What's Your Plan for the Illinois Progressive Tax Plan?
With government organizations still catching up with infrastructure repairs and upgrades that were put off during the recession, many government bodies are digging deep to try to find funding to make up for budgetary shortfalls. To make up these funding problems, many tax agencies are increasing their revenues by increasing taxes. Illinois currently has a progressive tax plan being worked on at the state level. But what does it involve, how will it impact your business and what do you need to do about it? Here's a quick look to get you started.
Estimated to raise an additional $3.2 billion annually, the Illinois progressive tax plan is being pushed by Governor Pritzker to help fund deficits in the state budget. However, this will raise Illinois' corporate income tax to the third highest in the United States. Businesses with income under $10,000 will see a slight decrease, but the real change happens when businesses make over $250,000, when the rate jumps almost 3% from 4.95% to 7.75%. For this reason, numerous business associations across the state are speaking out against the tax plan.
Illinois Chamber of Commerce spoke out. “[Under Pritzker’s proposal] once you hit $1,000,001, 100 percent of your income then gets taxed at the highest rate [of 7.95 percent]. The whole concept of a marginal rate evaporates,” Todd Masich, CEO, said. “They know how to go ahead and do the math ... they’re going to go ahead and find a way to either avoid paying on $1,000,001 or they’re simply going to go to a state that doesn’t have any income tax and they don’t have to worry about it.” Governor Pritzker does not think that this will cause businesses to leave the state, but historical evidence says otherwise.
By being aware of changes to this prospective change in the Illinois tax structure, you can make plans to mitigate the impact of those changes on your business. But what if you're not quite sure exactly where you fall with the Illinois progressive tax plan? AccountRely has business and accounting professional consultants standing by to help you develop a solid strategy for all your business needs. Please feel free to reach out today for more information, with any questions or to get started on your next business strategy.