Averting a third year without a budget, the Illinois House today, following the Senate action on July 4, 2017, 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). Key changes contained in SB 9 include:

— Permanently increasing the corporate income tax rate to 7.0% (from 5.25%), effective July 1, 2017, which subjects Illinois corporations to a 9.5% rate on income apportioned or allocated to Illinois when combined with the 2.5% personal property replacement tax

— Permanently increasing the individual income tax rate to 4.95% (from 3.75%), effective July 1, 2017

— Expanding the manufacturing and assembling machinery and equipment exemption to include graphic arts machinery and equipment, beginning July 1, 2017

— Restoring the R&D credit through 2021

— Requiring, for purposes of determining Illinois taxable income, the addback of amounts deducted for federal income tax purposes under the IRC Section 199 production deduction, effective for tax years ending on or after December 31, 2017

— Eliminating the like-apportionment rule for all taxpayers, except insurance companies that apportion income under Section 304(b) of the Illinois Income Tax Act and are subject to the Illinois insurance premium tax

— Reducing certain fees collected by the Secretary of State under the Business Corporation and Limited Liability Company Acts

— Updating the state's unclaimed property law by adopting the Revised Uniform Unclaimed Property Act with some modifications, most notably repealing the business-to-business exemption

Tax changes that were considered during the legislative process but did not make it into the final bills include a freeze on property tax rates (which had been actively promoted by Governor Rauner as part of any tax deal), expansion of the sales and use tax base to include certain services, inclusion of production-related tangible personal property under the manufacturing and assembling machinery equipment exemption, imposition of a new video service tax on streaming services, and changes to the false claims act, among other proposals.