SB 1911 (Senator Elgie Sims, Jr., D-Chicago/Representative Curtis Tarver, D-Chicago) was approved by both chambers and makes several fiscal, tax, and economic development changes. It transfers funds to support state auditing functions, extends and modifies income tax provisions, updates the film production tax credit rules, and authorizes STAR bonds for financing major tourism and entertainment projects.
The legislation is intended to address an anticipated state revenue shortfall by adjusting Illinois tax laws to account for federal tax changes. The federal government’s recent budget and tax policy actions are projected to reduce Illinois revenues by approximately $267 million in Fiscal Year 2026. To mitigate this impact, the bill makes technical changes to maintain state revenue streams, including updating terminology related to foreign corporate income from Global Intangible Low-Taxed Income (GILTI) to Net Controlled Foreign Corporation Tested Income (NCTI) so Illinois can continue taxing this income under the new federal definition. The measure also proposes decoupling from federal bonus depreciation rules, which allow businesses to deduct the cost of certain capital investments more quickly. Supporters argue the changes will help Illinois continue funding core public services by preserving existing revenue sources.
Key Components
State Finance Transfer
- Transfers $17,653,153 from the General Revenue Fund to the Audit Expense Fund
- Supports the Office of the Auditor General’s work reviewing state spending and programs
Pass-Through Entity (PTE) Tax Election Extended
- Removes the sunset on Illinois’ PTE income tax workaround (originally ending after 2025)
- Allows partnerships and S-corps to continue electing entity-level taxation to bypass the federal $10,000 SALT deduction cap
Bonus Depreciation Alignment
- Expands Illinois' bonus depreciation adjustments to cover a second category of federal property (qualified production property under IRC §168(n))
- Helps maintain conformity with federal tax rules for businesses
Film Production Tax Credit Changes
- Adjusts credit calculation rules
- Limits wages for no more than two executive producers per production to qualify as Illinois labor costs (with an exception if those producers also have other compensated roles)
- Adjusts rules for nonresident wages
- Requires withholding on “loan-out” company wages (common in film payroll structures)
- Sets a program sunset: no new credits after tax year 2039
STAR Bonds — New Economic Development Program
Creates the Statewide Innovation Development and Economy Act, authorizing:
- Municipalities and counties to issue Sales Tax and Revenue (STAR) bonds
- STAR bonds can fund major tourism, entertainment, retail, and mixed-use projects
- Projects must be in one of the State’s 10 Economic Development Regions
- Governor’s Office (in consultation with DCEO) must approve STAR districts and projects
- Goal: stimulate tourism and large-scale regional economic development
STAR bonds are similar to programs used in other states (notably Kansas), where future sales tax revenue is pledged to repay project financing.
County Implications
- Economic Development Authority Expanded: Counties gain power to issue STAR bonds for qualifying projects, offering a new tool for attracting tourism and commercial investment.
- State Oversight: Projects require approval from the Governor/DCEO, meaning counties must coordinate closely with the state.
- Revenue Considerations: STAR bonds redirect future sales tax revenue to bond repayment; counties should evaluate long-term fiscal impacts before participating.
- Film Tax Credit Administration: The withholding and wage-eligibility changes may require coordination with local film offices or payroll providers, especially in counties hosting productions.
This bill extends tax benefits for businesses, refines the state’s film production credit, supports auditing operations, and introduces a financing mechanism (STAR bonds) for tourism and entertainment projects. Counties may see new development opportunities, but should weigh fiscal risks and state approval requirements when considering STAR bond proposals.