Illinois Tax Change: More Than Sears and CME

Posted in Articles, Tax Highlights January 2012

Keywords: net loss deductions, SALT, tax, tax planning

The passing of SB 397 and SB 400 in December has brought a lot of publicity to the tax breaks for Sears and CME Group. However, there are some significant changes for all Illinois residents and businesses. Most notably, the change in the estate exclusion will be increasing starting with the 2012 tax year. As of January 1, 2012 the exclusion will increase from the current $2 million to $3.5 million. Starting with the 2013 tax year the exclusion will be $4 million dollars, putting it closer to the current federal exclusion of $5 million. While a death is something no one can plan for or wants to think about, it is nice to know that the gap between federal and state exclusions will be reduced. This should mean less of a headache when it comes to estate planning.

Businesses also got a little good news — the Net Loss Deduction (NLD) carryforward suspension was lifted in favor of a limit. C corporations with NLD carryforwards will now be allowed to use up to $100,000 of NLD in 2012 and 2013 instead of having them suspended until 2014 as was originally introduced in 2010. This means a savings of up to $9,500 of Illinois tax liability for each of those two years. 

Not included in either bill but still important was Illinois's treatment of 100% bonus depreciation. The state has not decoupled from the federal bonus depreciation and no addition will be necessary for 2011. This is not a change from the last part of 2010 but allows taxpayers who have placed new fixed assets in service in 2011 a full deduction in the current year.

Other changes to be aware of include the following:

  • 5-year extension of R&D credit 
  • Extension of replacement-tax investment credit through 2018
  • Increase of personal exemption to $2,050 for 2012 — indexed for inflation going forward
  • Extension of the Earned Income Credit (EIC)
  • Extension of all credits set to sunset in 2011–2013

While this is not an exhaustive list of the changes in the two bills, it does bring to light the many taxpayer-friendly addendums to the Illinois tax laws.

If you have any questions regarding these changes please contact Jason Parish at jparish@BlackmanKallick.com or 312-980-2959 or your Blackman Kallick representative. Our thanks to Deb Rood for her contribution to this article.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.


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This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.