Budget & Taxes (Sales Tax)

This bill primarily updates tax and bond laws in Illinois to support large-scale construction projects known as megaprojects. It allows the Department of Commerce and Economic Opportunity to certify specific building projects, granting eligible developers a temporary exemption from state and local taxes on building materials for up to 15 years. Additionally, the legislation clarifies that public corporations can no longer levy taxes to pay off bonds once the debt is fully paid or the bond matures. The bill also requires that future bond referenda be held during general elections rather than at regularly scheduled times, while making various technical adjustments to existing tax acts.

Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that diapers for use by infants, children, or adults are exempt from the taxes under the Acts. Effective immediately.

Specifies that the amendatory Act may be referred to as the Reducing Expenses and Advancing Local (REAL) Housing Act. Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Creates the Middle Housing Incentive Program. Amends the Department of Labor Law of the Civil Administrative Code of Illinois. Authorizes the Department to establish workforce development initiatives. Amends the Department of Revenue Law of the Civil Administrative Code of Illinois. Extends the Veteran Property Tax Relief Reimbursement Pilot Program to July 1, 2030 (rather than July 1, 2028). Describes administrative responsibilities of the Department. Amends the State Finance Act. Creates the Veterans Property Tax Relief Reimbursement Pilot Program Fund and the Middle Housing Incentive Program Fund as special funds in the State treasury. Amends the Illinois Municipal Code and the Counties Code. Provides that a county or municipality may opt in, by resolution, to participate in the receipt of Local Government Distributive Fund revenues exceeding 8% of State income tax collections. Authorizes by-right overlay districts for middle housing and other housing-related innovations. Amends the Tax Increment Allocation Redevelopment Act. Makes changes to the definition of "redevelopment costs." Amends the Use Tax Act, the Services Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Changes the rate of tax on qualified residential development building materials to 1.25% (rather than 6.25%). Amends the Property Tax Code. Makes changes concerning the distribution of moneys collected from the Real Estate Transfer Tax. Amends the Prevailing Wage Act. Modifies the definition of "public works". Amends the Illinois Housing Development Act. Establishes grant-making and reporting requirements for the Illinois Housing Development Authority. Amends the Real Estate License Act of 2000. Limits commissions charged in residential real estate transactions. Amends the Security Deposit Return Act, the Security Deposit Interest Act, and the Landlord and Tenant Act. Makes changes regarding screening reports of prospective tenants and upfront rental costs of residential units. Makes conforming changes in the Condominium Property Act and the Common Interest Community Association Act regarding middle housing. Makes other changes. Effective January 1, 2028.

Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that, from July 1, 2026 through December 31, 2026, use and occupation taxes on motor fuel and gasohol are imposed at the rate of 1.25%. Makes corresponding changes concerning the distribution of proceeds. Effective immediately.

Creates the Short-Term Rental Excise Tax Act. Imposes a tax upon renters of short-term rentals at the rate of 4% of the rental price of those short-term rentals. Provides that the proceeds from the tax shall be deposited into the Community Land Trust Fund. Amends the State Finance Act to create the Community Land Trust Fund. Provides that moneys in the Community Land Trust Fund shall be used by the Illinois Housing Development Authority for development, staffing, and capacity building and technical assistance related to community land trusts in the State. Amends the Community Land Trust Home Ownership Act. Makes changes to the definition of community land trust. Effective immediately.

Amends the Cigarette Tax Act. Provides that 2% of the moneys received under that Act, the Cigarette Use Tax Act, and the tax imposed on little cigars under the Tobacco Products Tax Act of 1995 shall be deposited into the University of Illinois Cancer Center Fund. Amends the State Finance Act to create the University of Illinois Cancer Center Fund. Provides that moneys in the Fund shall be used by the University of Illinois Cancer Center for purposes of cancer research, patient care, and operating expenses of the Cancer Center. Effective immediately.

Amends the Illinois Municipal Code. Provides that the municipal hotel operators' tax and municipal hotel use tax in Dupage County are repealed on January 1, 2029 (rather than January 1, 2027).

Amends the Illinois Housing Development Act. Provides that the Illinois Housing Development Authority shall issue to home builders who build single-family homes in the State (i) certificates of exemption from the Retailers' Occupation Tax Act, the Use Tax Act, the Service Use Tax Act, and the Service Occupation Tax Act and (ii) credit certifications against the taxes imposed under the Illinois Income Tax Act.

Amends the Enterprise Zone Act. Provides that certain credits related to high impact businesses do not apply on or after the effective date of the amendatory Act. Amends the Illinois Income Tax Act. Provides that a construction jobs credit does not apply for taxable years ending on or after the effective date of the amendatory Act. Provides that a high impact business construction jobs credit does not apply for taxable years ending on or after the effective date of the amendatory Act. Makes changes concerning the business interest deduction. Creates an addition modification for the federal deduction for domestic research or experimental expenditures. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Makes changes concerning incentives for biodiesel, renewable diesel, and biodiesel blends. Makes other changes.

Creates the Capital Area Tourism Authority Act. Establishes the Capital Area Tourism Authority as a political subdivision and unit of local government for the benefit of the general public and for the promotion of business, industry, commerce, and tourism in the City of Springfield, Sangamon County, and the State of Illinois. Provides that, if and only if the Sangamon County Board, by ordinance, imposes a tax under a specified provision of the Counties Code on all hotel operators who engage in business as a hotel operator within a STAR bond district that is established in the territory of the Authority and if the Sangamon County Board also resolves that all of the revenue generated from that tax, as well as all of the tax receipts generated from local sales tax within such a STAR bond district, shall be dedicated to the payment of the project costs for any STAR bond project in such a district and shall be considered pledged STAR revenues under the Statewide Innovation Development and Economy Act, then the Authority may exercise certain economic development powers. Contains provisions concerning the powers and duties of the Authority; the membership of the Board of the Authority; meetings and records of the Board of the Authority; the use of pledged tax revenue; ownership and control of projects financed by the Authority; the investigatory authority of the Board of the Authority; and other matters. Contains legislative findings. Defines terms. Effective immediately.