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Some Illinois parents could qualify for a new tax credit that is part of the state's fiscal year 2025 budget starting July 1.
Under the Illinois tax credit for 2024, eligible families could get up to $300. The credit is available to low and middle-income families with children under age 12.
The Illinois child tax credit Illinois 2024 - explained
During the final hours of the spring legislative session, Illinois lawmakers approved a new child tax credit. The 2024 child tax credit from Illinois is available to families with children under age 12 and those who qualify for the federal EITC (Earned Income Tax Credit).
There is an income requirement as well. Married couples with annual incomes up to $60,000 and singles earning up to about $50,000 qualify for the credit.
How much is the child tax credit in Illinois?
The credit amount depends on the number of children a taxpayer has. For instance, the credit amount is capped at just over $300 for eligible taxpayers with three or more children, about $270 for taxpayers with two children and about $170 for eligible taxpayers with one child.
The 2024 child tax credit from Illinois equals 20% of the state's EITC, which allows taxpayers to claim 20% of the federal EITC. Starting in tax year 2025, the credit amount will increase to 40% of the state's EITC, meaning the maximum available child tax credit will also increase to $600.
It is difficult to estimate the credit amount for future years as the federal EITC, which eventually determines the size of the child tax credit from Illinois, is tied to inflation. The 2024 child tax credit from Illinois is estimated to cost the state about $50 million, while the cost for subsequent years will be about $100 million or more.
Presently, the Illinois Department of Revenu is preparing guidelines for next year's filing season and will soon share information on the 2024 child tax credit on its website.
A much-needed credit
The Illinois child tax credit could prove extremely useful for families struggling to make ends meet. The extra money can help families pay for childcare, an extra week of groceries, or pay for car repairs.
Such use of the credit boosts the economy as well. Experts are of the view that every child tax credit dollar creates $2.50 in economic stimulus. In fact, a January report from the Illinois Economic Policy Institute noted that the economic impact of child tax credits is higher than reducing corporate income taxes or capital gains taxes.
Over the past few years, several proposals have been floated for having a permanent child tax credit, including from legislators in the General Assembly, advocacy groups and think tanks.
Earlier this year, Gov. JB Pritzker proposed a child tax credit in his proposed budget. The proposed credit, which was smaller than the current approved version, would have applied to children below three years and cost the state about $12 million.
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