Months of debate between the Illinois state legislature and Governor Bruce Rauner culminated today with the passage of a budget that includes an increase in the state’s Earned Income Tax Credit (EITC) from 10 to 18 percent of the federal credit by 2018.
Under the agreement, which ends the state’s two-year budget impasse, the personal income tax rate for all Illinois workers will increase from 3.75 to 4.95 percent. Increasing the state’s EITC will help to mitigate the burden of an income tax hike on low-wage workers who are often hit hardest by flat tax systems. Advocates in the state had urged the legislature to go even further to support those with the lowest incomes by increasing the EITC to 20 percent of the federal credit.
Illinois joins an impressive number of states that have advanced EITC legislation this session. Montana and South Carolina both enacted new state-level credits earlier this year, and a bill to enact a Hawaii EITC is awaiting signature from the governor. California significantly expanded its EITC and Oregon passed legislation to help increase EITC participation rates.
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