Lower-Income Residents Get A New Tax Break In Illinois Budget Package

Jul 17, 2017

Credit flickr:401(k)2012

The Illinois tax package approved earlier this month raises the income tax rates for both businesses and individuals, but it also includes an increase to the state’s earned-income credit.  

Opponents of the tax hike, like Gov. Bruce Rauner, have not pointed out this lesser-known change approved by the Illinois General Assembly Over Rauner's veto. It could have potential benefits for low-income earners who qualify for tax credits.

Ralph Martire, executive director for the nonprofit think tank Center for Tax and Budget Accountability, supports both changes. He said the increase to the earned-income credit is a smart approach.

“Legislators in both parties did a positive thing by saying, "All right, we’re stuck with this flat rate, but let’s ensure that we relieve some of what this tax increase would mean for low and moderate income families.'”

The earned-income tax credit is a federal program that reduces what qualified taxpayers owe or increases their federal income-tax refunds. Illinois residents can qualify for a percentage of the federal credit and apply that to their state taxes.

The changes are effective for the 2017 tax year and are scheduled for an additional increase the following year. This increase could amount to as much as $200 more for some. 

“We really felt it would be part of any final package,” Martire said, "and, frankly, we are quite pleased and applaud legislators for including it in."

  • Illinois Public Radio's Daisy Contreras contributed to this report.