Illinois General Assembly extends research credit through 2032 and outlines remediation tax credits

House Bill 3821, introduced in the Illinois House of Representatives on March 3, 2025, aims to extend and clarify tax credits related to research and development as well as environmental remediation. The bill seeks to address the need for continued support for innovation and environmental cleanup efforts in the state.

One of the key provisions of House Bill 3821 is the extension of the research and development tax credit, which is intended to apply continuously for tax years ending on or after December 31, 2004, and before January 1, 2032. This provision validates actions taken by taxpayers relying on the continuation of this credit, thereby providing a sense of stability for businesses engaged in research and development activities.

Additionally, the bill outlines an Environmental Remediation Tax Credit, allowing taxpayers to claim a credit for unreimbursed eligible remediation costs incurred for environmental cleanup. This credit is set at 25% of eligible costs exceeding $100,000 per site, with a cap of $40,000 per year. Notably, the $100,000 threshold does not apply to sites located in designated enterprise zones, which could incentivize cleanup efforts in economically distressed areas.

The introduction of House Bill 3821 has sparked discussions among lawmakers and stakeholders. Proponents argue that the bill will foster innovation and environmental responsibility, potentially leading to job creation and economic growth. However, some critics express concerns about the long-term fiscal implications of extending these tax credits, questioning whether they will effectively stimulate the desired outcomes.

The bill's significance lies in its potential to impact both the economy and the environment in Illinois. By supporting research and development, it aims to position the state as a leader in innovation. Simultaneously, the environmental remediation provisions could enhance public health and safety by encouraging the cleanup of contaminated sites.

As House Bill 3821 moves through the legislative process, its future will depend on ongoing debates and negotiations among lawmakers, as well as the perspectives of various interest groups. The outcome could shape Illinois' economic landscape and environmental policies for years to come.