SPOTLIGHT PROGRAMS

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 a project’s new job creation. To qualify, companies with less than 100 global employees must create new jobs equal to at least 5% of their total worldwide employment or 50 new full-time jobs; there is no minimum investment.  Companies with more than 100 global 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. Unused credits may be carried forward for 5 years.  Additional credits may also be available as reimbursements for qualified training costs. Those additional credits equal 10% of eligible training costs of new full-time employees.
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EDGE Tax Credit Calculation

• For new employees, the program allows for the lesser of the following:
  — 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 a qualifying underserved census tract, the program allows for the lesser of the following:
  — 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.

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Invest in Illinois Closing Fund: New for 2023, the State of Illinois has appropriated $400 million for high priority projects with funding levels at the discretion of the Governor. Funds can be used to offset the upfront costs of construction, infrastructure and site development for a project.

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TAX CREDITS

Reimagining Electric Vehicles (REV) Program:  In November 2021, Governor Pritzker signed the “Reimagining Electric Vehicles in Illinois Act” creating a new classification of incentives for qualifying projects in the electric vehicle industry.  Under the new program, new or existing manufacturing facilities involved in the production of EVs, EV component parts, or EV power supply equipment (including EV charging stations) can qualify for a variety of incentives including tax credits, sales tax exemptions, and utility tax exemptions based on the level of tier the project qualifies for. Unlike EDGE, the tax credits based on employee withholdings earned under the REV program can be claimed against the company’s employee withholdings remittance, thus offering the ability to fully monetize the tax credit.

• Tier 1 Investment Projects: To qualify, Tier 1 projects must make an investment of at least $2.5 million and create at least 50 new jobs within four years. Qualifying projects are eligible for a tax credit equal to 75% of the income tax withholdings of new or retained jobs during a ten-year period. There is an option for one renewal to extend the credit to a total of 20 years. Both tax credit percentages for new and retained jobs can increase to 100% for projects locating in priority areas. Additional non-refundable income tax credits can be earned for qualifying training expenses and for withholdings paid by construction jobs in connection with the project.

• Tier 2 Investment Projects: EV projects which meet the below thresholds are eligible incentives in addition to the Tier 1 benefits described above including a 15-year tax credit term for all Tier 1 tax credits, a 5-year exemption from sales taxes paid on construction materials, a 10-year exemption on state utility taxes, a 10-year exemption from state telecom taxes, and a 0.5% investment tax credit. To qualify, EV projects must meet one of the following thresholds within a 5-year period:
  — New EV manufacturers investing at least $1.5 billion and creating 500 new jobs
  — New EV component manufacturers investing at least $300 million and creating 150 new jobs
  — Existing facilities converting to EVs or EV components investing at least $100 million and creating at least 50 new jobs (or new jobs equivalent to 10% of their statewide baseline, whichever is less)

Manufacturing Illinois Chips for Real Opportunity (MICRO): In April 2022, the MICRO incentive program was passed to incentivize the creation of microchip and semiconductor jobs. Projects must invest $20 million and create 50 jobs within four years to qualify. The regular benefit is 75% of income tax withholdings for new or retained jobs once the new jobs threshold is met. The benefits may be increased to 100% of withholdings if the project is located in an underserved or energy transition area. The tax credits can be earned for a period of ten years. Larger projects must meet higher investment and job creation thresholds dependent on the type of project. The types of projects that may qualify for larger credits include microchip and semiconductor manufacturers, microchip and semiconductor components parts manufacturers, and manufacturers converting existing manufacturing facilities to microchips and semiconductors. Larger projects receive a longer term of 15 years and additional benefits including an exemption on retailers’ occupation tax on building materials, exemption on state utility tax for electricity and natural gas, and an exemption on telecommunication excise tax. All projects are eligible for credit up to 25% of eligible training costs for new employees, with a 10% baseline for all projects. An additional 15% for trainees is available for project that hire recent Illinois graduates, certificate holders or credential recipients from 4-year public and private universities, community colleges, vocational/technical schools, Clean Jobs Workforce Network Program, and USDOL certified apprenticeship programs. All projects are also eligible for a credit up to 10% of training costs to upskill retained employees. Projects also receive an investment credit of 0.5% on qualified property.

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TAX EXEMPTIONS

Data Center Tax Exemption:  Data centers investing more than $250 million and creating more than 20 new jobs over a 60-month period are eligible for a sales tax exemption on qualifying tangible personal property including new equipment, construction materials, and building infrastructure in addition to excise tax exemptions on electricity consumed at the at facility. To qualify, projects must pay at least 120% of the applicable county median wage. The data center must also meet carbon neutral status or attain certification under one or more green building standards. The data center can also qualify for an additional tax credit equivalent to 20% of wages for construction workers for projects locating in qualifying underserved census tracts.

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Enterprise Zone Program: Businesses locating in one of state’s dedicated Enterprise Zones may qualify for certain incentives including a sales tax exemption on building materials, an investment tax credit of 0.5% of qualified property, a state utility tax exemption on gas, electricity and telecommunication, as well as other incentives.  Additional incentives may be available at the local-level for projects locating in an Enterprise Zone at the discretion of the local zone administrator.

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High Impact Business Program (HIB): For large-scale economic development projects located outside of eligible Enterprise Zone area, the state allows for a offers a number of applicable tax incentives through the HIB program. To qualify, businesses must create at least 500 full-time jobs and make a minimum capital investment of $12 million or retain 1,500 jobs and invest $30 million. The applicable programs include:

• Sales tax exemption on building materials
• Sales tax exemption on utilities
• Bonus investment tax credit above the statutory state credit
• Sales tax exemption on personal property used or consumed in the manufacturing process or in the operation of a pollution control facility

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River Edge Redevelopment Zone: To help revive and redevelop properties that are located adjacent to rivers the Illinois Department of Commerce is authorized to designate zones in the cities of Aurora, East St. Louis, Elgin, Peoria, and Rockford. These zones allow projects to claim several incentives authorized by Illinois. Two of the incentives are administered locally, which are the sales tax exemption and property tax abatement. The rest are claimed through the state and include dividend income deduction, interest income deduction, new construction jobs credit, building materials sales tax exemption, and property tax abatement.

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

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DIRECT FINANCIAL ASSISTANCE

Business Attraction Prime Sites Capital Grant Program: The new sites program provides projects with grant funds of up to $5,000 per new job created to be used for site development and infrastructure costs of new construction and renovation projects. Grants will typically range from $250,000 to $6 million and require a 4:1 match requirement. Warehouses are not eligible for the grant program.

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JOB TRAINING

Employer Training Investment Program (ETIP): This program provides grants from the state that can reimburse up to 50% of the cost of employee training. The training must be for a full-time Illinois-based employee at a company physically located in Illinois.

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Illinois Apprenticeship Education Expense Tax Credit: Employers are allowed a tax credit associated with qualified apprenticeships. The apprentice must be an Illinois resident who is at least 16 at the end of the school year that the credit is applied for. They must also be enrolled in an apprenticeship program that is registered with the U.S. Department of Labor and employed by the taxpayer in Illinois. Employers may receive a credit of $3,500 per apprentice, and an additional credit of $1,500 is available if the apprentice resides in an underserved area.

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LOCAL INCENTIVES

Local Property Tax Incentives: At the discretion of the local governing bodies, projects locating outside of Cook County can be approved for local property tax abatements of up to $4 million for a period of up to 10 years.  For projects locating within Cook County, the local governing bodies have the ability to award a special assessment classification for qualifying properties to reduce their annual assessment for a period of up to twelve years.

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Last Updated: April 2023