What's Happening?
Illinois Governor J.B. Pritzker has signed a series of bills, including Senate Bill 1911, which decouples the state's tax code from the federal tax code. This measure, effective immediately, includes changes
such as decoupling from federal bonus depreciation for newly constructed non-residential real property and replacing the Global Intangible Low Tax Income tax with Net Controlled Foreign Corporation Tested Income. Additionally, it extends the excess business loss deduction for trusts and the State and Local Tax Deduction. The bill also amends the Film Production Services Tax Credit Act and creates the Statewide Innovation Development and Economy Act. Republicans have expressed concerns that this decoupling could make Illinois less competitive. Other enacted bills include the Public Official Safety and Privacy Act and the establishment of a Task Force on Eliminating Food Deserts.
Why It's Important?
The decoupling of Illinois' tax code from the federal system represents a significant shift in the state's fiscal policy, potentially affecting businesses and economic competitiveness. By moving away from federal tax structures, Illinois aims to tailor its tax policies to better suit local economic conditions and priorities. However, this move has sparked debate, with critics arguing it could deter investment and economic growth. The broader implications of these changes could influence how other states consider aligning their tax policies with federal standards, especially in terms of balancing local economic needs with national economic trends.
