2026 Legislative Agenda
Research and Development Tax Credit
Research and Development (R&D) is the lifeblood of manufacturers, driving continuous innovation and growth. Unfortunately, Illinois’ R&D tax credit is outdated and set to expire without legislative action. This IMA initiative would make the R&D credit permanent, providing manufacturers with the predictability and reliability they need to confidently invest in and expand their R&D operations in Illinois.
Estate Tax Phase Out for Manufacturers
Illinois is one of only a few states that imposes an estate tax, placing an added burden on family-owned manufacturing businesses that are passed from one generation to the next. To help preserve these companies and the jobs they support, the IMA is proposing to exclude a decedent’s business interest in a manufacturing company from the estate tax beginning January 1, 2027.
Bonus Depreciation Decoupling
One of the major changes enacted under HR1, the One Big Beautiful Bill Act, was the creation of a permanent 100% upfront deduction for qualifying property to promote growth in U.S. manufacturing, particularly for companies investing in new equipment or facilities. Because Illinois’ tax structure is closely tied to federal tax policy, Illinois decoupled from the federal provision, unfairly burdening Illinois companies. The IMA is proposing a reversal of that decision so Illinois manufacturers can fully benefit from the same federal incentives available to manufacturers across the nation.
Heat Rate Change
The Clean Energy Jobs Act established limitations for fossil-fueled power plants based on specified “heat rates,” but provided no definition or guidance on how those rates should be calculated. This IMA proposal would define heat rate as the amount of energy, measured in BTUs, used by a generator or power plant to produce one kilowatt-hour of electricity, calculated using a 12-month average. The proposal would also clarify that the required 50 percent reduction in CO₂e emissions by 2035 is based on the 2034 gross heat rate average, rather than imposing a rolling and continuous annual reduction from 2035 through 2040.
GILTI Repeal & Reinstatement of Illinois’ Addback Rules
This IMA proposal would reverse two changes enacted by the Illinois General Assembly in 2025. First, it would repeal recent modifications to the Global Intangible Low-Taxed Income (GILTI) provisions that increase a company’s taxable income by reducing the dividend deduction for companies that own foreign subsidiaries to a 50 percent cap. Second, it would reinstate two Illinois addback rules that were eliminated: (1) when the related entity is subject to tax in another state or foreign country; and (2) when payments are arm’s-length transactions because the related entity pays or accrues the expenses to a foreign unrelated entity.
Energy Reform
Following recent changes under the Clean and Reliable Grid Act (CRGA), this proposal outlines the IMA’s position on several key areas of energy policy through its legislative intent. The IMA Energy Reform proposal would repeal the mandated phaseouts of coal and natural gas power plants, require financing for battery storage projects through the Illinois Finance Authority, establish a sales tax exemption for industrial natural gas use, prohibit Integrated Resource Plans from exceeding rate caps without legislative approval, and require the Illinois Commerce Commission to conduct an annual affordability study.
Recent rate increases and shifts in energy policy are pushing Illinois toward an energy crisis, and potentially an industrial crisis, if manufacturers cannot depend on a reliable and affordable power grid.
Natural Gas Local Referendum
Natural gas is critical to both manufacturers and Illinois residents. To ensure the public has a voice in decisions that directly impact them, this IMA initiative would prevent municipalities or counties from banning natural gas without first holding a voter referendum. This approach ensures that decisions about natural gas are made by those most affected.
Head Tax Preemption
This initiative would prevent municipalities or counties from imposing a tax on businesses based on the number of employees they have. Head taxes discourage job growth and place an added burden on employers. Under this IMA proposal, businesses would gain an additional layer of protection against unnecessary and punitive taxation.
PTE Update
To promote parity between resident and non-resident businesses under Illinois’ pass-through entity (PTE) tax, the IMA is proposing a change to the state’s PTE tax structure. This proposal would allow partnerships subject to the entity-level tax to elect either a full distributive share method or an Illinois-sourced income method.
Student Loan Employer Tax Credit
This initiative aims to address both student loan debt and workforce shortages by providing employers with a tax credit for helping repay an employee’s student loan debt. Modeled after the federal Employer Participation in Repayment Act enacted through the CARES Act, this proposal would support workers burdened by student loans while giving manufacturers a valuable tool to attract and retain talent.
IMA Education Foundation Legislative Agenda
Employer Based Child Care Needs Assessment Incentive Pilot Program (HB 1251 Vella)
This IMA initiative, this legislation directs the Department of Early Childhood to conduct a statewide review of employer-based child care in Illinois, focusing on access, quality, gaps, and opportunities for improvement, as well as the role employers can play in supporting affordable child care. The Department will report its findings to the Governor and General Assembly and will be advised by a newly created Employer-Based Childcare Needs Assessment Advisory Council.
High School Graduation Requirements (HB 3307 Elik)
The IMA Education Foundation is seeking to change the high school graduation requirements to allow for 2-years of CTE courses in place of the 2-year foreign language requirement. This will allow for critical education that more closely meets the needs of students.
Manufacturing Promise Scholarship Program
Similar to the MAP grant program, this IMA initiative provides that any high school student is entitled to free community college education if they are enrolled in a manufacturing pathway. This is not a tuition waiver and will require 20% of participants to represent underrepresented groups. Community college manufacturing programs as well as apprenticeship and union manufacturing programs quality under this program.
State Stipends for Teacher Externships (HB 3093 Ness)
The IMA is seeking to provide incentives for teachers and employers to provide work-based learning experiences by requiring ISBE, subject to appropriation, to provide stipends for teachers who participate in externships with a manufacturing company in this State. The externships experience is designed to give teachers the opportunity to spend time outside of the classroom and in manufacturing facilities.
State Stipends for Manufacturing Employees Who Teach (HB 3092 Ness)
In an effort to help to school districts hire career and technical education teachers, the IMA is seeking to provide a financial incentive through stipends from ISBE, subject to appropriation, for a manufacturing employee, in the amount of one-half of the salary of the employee, that is employed by a manufacturing company and working within a school district as a license career and technical education teacher.
IMA's Growth Agenda
Establish a strong manufacturing climate in Illinois
- Fight for a balanced budget and true pension reform
- Enact real and meaningful reforms to the Workers’ Compensation system
- Ensure a level playing field in the court system with fair, common sense reforms
- Modernize and invest in world class infrastructure that moves people and products
- Reduce health care costs for both patients and providers
- Eliminate regulations that increase costs and reduce employer flexibility
- Create a fair Unemployment Insurance system
Develop a tax system that promotes manufacturing
- Create a modern and permanent Research & Development incentive
- Eliminate the state’s sales tax on electricity and natural gas
- Preserve a low and flat income tax system
- Incent the location of manufacturing machinery and equipment in the state
- Maintain the confidentiality of private tax records
Champion strong energy policies
- Embrace an “all of the above” approach to energy production
- Grow hydraulic fracturing in southern Illinois
- Streamline permitting processes at the EPA
- Promote self-directing programs that increase efficiency and reduce energy usage
- Oppose overly burdensome EPA regulations that disadvantage manufacturing
Create a 21st Century Workforce
- Establish a pipeline of qualified workers
- Lead STEM (Science, Technology, Engineering & Math) Exchange for Manufacturing
- Implement stackable credential programs in community colleges
- Administer job training programs
- Support initiatives to transition U.S. veterans and military personnel into manufacturing jobs
