Call for expansion of minimum wage tax credit

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The Naperville Area Chamber of Commerce (NACC) has joined many chambers across the state for the “Chambers All-In” initiative to advocate for key bills that will best support our community. business towards economic recovery. * A major bill in play in which we are actively promoting the HB5320 Minimum Wage Credit ** which would increase minimum wage tax to offset the minimum wage increase.

The Illinois General Assembly passed PA 101-0001 in 2019, which sets phased minimum wage increases (see increases and dates in the table below). This same legislation provided a minimum wage tax credit to support businesses and non-profit organizations with 50 full-time equivalent employees or less. This credit is equivalent to the percentage of the difference between the minimum wage in 2019 ($8.25) and the progressive increases. In the original PA 101-0001 legislation, the tax credit percentage decreased each year, with the credit set at 5% by 2025. The table below shows the schedule for the gradual increase in the minimum wage , the tax credit percentage difference in the original legislation and what percentages are proposed in the minimum wage credit bill HB5320.

Minimum wage increase

(from $8.25 in 2019)

2019 law creating a tax credit* Proposed legislation
$9.25 (1/1/20)

$10 (01/07/20)

25% in 2020 25% in 2020
$11 (1/1/21) 21% in 2021 25% in 2021
$12 (1/1/22) 17% in 2022 25% in 2022
$13 (1/1/23) 13% in 2023 25% in 2023
$14 (1/1/24) 9% in 2024 25% in 2024
$15 (1/1/25) 5% in 2025 5% in 2025
Ends 12/31/26 for employers with more than 5 employees.

Ends 12/31/27 for employers with less than 5 employees.

* The tax credit reflects the difference between the new minimum wage at each increase and what each employee was paid previously.

We are proud that the HB5320 Minimum Wage Credit Bill has bipartisan support. A special thank you to the legislators in our region who co-sponsored this bill.

Having to shoulder the additional costs of minimum wage increases to the existing financial challenges caused by COVID-19 has dealt a significant financial blow to our small businesses. Increasing the minimum wage tax credit percentage will provide much-needed financial relief to our small businesses over the next few years as our economy recovers from the devastation of a global pandemic. This extra money put back in the pockets of small businesses will allow them to reinvest in expansion and job growth. The ANCC will continue to advocate for this bill. If your business or nonprofit can speak to the value of this minimum wage tax credit for your organization, please contact us so we can pass this information on to our elected officials who need to hear from you.

As always, please don’t hesitate to contact me if you have any questions or would like to discuss policy issues that impact your business or industry.

RESOURCES:

* See Chambers ‘All-In’ details of the Minimum Wage Tax Credit at:

https://www.linkedin.com/posts/naperville-area-chamber-of-commerce_chambersallin-activity-6899849927132811264-HCk3/

** Full description of HB5320 Minimum Wage Credit Bill with updates on bill co-sponsors, actions, etc. from the Illinois General Assembly website:

https://www.ilga.gov/legislation/billstatus.asp?DocNum=5320&GAID=16&GA=102&DocTypeID=HB&LegID=139835&SessionID=110


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