- A Returning Citizen is someone who has been convicted of a crime in Illinois or an offense in any other jurisdiction, not including any offense or attempted offense that would subject a person to registration under the Sex Offender Registration Act;
- A Returning Citizen was sentenced to a period of incarceration in an Illinois adult correctional center; and
- A Returning Citizen is someone who was hired by the taxpayer within five years after being released from the Illinois Adult Correctional Center.
No. Any Returning Citizen whose offense or attempted offense subjects a person to registration under the Sex Offender Registration Act is not eligible for this credit.
The new, more robust changes in the Credit for Wages Paid to Returning Citizens goes into effect for your Tax Year 2025 filing.
- The new Illinois law increases the tax credit for businesses that hire formerly incarcerated individuals from 5% to 15% of qualified wages.
- The ceiling for these incentives has increased from $1,500 to $7,500 per Returning Citizen employed by the business.
- An annual credit award cap has been changed from no annual limit to a $1,000,000 annual limit effective in Tax Year 2025.
- The length of time has changed from within three years to within FIVE years after being released from the Illinois Adult Correctional Center.
Immediately! While the expanded 2025 Tax Credit of up to $7500 does not take effect until your 2025 Tax Year filing, there is still a tax credit of up to $1500 applicable to TY 2024 if you hired a returning citizen in the 2024 tax year.
Beginning with the day the returning citizen begins work, only wages subject to federal unemployment tax and only wages attributable to service rendered during the first year are eligible for the 15% of qualified wages or max $7,500 credit.
The calculation is based on the qualified wages of the Returning Citizen. It is 15% of the qualifying wages or $7500 credit, whichever is less. The maximum amount for the Tax Credit may not exceed $7500.
Yes. Starting in TX 2025, the maximum annual credit award cap is $1,000,000 per year. Once that $1,000,000 has been allocated to qualifying businesses, the program will shut down until following year.
Yes. If a Returning Citizen worked at a business for three months and then left your employ, (i.e. got a different job, moved out of state, etc.) then the Returning Citizen’s qualified wages would be calculated based on those three months of employment. Therefore, the credit is based on the length of employment.
Yes, as long as all the parameters are met as specified as what qualifies as a Returning Citizen pertinent to this act in particular, point 3 below.
- A Returning Citizen is someone who has been convicted of crime in Illinois or an offense in any other jurisdiction, not including any offense or attempted offense that would subject a person to registration under the Sex Offender Registration Act;
- A Returning Citizen was sentenced to a period of incarceration in an Illinois adult correctional center; and
- A Returning Citizen is someone who was hired by the taxpayer within five years after being released from the Illinois Adult Correctional Center.
- Includes only wages that are subject to federal unemployment tax under Section 3306 of the Internal Revenue Code, without regard to any dollar limitation contained in that Section;
- Does not include any amounts paid or incurred by an employer for any period to any qualified returning citizen for whom the employer receives federally funded payments for on-the-job training of that qualified returning citizen for that period; and an employer for any period to any qualified returning citizen for whom the employer receives federally funded payments for on-the-job training of that qualified returning citizen for that period; and
- Includes only wages attributable to service rendered during the one-year period beginning with the day the qualified returning citizen begins work for the employer.
If the taxpayer has received any payment from a program established under Section 482(e)(1) of the federal Social Security Act with respect to a qualified returning citizen, then, for purposes of calculating the credit under this Section, the amount of the qualified wages paid to that qualified ex-offender must be reduced by the amount of the payment.
Immediately! While the expanded 2025 Tax Credit of up to $7500 does not take effect until your 2025 Tax Year filing, there is still a tax credit of up to $1500 applicable to TY 2024 if you hired a returning citizen in the 2024 tax year.
The Department of Revenue anticipates developing a program to be included in the My Tax Illinois portal where a business may register for this tax credit.
Since the credit is available for taxable years beginning on or after 12/31/25, the date for this program to be instituted is December 2025 with anticipation of a printed or mailed completed form to be attached to your business tax return.
The Department of Revenue will specify any requirements in the My Tax Illinois portal when developed at a later date.
Illinois Department of Revenue
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