Illinois Income Tax and Property Tax Rebates.
Beginning the week of September 12th, Illinois will begin to issue income and property tax rebates to taxpayers. The income tax rebate is available to individual taxpayers with income of less than $200,000, or $400,000 for married filing jointly. The rebate is $50 for an individual taxpayer, $100 for joint filers, and an additional $100 per dependent, up to 3 dependents. Therefore a family of five would receive a rebate of $400.
The property tax rebate is available to taxpayers with income of less than $250,000, or $500,000 for married filing jointly. The amount of the rebate is equal to the property tax credit claimed on your 2021 income tax return, but is capped at $300.
If you filed a 2021 Illinois income tax return that included Schedule ICR, in order to claim the credit for payment of property taxes, no additional action is needed. If your return did not include Schedule ICR, but you paid property taxes on your primary residence, you will need to file Form IL-1040-PTR, to claim the credit prior to October 17, 2022. You should also consider amending your return to include Schedule ICR to claim the pre-existing tax credit for property taxes you paid. You can check the status of your rebate payments at tax.illinois.gov/rebates.
Inflation Reduction Act. The recently passed Inflation Reduction Act contains several provisions to increase federal revenues. The tax increases contained in the Inflation Reduction Act will not directly affect individuals and small businesses. The tax increases contained in the bill only apply to large business and publicly traded companies: a corporate minimum tax affecting corporations with revenues over one billion dollars per year, and a 1% tax on stock buybacks.
The bill also contains a significant funding increase for the IRS to increase enforcement. So while the tax code may not change for individuals or businesses, the risk of audits and other enforcement actions will increase. We encourage taxpayers to review their tax compliance practices to minimize their risk in the face of increased enforcement, and our attorneys and tax professionals stand ready to provide advice on best practices for tax compliance.
The Act also contains a number of tax credits to encourage adoption of clean energy technology. The $7,500 tax credit for purchasing electric vehicles is no longer capped based on number of vehicles sold per manufacturer. There will be requirements for minimum amounts of American-produced battery components, with electric vehicles not meeting those requirements only receiving half the credit. The credit will also now be available at the time of purchase rather than being claimed at tax time. Only individual taxpayers making less than $150,000, or $300,000 if married filing jointly, per year are eligible. Purchasers of used electric vehicles sold through a dealership for less than $25,000 will also be eligible for a credit of 30% of the purchase price, up to $4,000. Only individual taxpayers with incomes of less than $75,000, or $150,000 married filing jointly, will be eligible, and the credit can only be claimed once every 3 years. A credit for commercial electric vehicles of 30% of the incremental price increase of a comparable fossil fuel powered vehicle will also be available for businesses. All of these credits will be available through 2032.
The existing credits for residential energy efficiency improvements and clean energy production have been extended and increased. The credit for installing solar, wind, geothermal or biomass energy production is increased to 30%, and the credit will remain in effect at that level through 2032. The credits for energy efficiency are also extended through 2032 and increased to 30% of qualifying project costs. The lifetime caps on the credit are also eliminated and replaced with an annual limit of $1,200, except qualifying windows are limited to a $600 annual cap, and doors to $500 annually. Roofing is no longer eligible for the credit. A credit of up to $2,000 for the installation of a qualified heat pump, not subject to the $1,200 annual limit is also available. A credit of $150 for a qualified energy use audit, and $600 for electric panel upgrades has also been added.
Mid-year mileage reimbursement rate update. Due to the increase in gas prices earlier this year, the IRS took the unusual step of updating its mileage reimbursement rate in the middle of the year. Effective July 1, the reimbursement rate is 62.5 cents per mile for business travel.