Bill Text: IL HB4194 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Invest in Kids Act. Provides that a taxpayer may take a credit under the Act for tax years ending before January 1, 2029 (currently January 1, 2024). Provides that, beginning in calendar year 2024, the aggregate amount of credits the Department of Revenue may award under the Act in any calendar year may not exceed $50,000,000 (currently, $75,000,000). Provides that contributions under the Act may be directed to students whose permanent address is located in an underserved area but may not be directed to a particular student. Provides that, for taxable years beginning on or after January 1, 2024, the amount of the credit under the Act shall be 100% of the first $5,000 in contributions made by the taxpayer during the taxable year, plus (i) 55% of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is not directed to students whose permanent address is located in an underserved area and (ii) 65% of the of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is directed to students whose permanent address is located in an underserved area. Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced) 2023-10-25 - Referred to Rules Committee [HB4194 Detail]

Download: Illinois-2023-HB4194-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB4194 Introduced , by Rep. Angelica Guerrero-Cuellar SYNOPSIS AS INTRODUCED:
35 ILCS 40/5
35 ILCS 40/10
35 ILCS 40/40
35 ILCS 40/65
35 ILCS 5/224
Amends the Invest in Kids Act. Provides that a taxpayer may take a credit under the Act for tax years ending before January 1, 2029 (currently January 1, 2024). Provides that, beginning in calendar year 2024, the aggregate amount of credits the Department of Revenue may award under the Act in any calendar year may not exceed $50,000,000 (currently, $75,000,000). Provides that contributions under the Act may be directed to students whose permanent address is located in an underserved area but may not be directed to a particular student. Provides that, for taxable years beginning on or after January 1, 2024, the amount of the credit under the Act shall be 100% of the first $5,000 in contributions made by the taxpayer during the taxable year, plus (i) 55% of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is not directed to students whose permanent address is located in an underserved area and (ii) 65% of the of the portion of the qualified contributions made by the taxpayer that exceeds the first $5,000 and is directed to students whose permanent address is located in an underserved area. Effective immediately.
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A BILL FOR
HB4194 LRB103 34921 HLH 64794 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Invest in Kids Act is amended by changing
Sections 5, 10, 40, and 65 as follows:
(35 ILCS 40/5)
(Section scheduled to be repealed on January 1, 2025)
Sec. 5. Definitions. As used in this Act:
"Authorized contribution" means the contribution amount
that is listed on the contribution authorization certificate
issued to the taxpayer.
"Board" means the State Board of Education.
"Contribution" means a donation made by the taxpayer
during the taxable year for providing scholarships as provided
in this Act.
"Custodian" means, with respect to eligible students, an
Illinois resident who is a parent or legal guardian of the
eligible student or students.
"Department" means the Department of Revenue.
"Eligible student" means a child who:
(1) is a member of a household whose federal adjusted
gross income the year before he or she initially receives
a scholarship under this program, as determined by the

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Department, does not exceed 300% of the federal poverty
level and, once the child receives a scholarship, does not
exceed 400% of the federal poverty level;
(2) is eligible to attend a public elementary school
or high school in Illinois in the semester immediately
preceding the semester for which he or she first receives
a scholarship or is starting school in Illinois for the
first time when he or she first receives a scholarship;
and
(3) resides in Illinois while receiving a scholarship.
"Family member" means a parent, child, or sibling, whether
by whole blood, half blood, or adoption; spouse; or stepchild.
"Focus district" means a school district which has a
school that is either (i) a school that has one or more
subgroups in which the average student performance is at or
below the State average for the lowest 10% of student
performance in that subgroup or (ii) a school with an average
graduation rate of less than 60% and not identified for
priority.
"Jointly administered CTE program" means a program or set
of programs within a non-public school located in Illinois, as
determined by the State Board of Education pursuant to Section
7.5 of this Act.
"Necessary costs and fees" includes the customary charge
for instruction and use of facilities in general and the
additional fixed fees charged for specified purposes that are

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required generally of non-scholarship recipients for each
academic period for which the scholarship applicant actually
enrolls, including costs associated with student assessments,
but does not include fees payable only once and other
contingent deposits that are refundable in whole or in part.
The Board may prescribe, by rules consistent with this Act,
detailed provisions concerning the computation of necessary
costs and fees.
"Scholarship granting organization" means an entity that:
(1) is exempt from taxation under Section 501(c)(3) of
the Internal Revenue Code;
(2) uses at least 95% of the qualified contributions
received during a taxable year for scholarships;
(3) provides scholarships to students according to the
guidelines of this Act;
(4) deposits and holds qualified contributions and any
income derived from qualified contributions in an account
that is separate from the organization's operating fund or
other funds until such qualified contributions or income
are withdrawn for use; and
(5) is approved to issue certificates of receipt.
"Technical academy" means a non-public school located in
Illinois that: (1) registers with the Board pursuant to
Section 2-3.25 of the School Code; and (2) operates or will
operate a jointly administered CTE program as the primary
focus of the school. To maintain its status as a technical

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academy, the non-public school must obtain recognition from
the Board pursuant to Section 2-3.25o of the School Code
within 2 calendar years of its registration with the Board.
"Qualified contribution" means the authorized contribution
made by a taxpayer to a scholarship granting organization for
which the taxpayer has received a certificate of receipt from
such organization.
"Qualified school" means a non-public school located in
Illinois and recognized by the Board pursuant to Section
2-3.25o of the School Code.
"Scholarship" means an educational scholarship awarded to
an eligible student to attend a qualified school of their
custodians' choice in an amount not exceeding the necessary
costs and fees to attend that school.
"Taxpayer" means any individual, corporation, partnership,
trust, or other entity subject to the Illinois income tax. For
the purposes of this Act, 2 individuals filing a joint return
shall be considered one taxpayer.
"Underserved area" has the meaning given to that term in
Section 5-5 of the Economic Development for a Growing Economy
Tax Credit Act.
(Source: P.A. 102-16, eff. 6-17-21.)
(35 ILCS 40/10)
(Section scheduled to be repealed on January 1, 2025)
Sec. 10. Credit awards.

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(a) The Department shall award credits against the tax
imposed under subsections (a) and (b) of Section 201 of the
Illinois Income Tax Act to taxpayers who make qualified
contributions. For taxable years beginning before January 1,
2024 contributions made under this Act, the credit shall be
equal to 75% of the total amount of qualified contributions
made by the taxpayer during a taxable year, not to exceed a
credit of $1,000,000 per taxpayer. For taxable years beginning
on or after January 1, 2024, the credit shall be calculated as
follows:
(1) If the total amount of qualified contributions
made by the taxpayer during the taxable year does not
exceed $5,000, then the credit shall be equal to 100% of
the total amount of qualified contributions made by the
taxpayer during the taxable year.
(2) If the total amount of qualified contributions
made by the taxpayer during the taxable year exceeds
$5,000, then the credit shall be equal to 100% of the first
$5,000 in contributions made by the taxpayer, plus (i) 55%
of the portion of the qualified contributions made by the
taxpayer that exceeds the first $5,000 and is not directed
to students whose permanent address is located in an
underserved area and (ii) 65% of the of the portion of the
qualified contributions made by the taxpayer that exceeds
the first $5,000 and is directed to students whose
permanent address is located in an underserved area.

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For taxable years ending on or after January 1, 2024, the
total credit amount per taxpayer shall not exceed $500,000 in
any taxable year.
(b) Through calendar year 2023, the The aggregate amount
of all credits the Department may award under this Act in any
calendar year may not exceed $75,000,000. Beginning in
calendar year 2024, the aggregate amount of all credits the
Department may award under this Act in any calendar year may
not exceed $50,000,000.
(c) Except as otherwise provided in this subsection,
contributions Contributions made by corporations (including
Subchapter S corporations), partnerships, and trusts under
this Act may not be directed to a particular subset of schools,
a particular school, a particular group of students, or a
particular student. Except as otherwise provided in this
Section, contributions Contributions made by individuals under
this Act may be directed to a particular subset of schools or a
particular school but may not be directed to a particular
group of students or a particular student. Notwithstanding the
provisions of this subsection, on and after January 1, 2024,
contributions made by any taxpayer may be directed to students
whose permanent address is located in an underserved area but
may not be directed to a particular student.
(d) (Blank). No credit shall be taken under this Act for
any qualified contribution for which the taxpayer claims a
federal income tax deduction.

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(e) Credits shall be awarded in a manner, as determined by
the Department, that is geographically proportionate to
enrollment in recognized non-public schools in Illinois. If
the cap on the aggregate credits that may be awarded by the
Department is not reached by June 1 of a given year, the
Department shall award remaining credits on a first-come,
first-served basis, without regard to the limitation of this
subsection. Credits awarded for qualified contributions that
are directed to students whose permanent address is located in
an underserved area shall be awarded without regard to this
subsection but shall not exceed 15% of the annual statewide
program cap.
(f) Credits awarded for donations made to a technical
academy shall be awarded without regard to subsection (e), but
shall not exceed 15% of the annual statewide program cap. For
the purposes of this subsection, "technical academy" means a
technical academy that is registered with the Board within 30
days after the effective date of this amendatory Act of the
102nd General Assembly.
(Source: P.A. 102-16, eff. 6-17-21.)
(35 ILCS 40/40)
(Section scheduled to be repealed on January 1, 2025)
Sec. 40. Scholarship granting organization
responsibilities.
(a) Before granting a scholarship for an academic year,

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all scholarship granting organizations shall assess and
document each student's eligibility for the academic year.
(b) A scholarship granting organization shall grant
scholarships only to eligible students.
(c) A scholarship granting organization shall allow an
eligible student to attend any qualified school of the
student's choosing, subject to the availability of funds.
(d) In granting scholarships, beginning in the 2022-2023
school year and for each school year thereafter, a scholarship
granting organization shall give priority to eligible students
who received a scholarship from a scholarship granting
organization during the previous school year. Second priority
shall be given to the following priority groups:
(1) (blank);
(2) eligible students who are members of a household
whose previous year's total annual income does not exceed
185% of the federal poverty level;
(3) eligible students who reside within a focus
district; and
(4) eligible students who are siblings of students
currently receiving a scholarship.
(d-5) A scholarship granting organization shall begin
granting scholarships no later than February 1 preceding the
school year for which the scholarship is sought. Each priority
group identified in subsection (d) of this Section shall be
eligible to receive scholarships on a first-come, first-served

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basis until April 1 immediately preceding the school year for
which the scholarship is sought, starting with the first
priority group identified in subsection (d) of this Section.
Applications for scholarships for eligible students meeting
the qualifications of one or more priority groups that are
received before April 1 must be either approved or denied
within 10 business days after receipt. Beginning April 1, all
eligible students shall be eligible to receive scholarships
without regard to the priority groups identified in subsection
(d) of this Section.
(e) Except as provided in subsection (e-5) of this
Section, scholarships shall not exceed the lesser of (i) the
statewide average operational expense per student among public
schools or (ii) the necessary costs and fees for attendance at
the qualified school. A qualified school may set a lower
maximum scholarship amount for eligible students whose family
income falls within paragraphs (2) and (3) of this subsection
(e); that amount may not exceed the necessary costs and fees
for attendance at the qualified school and is subject to the
limitations on average scholarship amounts set forth in
paragraphs (2) and (3) of this subsection, as applicable. The
qualified school shall notify the scholarship granting
organization of its necessary costs and fees as well as any
maximum scholarship amount set by the school. Scholarships
shall be prorated as follows:
(1) for eligible students whose household income is

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less than 185% of the federal poverty level, the
scholarship shall be 100% of the amount determined
pursuant to this subsection (e) and subsection (e-5) of
this Section;
(2) for eligible students whose household income is
185% or more of the federal poverty level but less than
250% of the federal poverty level, the average of
scholarships shall be 75% of the amount determined
pursuant to this subsection (e) and subsection (e-5) of
this Section; and
(3) for eligible students whose household income is
250% or more of the federal poverty level, the average of
scholarships shall be 50% of the amount determined
pursuant to this subsection (e) and subsection (e-5) of
this Section.
(e-5) The statewide average operational expense per
student among public schools shall be multiplied by the
following factors:
(1) for students determined eligible to receive
services under the federal Individuals with Disabilities
Education Act, 2;
(2) for students who are English learners, as defined
in subsection (d) of Section 14C-2 of the School Code,
1.2; and
(3) for students who are gifted and talented children,
as defined in Section 14A-20 of the School Code, 1.1.

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(f) A scholarship granting organization shall distribute
scholarship payments to the participating school where the
student is enrolled.
(g) For the 2018-2019 school year through the 2027-2028
2022-2023 school year, each scholarship granting organization
shall expend no less than 75% of the qualified contributions
received during the calendar year in which the qualified
contributions were received. No more than 25% of the qualified
contributions may be carried forward to the following calendar
year.
(h) For the 2028-2029 2023-2024 school year, each
scholarship granting organization shall expend all qualified
contributions received during the calendar year in which the
qualified contributions were received. No qualified
contributions may be carried forward to the following calendar
year.
(i) A scholarship granting organization shall allow an
eligible student to transfer a scholarship during a school
year to any other participating school of the custodian's
choice. Such scholarships shall be prorated.
(j) With the prior approval of the Department, a
scholarship granting organization may transfer funds to
another scholarship granting organization if additional funds
are required to meet scholarship demands at the receiving
scholarship granting organization. All transferred funds must
be deposited by the receiving scholarship granting

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organization into its scholarship accounts. All transferred
amounts received by any scholarship granting organization must
be separately disclosed to the Department.
(k) If the approval of a scholarship granting organization
is revoked as provided in Section 20 of this Act or the
scholarship granting organization is dissolved, all remaining
qualified contributions of the scholarship granting
organization shall be transferred to another scholarship
granting organization. All transferred funds must be deposited
by the receiving scholarship granting organization into its
scholarship accounts.
(l) Scholarship granting organizations shall make
reasonable efforts to advertise the availability of
scholarships to eligible students.
(Source: P.A. 102-699, eff. 4-19-22; 102-1059, eff. 6-10-22;
103-154, eff. 6-30-23.)
(35 ILCS 40/65)
(Section scheduled to be repealed on January 1, 2025)
Sec. 65. Credit period; repeal.
(a) A taxpayer may take a credit under this Act for tax
years beginning on or after January 1, 2018 and ending before
January 1, 2029 January 1, 2024. A taxpayer may not take a
credit pursuant to this Act for tax years beginning on or after
January 1, 2029 January 1, 2024.
(b) This Act is repealed on January 1, 2030 January 1,

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2025.
(Source: P.A. 102-16, eff. 6-17-21.)
Section 10. The Illinois Income Tax Act is amended by
changing Section 224 as follows:
(35 ILCS 5/224)
Sec. 224. Invest in Kids credit.
(a) For taxable years beginning on or after January 1,
2018 and ending before January 1, 2029 January 1, 2024, each
taxpayer for whom a tax credit has been awarded by the
Department under the Invest in Kids Act is entitled to a credit
against the tax imposed under subsections (a) and (b) of
Section 201 of this Act in an amount equal to the amount
awarded under the Invest in Kids Act.
(b) For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if
the liability company is treated as a partnership for purposes
of federal and State income taxation, the credit under this
Section shall be determined in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and subchapter S of the Internal Revenue
Code.
(c) The credit may not be carried back and may not reduce
the taxpayer's liability to less than zero. If the amount of
the credit exceeds the tax liability for the year, the excess

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may be carried forward and applied to the tax liability of the
5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is
a tax liability. If there are credits for more than one year
that are available to offset the liability, the earlier credit
shall be applied first.
(d) (Blank). A tax credit awarded by the Department under
the Invest in Kids Act may not be claimed for any qualified
contribution for which the taxpayer claims a federal income
tax deduction.
(Source: P.A. 102-699, eff. 4-19-22.)