** In the midst of a three-year budget battle between the Governor and Legislature, the state’s primary business incentive tool – the Illinois Economic Development for a Growing Economy (EDGE) Tax Credit Program – was allowed to expire (again) at the end of April 2017.  Now with a new two-year state budget passed and permanent income tax increases enacted, the Legislature and Governor reinstated the former EDGE program on September 18th, 2017 with a number of policy changes (shown below).  Companies actively considering investments in Illinois will want to track related developments closely.  Please contact our Chicago office for additional information: 312-924-2490.
TAX CREDITS

Economic Development for a Growing Economy (EDGE): Provides non-refundable annual tax credits against corporate income taxes over a period of up to 10 years. EDGE credits are equal to a percentage of the new income tax withholdings generated by new job creation. To qualify, companies with 100 or fewer employees must create new jobs equal to at least 5% of their total worldwide employment; there is no minimum investment.  Companies with more than 100 employees must create new jobs equal to the lesser of 10% of their total worldwide employment or 50 new jobs; they must also invest at least $2.5 million in the project. Below are the policy changes enacted under the new EDGE legislation:

New EDGE Tax Credit Calculation (House Bill 162):

For new employees, the legislation allows for the lesser of the following:

  • Up to 50% of the incremental income tax created by new employees plus 10% of the training costs of new employees; or
  • 100% of the incremental income tax created by new employees.

If the project is located in an underserved area, then the credit may not exceed:

  • 75% of the incremental income tax created by new employees plus 10% of the training costs of new employees; or

  • 100% of the incremental income tax created by new employees.

For retained employees the credit may not exceed:

  • 25% of the income tax collected for retained employees.

High Impact Business (HIB): To stimulate large-scale economic development projects outside of Enterprise Zone locations, the HIB program offers investment tax credits, a state sales tax exemption on building materials, an exemption from state sales tax on utilities, and a state sales tax exemption on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility. Qualifying businesses must make a minimum capital investment of $12 million and create at least 500 full-time jobs. 

SPECIAL ZONING

Enterprise Zone Program: Businesses locating in one of state’s 104 dedicated Enterprise Zones may qualify for certain incentives including a sales tax exemption on building materials, an investment tax credit of .5% of qualified property, a state utility tax exemption on gas, electricity and telecommunication, as well as other incentives. 

GRANTS

Large Business Development Program (LBDP): Discretionary grants are available for major expansion or relocation projects that create and/or retain a large number of jobs. The funds may be used for bondable business activities, including financing the purchase of land or buildings, building construction or renovation, and certain types of machinery and equipment.  Businesses relocating to Illinois from out-of-state must create at least 500 jobs to qualify for the program. This program also provides long term fixed-rate low-interest loans.  (Note:  the LBDP program has not received a funding allocation for the current fiscal year).

JOB TRAINING

Employer Training Investment Program (ETIP):  The state can provide reimbursable grants of up to $500 for each new full-time job created.  (Note:  the ETIP program has not received a funding allocation for the current fiscal year).

TAX EXEMPTIONS

Property tax exemptions: All personal property of businesses; inventories, machinery, and intangibles are exempt.

Last reviewed: September 2017


 
BIGGINS LACY SHAPIRO & COMPANY
 
PRINCETON
47 Hulfish Street, Suite 320
Princeton, NJ 08542
(609) 924-9775
NEW YORK
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New York, NY 10003
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CHICAGO
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Chicago, IL 60603
(312) 924-2491
CALIFORNIA
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Walnut Creek, CA 94597
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