Broker Check

July 1, 2017 State of Illinois and County/City of Peoria Tax Increases

The State of Illinois has increased the income tax provisions of the State Revenue Code.  See more below:

Important Note to Our Clients:

There may be certain allocations or tax considerations to be made in preparation of your 2017 tax return next January-April. Please save a copy of your most recent pay stub prior to 07/01/2017, and bring with your tax return information for our review. 

Tax Rates
Effective July 1, 2017, income tax rates increase as follows:

• For individuals, trusts, and estates, the Illinois Income Tax is increasing
from 3.75 percent (.0375) to 4.95 percent (.0495).

• For corporations (excluding S corporations), the Illinois Income Tax is
increasing from 5.25 percent (.0525) to 7 percent (.07)

Important Note: These tax rate changes are in addition to the recently passed Peoria County local sales tax rate changes among various locales in the Peoria area.

Please see further information below, and be sure to update your Quickbooks/Payroll services tax tables/calculations as well as your sales tax calculations or Point of Sale machines accordingly. 

State of Illinois Tax Rate Changes

City and/or County of Peoria has again increased taxes in areas effective July 1, 2017.

Current Year 07/01/2017 Effective Tax Increases

Source: Pam Adams of the Peoria Journal Star writes 07/03/2017 "Peoria County Schools Sales Tax Begins":

If you’ve noticed some purchases cost a little more this week, that’s the new Peoria County Schools Facilities Sales Tax, which went into effect July 1.

County voters approved the one-half percent sales tax increase by a narrow margin — 50.62 percent to 49.38 percent — in November.

The tax applies to all retail purchases except groceries, medicines, including over-the-counter drugs and vitamins, and big-ticket items such as mobile homes, farm equipment and parts, and vehicles, ranging from cars to recreational vehicles and boats.

School districts can only use the revenues for building improvements, land acquisition or property tax relief. Districts are scheduled to receive their first monthly payment in October.

The Peoria County Regional Office of Education administers the funds locally. Revenues will be split among the county’s 18 public school districts based on their percentage of the county’s total school enrollment. The area’s largest school district, Peoria Public Schools, will receive about 49 percent of the revenues because it has about 49 percent of the county’s total enrollment.

Though the new sales tax amounts to a much-needed windfall for many school districts, Peoria County’s Chief Financial Officer Eric Dubrowski warned against making plans too quickly.

Sales tax revenues have been declining an average of 1.5 percent a year since 2012. The rise of on-line sales and, to a lesser extent, retail growth in East Peoria’s Levee District siphoned off local sales tax revenues, according to Dubrowski.

School districts that take a conservative, wait-and-see, approach before allocating the revenues should be safe. “But if they used aggressive figures and have already spent the money in their minds, they need to be careful,” Dubrowski said.

If the sales tax had been in effect during 2016, school districts would have seen about $9 million in sales taxes for the year.

PPS has already issued $29,000 in bonds and embarked on ambitious, district-wide school improvements. The bond is scheduled to be repaid with sales tax revenues.

Throughout the campaign to pass the referendum, the district projected an estimated $4.2 million a year in sales tax revenues, which translated into the ability to issue about $40 million in bonds.

With a one-half percent increase in sales tax rates, new rates throughout the county depend on where you are in the county. The rate is now 9 percent on most goods in the city of Peoria. But they are as high as 10 percent in downtown Peoria and 11 percent at restaurants, the result of increases, such as the Hotel, Restaurant and Amusement (HRA) Tax, previously enacted by the city of Peoria.

The base rate outside the city is 7.25 percent, though that does not include sales taxes other municipalities may have imposed. For instance, the total sales tax rate in Chillicothe is 7.75 percent. It’s 8.75 percent in Peoria Heights.

These tax rate increases were in addition to prior year tax increases. Those increases are indicated as previously reported in the following:

Prior Year 07/01/2016 Tax Increases

We would like to take an opportunity to let you know of some recent changes in taxation in the City of Peoria. Due to budget questions and concerns, some taxes have increased in Peoria to help them balance their budget. Taxes in general in Peoria County are slated to be increased this year in the following ways:

  • Motor vehicle gasoline tax will increase from 2 cents to 5 cents per gallon
  • City of Peoria sales tax has been increased from 1.5% to 1.75%.
  • Hotel taxes are rising from 5% to 7%.
  • Real Estate taxes have risen 0.25%

Overall sales tax will range from 8.5% to 11.5%, depending upon which part of town business is conducted in Peoria. The gasoline tax increase is raised to the maximum amount allowed by law. Neither the Motor vehicle tax nor the sales tax has been increased in the past 13 years.

These tax rate approvals are slated to begin July 1st, 2016.

The reasons given for the above tax increases given were to raise additional funds for “road reconstruction and preservation” according to the Peoria Budget One Sheet on their 2016 Budget update.

See the following for more information:

Property Tax Bill and Garbage Services Have Been Combined:

Garbage removal services have been added to real estate tax bills. As such, we will be subtracting the garbage removal fees from the amount shown on real estate tax bills, because the garbage fee is not deductible when itemizing deductions for real estate property taxes.

From the City of Peoria Website:

“All real estate tax bills were mailed to Peoria county residents this week. Because of the inclusion of the garbage collection fee now included on the property tax bill, the City of Peoria Finance Department has been inundated with calls from residents with questions.  Due to the high amount of call volume, many calls are going to voice mail. We ask for your patience during this time as staff members are working to return all calls to residents as soon as possible."

Due to recent changes in billing, we ask that residents note the following:

  • While the real estate portion of the bill pertains to 2015, the garbage collection fee is for April-December 2016.
  • Due to the software used for the billing, this fee also shows up on the right hand side under “Drainage Tax.”
    • The amount under “Drainage Tax” should be the same amount as the “Current Tax” of your garbage fee. If there is a municipal lien attached to your property, it will also be included under the “Drainage Tax.”
    • In regards to the garbage bill portion: the bill you received in April was for the garbage collection service provided in March 2016.
  • For residents who normally do not receive a real estate tax bill because of exemptions, they will still need to pay this bill for their garbage collection fee. They will now be receiving a property tax bill that will reflect the garbage collection fee as this is not exempt.

Again, we thank you for your patience and understanding during this time.

Please direct any questions to 494-8807.”

See the following for more information:

Peoria Budget Overview