Illinois Gov. Pat Quinn signed legislation (SB2505) last Thursday that temporarily raises Illinois income taxes by two-thirds.
The personal income tax rate immediately rises to 5 percent, up from 3 percent. The corporate income tax rate rises immediately to 7 percent, up from 4.8 percent. The increases are at that level for four years and then are scheduled to decline. For example, the personal tax rate drops to 3.75 percent in 2015 and eventually to 3.25 percent a decade after that.
The increases are retroactive to Jan. 1, 2011.
According to news reports, the state budget deficit was projected to hit $15 billion in the coming year, endangering government's ability to pay employees, provide money it owes to schools and local governments and reimburse the businesses and charities that work for the state. Quinn's office estimates the tax increase will generate about $6.8 billion a year, enough to balance the annual budget and begin chipping away at the state's backlog of about $8.5 billion in unpaid bills.
To view the actual bill, go to SB2505.