PRESERVING NEIGHBORHOODS ACT
HB3412 creates the Preserving Illinois Neighborhoods Act, a temporary Illinois income tax credit program aimed at encouraging new housing construction and rehabilitation in underserved areas. The bill applies to taxable years beginning on or after January 1, 2026 and ending on or before December 31, 2031, and it offers credits to qualified taxpayers who incur either qualified new construction expenditures or qualified rehabilitation expenditures on eligible residential property.
The bill defines eligible property as residential property in an underserved area with a market value of $300,000 or less before the project, and that has been vacant for at least two years or contains a structure condemned by the local government. New construction credits equal 15% of qualified expenditures for a qualified new residence, while rehabilitation credits equal 25% of qualified expenditures for restoring an existing single-family residence that is at least 40 years old. The Department of Commerce and Economic Opportunity would administer the program, issue credit certificates, and adopt rules in consultation with the Department of Revenue.
HB3412 would amend the Illinois Income Tax Act by adding a new Section 246 and creating a new, time-limited state tax credit for certain residential development projects. It would affect taxpayers including individuals, partnerships, corporations, trusts, LLCs, and certain tax-exempt charitable organizations with Illinois unrelated business taxable income, while excluding projects that already receive another state income tax credit for the same expenditures. The bill also sets program limits, including a $40,000 per-project cap for new construction credits, a $10,000 minimum expenditure threshold, and an annual statewide cap of $5 million in credits, and it requires periodic reporting and eventual repeal on January 1, 2032.
Based on the bill text and the absence of recorded committee testimony or votes, the overall sentiment appears generally supportive and policy-driven rather than contentious in the available record. The measure is framed as a neighborhood revitalization and housing preservation incentive, suggesting an intent to encourage reinvestment in distressed or underserved communities. No formal opposition, amendments, or recorded roll-call votes are provided in the materials supplied.
The main potential points of contention are likely to be the cost and targeting of the credit program, rather than the concept of redevelopment itself. The annual $5 million cap, first-come-first-served allocation, and the $40,000 per-project limit could raise questions about whether the program is sufficiently broad or equitable across the state. There may also be debate over the eligibility rules, including the $300,000 property-value ceiling, the requirement that properties be in underserved areas, and the exclusion of projects already benefiting from other state tax credits. Because no committee transcript is available, no specific legislator or stakeholder objections are documented in the provided record.