Companies actively considering investments in Illinois will want to track incentive developments closely.
Please contact our Chicago office for additional information: 312-924-2490.
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; 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.
EDGE Tax Credit Calculation:
For new employees, the program allows for the lesser of the following:
If the project is located in a qualifying underserved census tract, the program allows for the lesser of the following:
For retained employees, the credit may not exceed:
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: EV projects which invest at least $20 million and create at least $20M within a 4-year period. Qualifying projects are eligible for a 75% tax credit based on new employee withholdings taxes generate for a 10-year period (similar to EDGE). Retained jobs in addition to the minimum new job requirement are also eligible for a 25% tax credit under the program. Both tax credit percentages for new and retained jobs can increase by 25% 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:
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 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.
High Impact Business Program (HIB): For large-scale economic development projects located outside of eligible Enterprise Zone areas, the state 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:
Blue Collar Jobs Act: For projects making a minimum real property investment of at least $10 million and qualifying for the EDGE, HIB, or Enterprise Zone programs, the Department of Commerce and Economic Opportunity has the discretion to approve a “New Construction Project” designation which awards additional non-refundable tax credits to a project. Tax credits are equivalent to 50% of the incremental income tax paid by construction workers and laborers associated with the real property investment. An additional 25% can be awarded to the tax credits if the project is located in an underserved area. The total Blue Collar Jobs tax credits awarded by DCEO in any fiscal year cannot exceed $20 million. The program eligible requires contractors and subcontractors associated with designated projects that to file certified payroll information associated with the project.
NOTE – As of May 2021, Governor Pritzker has suspended approvals of new projects under the Blue Collar Jobs Act.
Enterprise Zone Program: Businesses locating in one of the 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.
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)
Property Tax Exemptions: All personal property of businesses; inventories, machinery, and intangibles are exempt.
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.
Last updated: March 2022