Illinois tax relief includes rebates, pause on food, gas taxes. Here's when to expect money
Lawmakers passed a plan they say will give Illinois residents $1.8 billion in tax relief. The plan includes direct checks to most taxpayers, temporary cuts in sales taxes, and a permanent expansion of the state's tax credit for low-income workers.
The plan cleared the 2022 General Assembly in the final hours of the legislative session on April 8 and awaits approval from Illinois Gov. JB Pritzker, who has said he intends to sign it.
Most of the relief requires no action from Illinoisans in order to receive benefits.
Tax rebate checks between $50 and $400
The state is set to provide rebate checks to each Illinois resident who files 2021 income taxes before Oct. 17, 2022.
The tax deadline is Monday. Late filers may have to pay delinquency fees, however, some Illinoisans in central and southern Illinois affected by a series of severe tornadoes in December 2021 had their tax deadline extended.
The amount of the checks will vary. Individuals making less than $200,000 per year are eligible for a $50 check. Couples filing jointly making less than $400,000 are eligible for $100.
All taxpayers with dependents will receive an additional $100 for each dependent, up to three. Families with three or more children would receive $400.
On April 10, Pritzker said 97% of Illinois residents will receive a direct check as part of the program.
The law requires the state's Department of Revenue to wait until July 5 to certify the list of eligible recipients, meaning the checks will come in the second half of the year.
Illinois is not the only state planning to issue refund or rebate checks, though plans vary widely.
A proposal in the Idaho Legislature signed into law on Feb. 4 will give residents a tax rebate of 12% of their state taxes or $75, whichever is greater.
A refund plan approved in Georgia would give taxpayers some or all of their 2020 state taxes, with single filers set to receive $250; heads of households, $375; and couples filing jointly to receive $500.
Indiana's Gov. Eric Holcomb announced earlier this week that every Indiana taxpayer would receive a tax refund of $125.
New Jersey has rolled out a "Middle Class Tax Rebate" of $500 if a person has a child, paid taxes and made less than $150,000
New Mexico's governor signed a bill in March that would give a tax rebate to residents, with single people making under $75,000 set to receive $250 checks and married couples filing jointly earning less than $150,000 set to receive $500.
Delaware became the most recent state to approve a direct payment program when its legislature passed a law to provide $300 one-time relief checks to residents.
Other states are still trying to sort out if they will have a state-level tax refund. One of the largest proposals is an in-the-works pitch from Pennsylvania Gov. Tom Wolf. He has advocated for a plan to send $2,000 checks to Pennsylvania households making less than $80,000.
Tax holidays for food, gas, school supplies
The tax relief plan also includes several tax holidays, meaning temporary cuts to taxes. First up: The state's 1% tax on groceries will be suspended beginning July 1 but reinstated on July 1, 2023.
The state also will delay a planned increase to the state's motor fuel tax, a tax levied on the sale of gasoline and diesel fuel, for six months, pushing it back from July to December.
The state's motor fuel tax was 19 cents per gallon for almost 30 years. It was doubled to 38 cents per gallon in 2019, with planned annual increases tied to the rate of inflation. The increase was approved in order to help pay for the state's $45 billion "Rebuild Illinois" infrastructure plan.
The motor fuel tax currently sits at 39.2 cents per gallon and was set to increase to 41.4 cents per gallon on July 1.
Finally, the plan includes a 10-day window between Aug. 5 and Aug 14 where all sales taxes on school supplies will be reduced from 6% to 1.25%. School supplies are any item that is used by a student in the course of their study, though some items are exempted from the tax holiday.
Textbooks, art supplies, cameras, computers, cellphones or memory cards are among supplies not qualifying for the reduction, though paper, notebooks, glue, compasses, pens, crayons, folders, binders and backpacks are among eligible items.
Expanded tax credit for low-income workers
One of the few permanent changes to the state's tax code this year is an expansion of the Earned Income Credit, a credit that low-income workers can claim that reduces the amount of taxes owed.
The law has expanded the pool of eligible taxpayers to include childless workers ages 18 to 24, childless workers over age 65, and immigrants who file taxes with an Individual Taxpayer Identification Number. The ITIN is a way for the government to identify a person who does not have a Social Security number.
The expansion will open the EIC to about 955,000 workers not previously covered by the tax credit, according to Jenna Severson, a spokesperson for Economic Security for Illinois, a group that advocated for the policy.
Additionally, the new bill will increase the amount of money the state credits qualifying individuals from 18% of the federal earned income tax credit to 20%. Severson noted this will translate to several dozen dollars of additional credit, depending on factors such as the number of dependents.
The federal earned income tax credit is a similar program on which the state's tax credit system was based.
It is the fourth time the EIC has been increased since it was first rolled out in 2000 and goes into effect in January 2023. It initially offered 10% of the federal earned income tax credit.
The plan was pushed for by lawmakers and activists.
"It is both morally and financially wise for us to invest in this policy and in the people who power Illinois,” said House Speaker Emanuel “Chris” Welch. D-Hillside. Welch worked with Economic Security for Illinois to propose an expansion to the EIC before he was speaker of the House.
“Right now, nearly 1 million workers are excluded from tax relief in Illinois," said Amber Wilson, a campaign manager at Economic Security for Illinois. "But, because working families organized and fought tirelessly to address this economic injustice, Illinois’ new budget will permanently change that."
Wilson's group is part of a coalition that has advocated an EIC expansion for several years. More than 40 groups worked on the initiative, including AARP Illinois, Chicago Urban League, Illinois Action for Children, Latino Policy Forum, Small Business Majority, United Way of Illinois, and Shriver Center on Poverty Law.
Despite bipartisan support, the plan was controversial
Democrats, who designed the tax relief plan, have said that the ability to provide tax cuts and rebate checks is the result of "fiscal responsibility."
"Now that inflation has surged to its highest in nearly four decades, we knew it was our responsibility to respond appropriately to the needs of every single Illinoisan," said Welch on April 10. "That's what we did in this year's budget."
The plan was approved as part of the state's annual budgeting process, with the Legislature passing the tax relief plan in SB 157. The bill passed nearly unanimously, with only one lawmaker in either of the state's legislative chambers, Sen. Craig Wilcox, R-McHenry, voting against it.
Wilcox criticized the measure and voted against it, likening it to a political tool.
"By structuring one-time ‘rebate’ checks to arrive shortly before the November election, and providing temporary tax relief that expires shortly after the election, they made it clear they have no problem bribing Illinoisans with their own money versus paying down state debt or adopting measures that would provide permanent tax relief," said Wilcox in a statement after the tax plan passed.
Other Republicans echoed the sentiment, including Senate Republican Leader Dan McConchie, R-Hawthorn Woods, who accused the tax relief plan of being "an attempt to buy your vote." McChoncie voted in favor of the plan.
This story has been updated to reflect the amount of money it is possible to receive through rebate checks.