It is no secret that businesses and industries throughout the country are increasingly experiencing workforce challenges and shortages. Chicago and Illinois are no different. According to the U.S. Chamber of Commerce, for every 76 Illinois workers, there are 100 job openings. And, while Illinois is fortunate to be better positioned than many other states in this regard, the simple fact is that our workforce pool must be expanded to meet the needs of businesses today and tomorrow. To meet this pressing challenge, the Chicagoland Chamber has embarked on an “Access to Work” campaign identifying underutilized and untapped labor pools to help both individuals secure sustainable employment opportunities that benefit themselves, their families, and their communities, while also helping businesses of all sizes identify talent and address their workforce challenges.

Under this campaign, the Chicagoland Chamber has worked closely with the Pritzker and Johnson administrations and so many others to call for expedited and expanded work authorization permitting for newly arrived and long-term immigrants. The Chamber has also worked closely the City of Chicago to connect young people with employment opportunities through programs like One Summer Chicago. Another population viewed as key in this initiative is Illinois’ returning citizen population.

To support businesses seeking to hire returning citizens, the Chamber initiated SB 3738 (Peters) / HB 4871 (Davis) in the 2024 Illinois General Assembly Spring Legislative Session to significantly modernize Illinois’ existing returning citizen tax credit. In 2006, the General Assembly established the “ex-felon” tax credit to offer businesses that employ formerly incarcerated individuals the opportunity to receive a 5% tax credit up to $1,500 based on wages paid to that eligible worker. The tax credit has remained largely unchanged since 2006 and is now one of the most underutilized tax credits in the State’s tax credit portfolio.

According to the Illinois Comptroller’s most recent Tax Expenditure Report (FY21), the Ex-Felon Tax Credit had a combined $134,000 fiscal impact to State income and corporate tax revenues—among the lowest expenditure of any credit.

Upon review of the statute, it became clear that the credit was so minimal, it was more of a hassle for employers to seek the credit than actually take advantage of it. To that end, the Chamber was pleased that included in legislation establishing the Illinois 2025 revenue package (HB 4951) was language to significantly bolster and reform the returning citizens hiring tax credit. Specifically, the bill:

  • Renames the tax credit the “Returning Citizens” Tax Credit (currently, “Ex-Felon”)
  • Increases the amount of the credit to 15% of wages paid (currently, 5%)
  • Raises the maximum value of a credit to up to $7,500 (currently, $1,500)
  • Expands eligibility of individuals that can qualify for the credit to include workers that were released up to 5 years (currently, 3 years) from an Illinois correctional facility

The benefits of transitioning returning citizens into our workforce have become increasingly clear. There are plenty of studies and reports that demonstrate this, including a recent report from JPMorgan Chase estimates that the challenges that returning citizens face, which leads to unemployment and lack of access to employment, costs our economy between $78-$87 billion a year.

Support for creating and ensuring career pathways for returning citizens into the workforce is broad and across the political spectrum. The Chamber was proud to receive the support of the City of Chicago, the Illinois Prison Project Action Fund, and several of our business partner organizations when the Chamber and its legislative champions testified on the bill in the Senate Revenue Committee this spring.

The Chamber thanks Governor Pritzker and its legislative champions for their support of the initiative. From expanding and building off important workforce and education initiatives within the Illinois Department of Corrections to tackling existing barriers, both in law and in practice, that hinder businesses ability to transition returning citizens into the workforce, the Chamber looks forward to continuing its work to ensure sustainable employment opportunities for Illinois and Chicago’s returning citizens, which is a win for the individual and a win for Chicagoland’s businesses.

The improvements to the Returning Citizens tax credit will be available to businesses year starting on January 1, 2025. To find out more information, please reach out to the Chamber, the Illinois Department of Revenue, or your own tax practitioners if you are interested in participating in the program.