Legislature Provides Various Hospital Tax Incentives in Illinois

Tuesday, June 19th, 2012

 
 
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Illinois
General

Governor Pat Quinn recently signed into law legislation that provides several tax incentives for hospitals in the state. 2012 Ill. Pub. Act 97-0688, sec. 5-5. The new law provides a property tax exemption, income tax credit, and sales tax exemption specific to qualifying hospitals.

The property tax exemption is provided to hospitals if the value of their charitable activities equals or exceeds the hospital's estimated property tax liability. The value of services considered for this purpose includes but is not limited to:

  • Charity care
  • Health care services provided to low-income individuals
  • Support for state health care programs for low-income individuals

An income tax credit is provided (for tax years ending on or after December 31, 2012) in an amount equal to the lesser of (1) the amount of real property taxes paid during the tax year on property used by the hospital for hospital purposes during the previous tax year, or (2) the cost of free or discounted services provided during the tax year.

Finally, a sales and use tax exemption was created for purchases of tangible personal property by hospitals if the value of qualified services or activities exceeds the hospital's estimated property tax liability (without any regard to the property tax exemption discussed above). As with the property tax exemption, the value of services considered for this purpose includes but is not limited to:

  • Charity care
  • Health care services provided to low-income individuals
  • Support for state health care programs for low-income individuals

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