The cornerstone of Breen’s package is HB 4563, which expands Illinois’ current Invest in Kids Act tax credit model to allow Illinoisans to make fully deductible charitable contributions to 501(c)(3) foundations supporting public school districts, while receiving tax credits to reduce their partially deductible state and local income tax (SALT) payments. The new federal tax law provided a $10,000 limit on deductions for SALT payments, while placing no limit on charitable deductions. “While changes to the federal tax code are providing many opportunities for taxpayers to keep more of their hard-earned money in their own pockets, folks in states where property taxes and income taxes are too high need relief. The Congress left intact the full deduction for charitable contributions, and my Illinois workaround to the new SALT deduction cap relies on the very successful education tax credit model upheld by the Tax Court and IRS, and used by states across the country. This plan has the potential to put over $1 billion every year back into Illinois taxpayers’ wallets. Rather than sending this money to Washington bureaucrats, these dollars can be pumped into the Illinois economy, to help our state grow and prosper.”
Through Breen’s SALT workaround, the current Invest in Kids Act, which allows taxpayers to make donations to private schools in exchange for a tax benefit, would be expanded to include contributions made to K-12 school district foundations. Taxpayers can make annual contributions to school district foundations up to the total amount of their state income taxes and residential property taxes, in exchange for a tax credit equal to 100% of their donation. The bill would ensure little to no cost to the state by amending the school code to ensure that state payments to the K-12 districts benefited by the program would be reduced by the amount of the total contributions received by the districts.
The second bill in the package, HB 4376, would allow parents who choose to send their children to K-12 private or parochial schools in Illinois to use their Illinois Bright Start program funds (529 Plan) to help offset those costs rather than only using those funds for college.
“Today’s Bright Start Program does not provide the flexibility provided by the recent changes in federal tax law, to allow families the ability to use their own 529 plan account for K-12 educational expenses,” said Breen. “My bill expands the Illinois Bright Start Program’s definition of ‘qualifying expenses’ so that families may enjoy the full tax benefits newly available through the revised federal tax law. Expanding the use of these tax-free funds will help hard-working Illinois families save for their kids’ education.”
HB 4376 also provides for a rollover of 529 plan funds into an Achieving a Better Life Experience (ABLE) account to help individuals living with significant disabilities. Whereas 529 plans may only be used for education, ABLE accounts may also be used for housing, transportation, employment training and support, assistive technology, personal support services and health care expenses. “These types of accounts really help folks living with disabilities to maintain their independence and quality of life,” Breen said. “Individuals with disabilities and their families often rely on public benefits for income, health care, housing and other assistance, and eligibility is largely based on meeting an income threshold. ABLE accounts allow families to create a long-term plan with defined tax benefits for covering the significant costs associated to living with a disability.”
The final bill in Breen’s Illinois Tax Reform Plan is HB 4562, a measure to support the small businesses that will start or grow as a result of the Tax Cuts and Jobs Act. HB 4562 will lift the requirement that individuals who operate a small business where they are the sole employee be in the unemployment insurance system. “This is a common sense issue. Individuals who operate a business where they themselves are the only employee certainly can’t really ‘fire’ themselves in the traditional sense of unemployment insurance, so they shouldn’t be forced to pay for this insurance,” said Breen. “There are thousands of single-employee businesses in Illinois, and while these entrepreneurs are contributing greatly to the Illinois economy, they’re being nickel-and-dimed through laws that force them to pay for services from which they would never benefit.”
Breen is hopeful he will have wide bipartisan support for all three bills and will be pushing for prompt consideration of the legislation in Springfield.