Illinois proposes repealing dividend deductions, decoupling from domestic production activities deduction, and repealing non-combination rule

March 2013


On March 6, 2013, Illinois Governor Pat Quinn delivered his fiscal year 2014 budget address. As part of his address, the Governor called for a creation of a Bill Payment Trust Fund to assist in the payment of the State's current outstanding bills. To generate monies for this new Fund, the Governor proposed three corporate income tax changes: (1) suspending the foreign dividend deduction; (2) decoupling from the federal domestic production activities deduction; and (3) suspending the non-combination rule for unitary members with different apportionment formulas. That same day, Senate Bill 1159 was amended to incorporate these three proposed changes, including repeal of most domestic dividend received deductions, which would be effective for tax years ending on or after December 31, 2013. Illinois taxpayers should be aware of how these changes, should they be enacted, will impact their Illinois corporate tax liability and filing requirements. [Illinois Senate Bill 159, introduced 3/6/13]

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