HB2897 amends the Illinois Income Tax Act to change how a portion of income tax revenue is distributed. Beginning July 1, 2025, the Department of Revenue would be required to deposit 10% of net revenue from individual, corporate, and pass-through entity income taxes directly into the Local Government Distributive Fund (LGDF) as the revenue is realized, rather than relying on the existing monthly transfer formula from the General Revenue Fund. The bill is framed as a revenue-distribution measure rather than a tax-rate change; it does not alter who owes income tax or the tax rates themselves.
The bill would revise Section 901 of the Income Tax Act, which governs collection and the allocation of income tax receipts among the General Revenue Fund, the Income Tax Refund Fund, the Education Assistance Fund, the Fund for the Advancement of Education, the Commitment to Human Services Fund, and the LGDF. Its practical effect would be to increase the share of income tax receipts flowing directly to local governments, while reducing the amount first retained in state-level accounts before transfer. Because the bill is effective immediately but the new LGDF deposit rule begins July 1, 2025, it would alter the state’s revenue flow and budgeting structure for future fiscal years.
The general sentiment in the available record is limited because there are no committee transcripts or recorded votes attached to the bill. Based on the bill caption, “INC TX-INCREASE LGDF,” the measure appears intended to support local government funding, which suggests a pro-local-government fiscal policy goal. However, without hearing testimony or vote history, there is no documented public support or opposition in the provided materials.
The main point of contention likely concerns state versus local fiscal priorities. Supporters would likely favor the bill as a way to provide a more direct and predictable revenue stream to municipalities and other local governments. Opponents may argue that directing 10% of income tax revenue to the LGDF reduces flexibility in the state budget and could constrain funding for state programs, especially because the change would occur automatically as revenue is realized. Any debate would likely center on the size of the transfer, the impact on the General Revenue Fund, and whether the state can absorb the reduced share of income tax receipts.
Impact
HB2897 would amend Section 901 of the Illinois Income Tax Act to require the Department of Revenue, beginning July 1, 2025, to deposit 10% of net income tax revenue directly into the Local Government Distributive Fund as collected. This would change the current transfer mechanism and increase the direct flow of income tax receipts to local governments, while reducing the amount available for state-level distribution through the General Revenue Fund and related transfers. The bill affects state revenue allocation, local government financing, and the statutory framework governing income tax deposits.
Sentiment
No committee transcripts or roll-call votes were provided, so there is no recorded debate or formal legislative sentiment in the supplied materials. The bill’s caption indicates an intent to increase the Local Government Distributive Fund, which suggests a generally supportive posture toward local government funding. At the same time, the measure would divert a larger share of income tax revenue away from state accounts, so any opposition would likely come from those concerned about state budget capacity and revenue flexibility.
Contention
The likely contention is over the tradeoff between local government aid and state fiscal resources. Supporters would likely argue that local governments need a larger, more reliable share of income tax revenue and that direct deposits improve predictability. Critics would likely focus on the reduction in state revenue available for the General Revenue Fund and other state purposes, as well as the automatic nature of the transfer beginning in fiscal year 2026. Because no hearing transcript or vote record is available, specific named opponents or supporters cannot be identified from the provided materials.