About a year ago, Illinois Governor Pat Quinn proposed a 50% increase in the Illinois income tax rate. That included an increase in the individual rate from 3% to 4.5% and an increase in the corporate rate from 4.8% to 7.2%.
Back then we added a “Tax Calculator” to our website, so you could quickly determine how that proposal would affect you.
Now Governor Quinn has proposed ”a 1 percent tax surcharge for education” as part of his new budget plan outlined on Wednesday, March 10, 2010. That would increase the tax rate from 3% to 4% on the individual side, a 33% increase.
That 33% increase would also apply to most small and mid-sized businesses, since these companies are generally organized as proprietorships, partnerships, LLCs or “S Corporations”. That means the business income is taxed on the owners’ personal returns at the individual tax rate.
It’s not clear how the 1 percent tax “surcharge” would apply to the current 4.8% corporate rate. It seems like it should simply mean an increase to 5.8%. However, some media outlets have reported that the corporate rate would also increase 33%.
Last year’s proposals also included an increase in the personal exemption amount. The new proposals do not include any increase in the exemption amount that we see from what’s been published so far.
We’ll update our Tax Calculator for the new proposals as soon as we get some clarification.
Stay tuned.
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