These are two things many of us were questioning would ever occur in our lifetime. But we can now say both are a reality! Today marks the first time in over two years that Illinois will be operating under a budget. This is a result after the House voted to override Governor Rauner's veto of Senate Bill 9. The House garnered the necessary votes to end the two year stalemate full of political puffery and sparring. Some of the relevant changes that Illinois' taxpayers should be aware of are noted below. All changes are effective July 1, 2017, unless otherwise noted.

• The Illinois income tax rate for individuals increased to 4.95% from 3.75%. The Corporate income tax rate increased to 7% from 5.25%.

• The separate combination reporting for certain industries including insurance companies, financial organizations, federally regulated exchanges and transportation services has been eliminated.

• The elimination of the domestic production deduction under IRC Section 199 by decoupling from the federal regime.

• The definition of "United States" has been amended to eliminate the commonly referred to "outer continental shelf" exemption.

• The tax incentives for gasohol will end on July 1, 2017 instead of the previous end date of December 31, 2018.

• The tax credit for residential real property will be eliminated for the taxable years on or after January 1, 2017 for certain taxpayers. Taxpayers may not claim a credit if their adjusted gross income for the taxable year exceeds $500,000 for spouses filing jointly or $250,000 for all other taxpayers.

Credits & Exemptions

• The research and development credit will be reinstated and extended through January 1, 2022. The credit was previously eliminated as of January 1, 2016, but will now apply continuously for all tax years ending on or after December 31, 2004 until January 1, 2022. Research activities within the State applicable under IRC Section 41 are eligible.

• The exemption for machinery and equipment used for graphic arts will be reinstated under the manufacturing exemption. This exemption had previously sunset on August 30, 2014.

• The sales tax discount for blended ethanol and biodiesel fuels will be extended to all sales made on or before December 31, 2023. Prior to the passage of this bill, these fuels would have been subject to tax effective December 31, 2018.

Notable Proposals Left out of the Final Bill

• A sales tax expansion to include services and the "Netflix tax" imposed on streaming television services were removed from the enacted bill.

• An attempt to modify the False Claims Act, which has led to significant litigation in Illinois, was also notably left off the final version.

• Lastly, a $.01 per ounce tax on sweetened beverages which appeared in the originally introduced Senate Bill was also left out of the enacted version of SB9. This proposed sweetened beverage tax would have been in addition to the Cook County Sweetened Beverage Tax which a Cook County Judge stayed last week after a taxpayer sued to block the enforcement of the county ordinance.

These changes will have various implications on taxpayers.