Income tax increase in effect

ILLINOIS (WCIA) -- Your next paycheck could be less than you expect. Employers are beginning to activate the income tax increase lawmakers passed last week.

Officials at the Department of Revenue say how soon you see the reduction depends on when employers file the paperwork, but many are already complying and it could go into effect on your next paycheck.

Just six days ago, lawmakers passed an income tax increase jumping to 4.95%. Some business owners are already planning how to handle the surcharge.

"For me, it's going to be what kind of paperwork do we receive from the state and how is that going to impact how much I have to do every single week, every single payroll?"

Forinash has about 20 employees. Most say they're not too concerned about the 1.2% tax increase, but worry whether the state will use the money wisely.

"It just depends on actually what they're going to be doing with the money to see if it actually works for the long run."

Lawmakers estimate the increase will generate more than $5 billion.

"I think it was noticeable, but I think everyone looks forward to the positive things that can happen from it."

IDOR is sending out guidelines and paperwork for employers to make sure their employees are aware of the change and why.

"I don't foresee any tough conversations with our employees. We have chosen to pay a higher wage over the last seven years anyways with being employer here."

Illinois has had a flat tax increase since 1969. It means the tax rate is the same for everyone. Some believe it should be a progressive tax with larger incomes taxed at higher rates.

"I just think it kind of is not very good for the working person to have to take that deficit."

Even if the tax doesn't start to come out of your check this week, you'll eventually notice. The law is retroactive to July 1, which means even  if your employer doesn't file paperwork with the IDOR in the next month, the tax will come out when it is filed.

Last time the increase was enacted in 2012, it raised about $6.6 billion.

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