Illinois Small Business Owner Ready for 2015
In 2014, Illinois small business owners saw muddled results from the state’s policymakers. The good, included a slight planned reduction in the income tax that would come Jan. 1 of 2015, and a new, small-business friendly governor. The bad and the ugly included the introduction of an automatic IRA mandate statewide and a minimum wage hike in Chicago.
Here is a look at three new laws that will ripple across Illinois’ small business community.
1. Auto IRA mandate.
The Auto IRA mandate became law and goes into effect June 1 of 2015.
SB 2758 mandatedthat employers with 25 or more workers set up an automatic individual retirement account for them.The mandate would include both full- and part-time employees and would force employers to automatically deduct at least 3 percent from their employees’ paychecks. Workers will have to actively “opt out” if they don’t want to participate.
This spring, SB 2758 passed the Senate but stalled in the House after a vigorous lobbying effort by NFIB and a coalition of business groups as well as the life insurance industry, agents and financial advisors and the banking industry. We worked hard to educate lawmakers on the many downsides of mandating this onto employers as well as the intrusion into the private sector marketplace.
2. Income Tax.
Also, our income tax went down starting Jan. 1 2015 (it was part of a phase out of the hike from 2011).
The the temporary state income tax rate of 5% rolls back to 3.75% on Jan. 1. That means workers will see an additional 1.25% in their paychecks beginning next month.
On the other hand, the rollback means state revenues will decrease by as much as $2 billion in the final half of the current fiscal year and another $4 billion in the complete fiscal year beginning July 1.
3. Minimum Wage Hike.
City workers in Chicago will now receive a $13 minimum wage thanks to Mayor Rahm Emanuel, who stands for reelection next year.
The Chicago ordinance increases the wage from $8.25 to $10 in July 2015. It then will increase by 50 cents in July 2016 and another 50 cents in July 2017. After that, the minimum wage would go up $1 in July 2018 and $1 in July 2019 to reach $13 an hour. In 2019, wage increases are synchronized with the local consumer price index.
The bill also provides a tax credit for businesses with 50 or fewer employees to help offset the cost of the wage hike and limits home rule municipalities from raising their local wage over $13, according to NFIB State Director Kim Clarke Maisch.
“It is this provision that left many House Democrats unwilling to support the bill and go against the City of Chicago,” she says. “Ironically, the Senate passed the wage hike bill after the Illinois House adjourned sine die, which means the House will not be coming back until it is time for the new General Assembly to be sworn in.”
Gov. Bruce Rauner questioned the impact Chicago’s minimum wage hike would have on the state’s overall economic climate.
Is the state of Illinois next in line for a minimum wage hike? NFIB members hope not—and NFIB will continue to oppose any such action.
Question: As a small business owner, what are you most hoping Illinois policymakers will accomplish in 2015?