Illinois Standard Exemption Reduced

Illinois has reduced the standard exemption for taxpayers to $2,000. The change applies to tax years that begin on or after June 1, 2017. The Department of Revenue amended its regulations to reflect the change. The department has not addressed whether taxpayers who file returns based on the 2017 calendar years will be affected by the change.

Illinois Standard Exemption

In 2012, Illinois enacted legislation to:

  • increase the exemption from $2,000 to $2,050; and
  • adjust the exemption each year using the Consumer Price Index.

Under Illinois law, if a law does not specify an end date for an exemption, credit, or deduction, the tax benefit is not available to taxpayers five years after the law is enacted. As a result, the higher standard exemption of $2,050 and the cost-of-living adjustment both ended on June 1, 2017.

Amendments to Other Regulations

In addition, the Department made technical amendments to other revenue regulations. Those regulations cover:

  • the items that make up an Illinois taxpayer’s net income;
  • the apportionment and allocation of income for partnerships that are not engaged in a unitary business with other combined group members; and
  • the determination of withholding tax for employers and for individuals who voluntarily agree to withholding.

86 Ill. Adm. Code Secs. 100.2050, 100.2055, 100.5270, 100.7050, 100.7070 and 100.7100, Illinois Department of Revenue, effective November 7, 2017

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