For Illinois residents, taxes can be confusing. In recent years, there have been drastic changes to the federal tax law. Depending on the political climate and philosophies of those controlling the levers of power, it is common for there to be different templates as to how people are taxed. State taxes can also be adjusted. In addition to the upcoming presidential election, the state has a proposal to change the Illinois state tax law and people should be cognizant of how it may impact them. If there are legal problems with any tax-related problem, having legal advice is critical to be protected.
The new proposed tax laws and how they affect Illinois residents
The state currently has a flat tax with a single rate for everyone no matter their income. It is 4.95%. The new proposal is for a graduated income tax. There are many terms that are used for this type of tax, but it essentially means that those who earn more will pay higher taxes. Many states have this. The graduated income tax is championed by Governor J.B. Pritzker.
With budgetary concerns exacerbated by the current health crisis and how it has led to the shuttering of businesses and many people out of work, the graduated tax is promoted as a strategy to bridge that budgetary gap. For the new law to take place, 60% of voters must be in favor of the amendment. However, if there is a simple majority and the other voters leave the space blank in voting for or against it, it will also be approved. If the new law goes into effect, it begins starting in 2021.
For those with potential tax issues, legal advice can be critical
Although this is just a proposed law and is not yet an issue with collecting taxes, litigation, audits and other potential legal challenges with paying taxes, it could be confusing. To have a firm foundational understanding of this new potential law and what will happen if it is put into practice, businesses and individuals would be wise to consult with a firm that is experienced with state and federal tax law to be fully prepared. This is also important with ongoing tax considerations. Calling for a consultation and advice is the first step.