IL HB3128

Creates a new Illinois income tax deduction equal to 50% of contributions made to a "small business asset purchase account" during the tax year, capped at $50,000 per taxpayer annually, effective January 1, 2026

Defines a small business asset purchase account as a separately held account used to purchase property primarily used in Illinois that qualifies for a federal Section 179 deduction (immediate expensing of business equipment)

Requires taxpayers to add back 50% of withdrawals from these accounts to their taxable income in the year of withdrawal

Establishes a 10% penalty for improper use of account funds, specifically when withdrawals are used for property that does not qualify for a Section 179 federal deduction or is not primarily used in Illinois

Applies to individuals, corporations, trusts, estates, and partnerships through corresponding amendments to each entity type's base income calculation provisions