Illinois Gives Tax Credit Act and the Social Security Fairness Act

On January 28 and 30, the University of Illinois Tax School will hold two different webinars covering several topics important to tax professionals as they enter tax season. Two of those topics are highlighted below: Illinois Gives Tax Credit Act and Social Security Fairness Act.

Illinois Gives Tax Credit Act

The Illinois Gives Tax Credit Act offers a significant incentive for Illinois taxpayers to support local charitable causes. Effective for tax years ending on or after December 31, 2025, this act provides a state income tax credit of 25% for qualified contributions made to permanent endowment funds held by Qualified Community Foundations (QCFs). The maximum credit a taxpayer can claim per year is $100,000.

To qualify, taxpayers must make their contributions to QCFs that are approved by the Illinois Department of Revenue. These endowment funds must provide charitable grants exclusively for the benefit of Illinois residents or charities located within the state.

Details on how to qualify and apply for the credit will be provided in the Illinois Tax Issues and Update Webinar on Tuesday, January 28, at 10:00 am.

Social Security Fairness Act

The recently enacted Social Security Fairness Act, signed into law on January 5, 2025, brings significant changes to the social security benefits received by certain public sector employees. By repealing the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), the Act eliminates the reduction in social security benefits for individuals who receive pensions from non-Social Security-covered employment, such as federal, state, and local government jobs. The provision is effective for benefits payable after December 2023.

Repealing the WEP will likely increase the social security benefits received by retirees with government pensions who also earned salaries or wages subject to social security at some time in their careers. Similarly, the repeal of the GPO will likely increase the social security benefits received by some recipients of government pensions. The affected recipients of government pensions also receive social security spousal benefits based on their spouse’s work history. Their spousal benefits are generally the result of the spouse working in a private-sector job subject to social security tax.

The Social Security Fairness Act brings changes that will increase the social security benefits for many retirees, particularly those in teaching, law enforcement, and other public service roles. For tax practitioners, this means that clients who were previously affected by WEP and GPO will now see higher social security benefits as well as a lump sum payment. The increased benefits could impact their overall tax liability. It’s crucial to review and adjust tax planning strategies for these clients to account for the increased income and potential changes in tax brackets.

This legislation’s impact and planning opportunities will be discussed in the Get Ready for Filing Season Webinar on Thursday, January 30, at 2:00 pm.

Sources

• The Illinois Gives Tax Credit Act. Dec. 2024. Illinois Department of Revenue. 
• FAQs – Illinois Gives Tax Credit Program. Illinois Department of Revenue. 
• Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) update. Social Security Administration. 
• Biden signs the Social Security Fairness Act into law: What to know. Folley, Aris. Jan. 6, 2025. The Hill.
• Social Security Fairness Act Will Boost Retirement Benefits For Millions. Will You Be Impacted? Pomroy, Kathryn. Kiplinger Personal Finance.
• The Social Security Fairness Act: What we know so far. Flanagan, Tammy. Jan. 9, 2025. Government Executive.