Illinois lawmakers are considering a bill that would give hundreds of thousands of families in the state a tax credit of up to $700 per child.
According to the bill, the tax credit would be based on income, but the bill would increase net income, potentially lifting thousands of children out of poverty and facilitating reductions in state aid payments to families. be.
So how does the tax credit work? Who would qualify? Here's what we know based on the text of the bills being considered, including HB 3950.
How credits are allocated
Families with children under 18 can claim an earned income tax credit of $700 per eligible dependent. Under the letter of the law.
Taxpayers with incomes of $50,000 or less, or $75,000 or less if filing jointly, will receive the full amount, although taxpayers with incomes above these thresholds will still be eligible.
In such cases, the maximum amount is reduced by $24 for every $1,000 the taxpayer's net income exceeds the stated threshold.
Who will benefit from the tax credit?
according to For research published by Illinois Economic Policy Institute Like the University of Illinois' Middle Class Renewal Project, the proposed bill would affect 840,100 households with children in the state, or about 60.4% of households with children.
More than 1.7 million children could be affected and child poverty would be reduced by 7.6%, according to the study.
How much will the tax credit cost the state?
The total annual cost of the tax credits would be just under $1.1 billion, according to the study.
According to the study's language, experts believe that at least some of the program's costs will be offset by a reduction in the amount of state aid paid to these families, while saving or creating nearly 7,800 jobs and increasing the It said it would increase production by $1.5 billion. .
When will my credit be activated?
According to the bill's text, the law would go into effect immediately if passed. It is unclear whether the bill will be passed before this year's tax return deadline of April 15, but if passed, parents would be able to claim the deduction immediately.
