Illinois State Senate District 4 issued the following announcement on Jan. 3.
Senate Majority Leader Kimberly A. Lightford (D-Maywood) reminds small businesses to take advantage of the minimum wage credit starting this year. The new tax credit is intended to help small businesses over the next six years as a part of the state’s minimum wage increase plan.
“Keeping small businesses competitive is a priority when increasing the minimum wage,” Lightford said. “I encourage businesses to take full advantage of this tax credit to ease their transition.”
Businesses and nonprofits with 50 full-time employees or less are eligible to offset a portion of the minimum wage increase cost from their withholding income taxes. Eligible businesses can claim this credit by filing Form IL-941, Illinois withholding income tax return, and a new schedule.
The maximum credit amount allowed is 25% of the difference between the new minimum wage and what each employee was paid previously. The percentage allowed each proceeding year will decrease before sunsetting in 2026 for most small businesses.
Illinois’ minimum wage was last raised in 2010 to $8.25. Raising the wage to $15 an hour is estimated to impact 1.4 million Illinoisans, according to the Illinois Economic Policy Institute at the University of Illinois.
Visit the Illinois Department of Revenue’s website tax.illinois.gov for information on how to calculate this credit, as well as additional resources, including IDOR’s withholding income tax Information Bulletin FY2020-13 and frequently asked questions.
Original source can be found here.