Illinois HB 4350: INC TX-SMALL BUSINESS CREDIT

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104TH GENERAL ASSEMBLY 
State of Illinois 
2025 and 2026
HB4350

Introduced 1/14/2026, by Rep. Martin McLaughlin 

SYNOPSIS AS INTRODUCED:

35 ILCS 5/246 new

 Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to 100%, but in no event more than $250,000 per taxpayer in any taxable year, of qualified business expenses paid by a qualified small business during the taxable year. Effective immediately.

LRB104 15940 HLH 29175 b

A BILL FOR

HB4350LRB104 15940 HLH 29175 b

1 AN ACT concerning revenue.

2 Be it enacted by the People of the State of Illinois, 

3represented in the General Assembly:

4 Section 5. The Illinois Income Tax Act is amended by 

5adding Section 246 as follows:

6 (35 ILCS 5/246 new)

7 Sec. 246. Small business credit.

8 (a) For taxable years that end on or after December 31, 

92026 and end on or before December 31, 2030, each qualified 

10small business is entitled to a credit against the taxes 

11imposed by subsections (a) and (b) of Section 201 in an amount 

12equal to 100%, but in no event more than $250,000 per taxpayer 

13in any taxable year, of qualified business expenses paid by 

14the qualified small business during the taxable year. 

15 (b) In no event shall a credit under this Section reduce 

16the taxpayer's liability to less than zero. If the amount of 

17the credit exceeds the tax liability for the year, the excess 

18may be carried forward and applied to the tax liability of the 

195 taxable years following the excess credit year. The tax 

20credit under this Section shall be applied to the earliest 

21year for which there is a tax liability. If there are credits 

22for more than one year that are available to offset a 

23liability, the earlier credi