HB1573 amends the Illinois Income Tax Act to create a new state income tax deduction for employer-provided educational assistance. Beginning with taxable years on or after January 1, 2026, a taxpayer may subtract from Illinois base income amounts paid by an employer on the taxpayer’s behalf under an educational assistance program as defined in Section 127 of the Internal Revenue Code, even if those amounts are already excluded from federal adjusted gross income. The deduction is capped at the first $5,250 of assistance provided to any individual, matching the federal educational assistance exclusion limit.
The bill also includes a parallel deduction for amounts a taxpayer pays on behalf of an employee as part of an educational assistance program, again limited to the first $5,250 per individual. In both cases, the deduction is exempt from Section 250 of the Act, meaning it would not be subject to the general limitations in that section. The bill is effective immediately, but the new deductions would apply starting in tax year 2026.
Impact
HB1573 would modify Section 203 of the Illinois Income Tax Act by adding new subtraction modifications for educational assistance benefits in the individual, corporate, and partnership provisions of the base income calculation. The practical effect is to reduce Illinois taxable income for employers and taxpayers who provide qualifying education assistance, thereby lowering state income tax liability for eligible filers. It would not change federal tax law, but it would conform Illinois treatment more closely to the federal Section 127 framework while allowing the deduction even when the benefit is already excluded federally.
Sentiment
The available record shows no committee transcript, recorded vote, or other debate history for HB1573, so there is no documented legislative sentiment beyond the bill’s introduction. Based on the bill text and caption, the measure appears to be a targeted tax incentive proposal intended to support education and workforce development through employer-sponsored assistance. Because no votes or hearing comments are available, support or opposition cannot be reliably characterized from the provided materials.
Contention
No specific points of contention are documented in the provided record. Potential areas of policy debate, based on the text alone, would likely include the revenue impact of creating a new deduction, whether the $5,250 cap is appropriate, and whether the benefit should apply to both employer-paid and employee-paid assistance. However, there is no evidence in the supplied materials of any stated objections, amendments, or negotiated compromises.
Permits cosigners to student loans under New Jersey College Loans to Assist State Students (NJCLASS) Loan Program to make payments on loans; allows gross income tax deduction for certain payments under NJCLASS Loan Program.