Quinn signs bill to double tax credit for poor

CHICAGO (MCT) — Low-income families across Illinois will get a little extra cash in their pockets under a measure Gov. Pat Quinn signed into law Tuesday that doubles a tax credit for the working poor.

The increase to the state's earned income tax credit will be phased in over the next two years. Once in place, families will get to keep an average of $100 more a year.

"I really think it is a special day for our state of Illinois, it's a day long in coming," Quinn said, noting it has been more than 10 years since the state increased benefits under the tax credit, which Quinn called "a complicated name for tax relief for working families raising children."

The tax credit is part of a broader package that also provided hundreds of millions of dollars worth of tax breaks to Hoffman Estates-based Sears Holdings Corp. and Chicago's financial exchanges, which had threatened to leave Illinois after last year's major income tax increase.

Together, the changes will cost the state an estimated $371 million a year. However, Quinn argues the tax credit for families will act as an economic booster as people use the extra money to buy things like groceries and clothes.

"That family is not going to admire money in a bank vault, especially now," Quinn said. "They are going to go out and spend the money in their local economy, creating jobs."

Roughly 935,000 families received the tax credit in 2010, though some tax experts say that number may increase to 1 million given current economic conditions. To qualify, families must meet income requirements set by the federal government. For instance, a single parent with one child can earn up to $36,052 a year, while a couple with three or more children cannot make more than $43,998 a year. More information is at irs.gov/eitc.

The new law also hikes the standard personal exemption for all individual taxpayers by $50, to $2,050, for 2012. The value of the exemption will be indexed to the cost-of-living adjustment in each subsequent tax year.

The measure was sponsored by Sen. Toi Hutchinson, D-Olympia Fields, and House Majority Leader Barbara Flynn Currie, D-Chicago.