Quinn Approves 66 Percent Income Tax Increase

SPRINGFIELD, Ill. (CBS/AP) -- Illinois Gov. Pat Quinn on Thursday signed into law the 66 percent tax hike passed this week by the General Assembly.

The hike goes into effect immediately, and workers should see a change in their paychecks in the next week or two, Newsradio 780's Julie Mann reports.

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The law is meant to help close a $15 billion budget deficit that threatens to cripple state government.

The increase means individuals will now pay 5 percent instead of 3 percent. The corporate rate jumps from 4.8 percent to 7 percent.

In addition to the corporate income tax, many businesses in Illinois pay a "Personal Property Replacement Tax" of 2.5 percent of income, bumping their corporate tax rate to 9.5 percent.

The full increase is supposed to last just four years. After that, the rates will fall but not all the way back to their original level.

In real numbers, if your gross income is $50,000 a year, your state income taxes will rise from $1,500 to $2,500 a year.

Taxpayers won't see the effects of the income tax hike right away, as it will take a few weeks for workers to implement the new tax rate.

Kelly Kraft, a spokeswoman for the governor's budget office, said that, while the tax hike is retroactive to Jan. 1, the uncollected tax since the beginning of the year will not be taken in one lump sum from Illinois residents' paychecks. Instead, it will be reconciled during next the 2011 tax filing season next year.

Depending on what deductions a taxpayer can take, they might get a larger tax bill or a smaller refund than normal.

Illinois State Comptroller Judy Baar Topinka, a Republican, criticized the tax hike during an appearance on the CBS 2 News Thursday.

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