Averting a third year without a budget, the Illinois House and Senate have voted to override Governor Rauner's veto of FY 2018 budget bills SB 6 (appropriations bill), SB 9 (revenue bill) and SB 42 (budget implementation). As a result, law firm partners filing Illinois personal income tax returns will see a permanent increase in the individual income tax rate from 3.75% to 4.95%, effective July 1, 2017. Although the various legislative bodies debated the income tax rate's retroactive application to January 1, 2017, the new law makes the increase effective July 1, 2017, thereby requiring individuals to apply, for the 2017 tax year, a 3.75% tax rate to income earned from January 1 through June 30, 2017, and a 4.95% tax rate to income earned from July 1 through December 31, 2017.

The corporate income tax rate saw a similar increase, from 5.25% to 7.0%, but partnerships avoided an increase to the personal property replacement tax, which currently stands at 1.5%.

For more on the key changes contained in the FY 2018 Illinois budget bills, see Breaking Tax News 2017-9009. Additional Alerts will follow.

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