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Illinois enacts budget increasing income tax rates, eliminating unitary non-combination rule

On July 6, 2017, the Illinois House of Representatives followed the Senate and voted to override Gov. Bruce Rauner’s veto of S.B. 9, enacting the state’s FY 2017-18 budget after two years without a spending plan. Effective July 1, 2017, the legislation substantially increases the corporate and personal income tax rates. Other major corporate income tax amendments include elimination of the unitary business non-combination rule, reinstatement of the research and development credit, and decoupling from the federal domestic production activities deduction. Personal income tax amendments include an increase of certain credit amounts, but an elimination of the standard exemption and certain credits for high-income individuals. Also, the sales tax exemption for graphic arts machinery equipment is reinstated. Finally, the legislation enacts the State Tax Lien Registration Act and the Revised Uniform Unclaimed Property Act.