Millions of Illinois taxpayers will pay an in-between rate on 2017 income as a result of the state’s mid-year tax increase.
The Illinois Department of Revenue computed the “blended” 4.35 percent rate for individual returns due in April after the basic tax rate increased from 3.75 percent to 4.95 percent July 1. The corporate rate increased from 5.25 percent to 7 percent. State lawmakers approved the rates and the state’s first full-year budget in 2 years over the veto of Gov. Bruce Rauner.
“Tax forms [IL1040] will use the blended rate to make it easier for the taxpayer,” Department of Revenue spokesman Terry Horstman said in an email. The blended rate on standard, individual returns applies to income earned from Jan. 1 to Dec. 31, 2017. Nearly 6.2 million individual returns were filed in the 2017 tax season.
Horstman said the blended 4.35 percent rate for individuals was based on number of days under the old 3.75 percent rate and days under the new 4.95 percent rate. In addition to the individual rate, the department has posted options for businesses as part of a bulletin announcing the changes at http://bit.ly/2iYwTAM.
State revenues were higher for the first 5 months of the fiscal year, primarily as a result of increased withholdings from the 32 percent increase in individual and 33 percent increase in corporate tax rates, according to a November state budget update from the Illinois Commission on Government Forecasting and Accountability. The commission provides budget and revenue analysis to the Illinois General Assembly.
Combined with sales tax and other changes, new rates are expected to raise a little more than $5.1 billion for fiscal 2018. The state fiscal year ends June 30.
“As of right now, things are going according to plan,” said Jim Muschinske, revenue manager for the commission.
Revenue from personal income withholdings increased $1.4 billion from July through November, minus refunds, while corporate receipts were up $218 million. Higher corporate tax revenue also resulted from an accounting change at the state Department of Revenue, said Muschinske.
“The bulk of it has been the tax increase, though there’s always going to be a little bit of delay,” said Muschinski. The full report is available at http://bit.ly/2iuRKrq.
Contact Tim Landis: email@example.com, 788-1536, twitter.com/timlandisSJR.
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