proposes to amend the Revenue Article of the Illinois Constitution. Provides that an additional income tax shall be imposed on individuals in an amount equal to 3% of the portion of the individual's net income that is greater than $1,000,000 for the taxable year. Provides that, of the revenue collected pursuant to those provisions, 50% shall be used to provide property tax relief and 50% shall be distributed to school districts solely on a per pupil basis. Effective upon being declared adopted.