Temporary tax relief in Illinois


Illinoisans received some modest tax relief when the state’s new fiscal year began July 1.

That includes some income tax rebates, property tax rebates, a suspension of the state’s 1 percent tax on groceries, and a six-month pause on the scheduled inflationary increase in the state’s motor fuel tax.

Gov. JB Pritzker and legislative Democrats held a news conference publicizing those tax breaks as consumers grappled with 8.6 percent inflation, the highest rate in nearly 40 years.

“We’re sending $1.8 billion in tax relief to Illinois families, and we are able to do that because Democrats balanced the budget, eliminated the bill backlog, and state government is now running a surplus,” Pritzker said.

The tax relief measures were included in the $46 billion budget lawmakers passed for the fiscal year. 

They include:

• An income tax rebate of $50 per individual with income below $200,000 a year, or $100 for couples filing jointly with income below $400,000 a year, plus $100 per dependent child, up to three children.

• Suspension of the 1 percent sales tax on groceries through June 2023.

• Suspension of the scheduled inflationary increase in the motor fuel tax through Dec. 31, which has been estimated at 2.2 cents per gallon. Instead, the motor fuel tax will increase twice at the rate of inflation next calendar year.

• A sales tax holiday on back-to-school items Aug. 5-14, when the rate will be imposed at 1.25 percent instead of the regular 6.25 percent.

• An additional property tax rebate of up to $300 for homeowners who were eligible to claim the property tax credit on their 2021 state tax returns. The rebate is available to joint filers earning $500,000 or less and single filers earning $250,000 or less.

In addition, the tax relief package included a permanent expansion of the state’s earned income tax credit to 20 percent of the federal EITC while also extending eligibility for that credit to noncitizens who file taxes using an Individual Taxpayer Identification Number instead of a Social Security Number.

Republicans criticized that package as an election-year gimmick, noting that rebate checks would show up in people’s mailboxes or bank accounts before Election Day, while motor fuel tax suspension would disappear soon after Election Day.

Republicans also criticized some of the tax breaks as too small or for not being permanent; noting the grocery tax suspension would only save consumers $1 on a $100 grocery bill and motor fuel tax savings would be only 22 cents on a 10-gallon tank of gas.

They proposed an alternative, which would have suspended or capped the state’s 6.25 percent sales tax on motor fuels, which they say has been producing a windfall for the state as gasoline prices have soared to record levels.

According to AAA, the average price of gasoline in Illinois stood at $5.39 on Thursday. That includes 37 cents of sales tax.

But Democrats pushed back against that criticism, arguing they have passed balanced budgets each of the last four years that have resulted in two credit upgrades each from all three major rating agencies and eliminated the bill backlog while also making investments in important state services.

(article courtesy of Capitol News Illinois)

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