As reported in a previous tax alert on July 7; the Illinois House of Representatives passed an income tax increase, increasing the personal income tax rate to 4.95 percent for 3.75 percent and the corporate income tax up to 7 percent from 5.25 percent. The tax rate increases are retroactive to July 1, 2017.
Paylocity is currently testing the changes and scheduled to deploy the changes in the system later this week. This change will result in the employee having an increase in the amount withheld from their paychecks.
The Illinois Department of Revenue (IDOR) has published a bulletin, which advises that the agency will provide additional guidance and instructions in January 2018 to address how taxpayers will calculate income tax with two different income tax rates applying to the 2017 tax year. The bulletin also addresses several other taxpayer questions regarding the tax increase. The IDOR informational bulletin is available here: http://www.revenue.state.il.us/Publications/Bulletins/2018/FY-2018-02.pdf.
The IDOR also posted a press release this week that provides links to all the publications related to the tax increase, which is available here: http://www.revenue.state.il.us/AboutIdor/PressReleases/PR-2017-07-11.pdf.
Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.