IL HB4071

Amends the Illinois Income Tax Act to create a new tax credit for small business taxpayers (those employing no more than 200 employees) for taxable years beginning January 1, 2016 through December 31, 2021.

Credit equals 50% of amounts paid during the taxable year to an insolvent debtor or trustee resulting from a recapture under Section 547(b) of the federal Bankruptcy Code, with a maximum credit of $100,000 per year.

Excess credits that exceed a taxpayer's annual tax liability may be carried forward and applied to tax liability in the following 5 taxable years, with earlier credits applied first.

For partnerships, S-corporations, and certain limited liability companies, the credit is determined according to each partner's or shareholder's distributive share of income under applicable federal tax code sections.

Takes effect immediately upon becoming law.