On January 13, 2011, Illinois Governor Pat Quinn signed into law a bill which increases taxes for individuals, estates, trusts and corporations nearly 67 percent. These tax increases serve as an effort to close what is expected to be a $15 billion dollar state budget gap.
Under the new law, individual, estate and trust tax rates increase from 3 to 5 percent from January 1, 2011 through December 31, 2014, then decrease to 4 percent from January 1, 2015 through December 31, 2024. The tax rates will then decrease again to 3.5 percent after January 1, 2025.
With regard to corporations, the current rate of 4.8 percent increases to 7 percent from January 1, 2011 through December 31, 2014, then decreases to 5.6 percent from January 1, 2015 through December 31, 2024. Likewise, the tax rates will decrease again to 4.9 percent after January 1, 2025.
In addition to these tax increases, the bill will suspend the use of net operating losses from 2011 through 2014.
Estimated payments due prior to February 1, 2011 must total 100 percent of the preceding year’s tax. Payments due after January 31, 2011 must total 150 percent of preceding year’s tax. Payments due after January 31, 2012 must total 100 percent of the preceding year’s tax.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.
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