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Tax Incentives

Economic Development For a Growing Economy Tax Credit Program (EDGE) The EDGE program is designed to offer a special tax incentive to encourage companies to locate or expand operations in Illinois when there is active consideration of a competing location in another state.

Authorization
The program is authorized by statute 35 ILCS 5/211.

How the Program Works
The program can provide tax credits to qualifying companies, equal to the amount of state income taxes withheld from the salaries of employees in the newly created jobs. The non-refundable credits can be used against corporate income taxes to be paid over a period not to exceed 10 years. To qualify, a company must provide documentation that attests to the fact of competition with another state, and agree to make an investment of at least $5 million in capital improvements and create a minimum of 25 new full time jobs in Illinois. For a company with 100 or fewer employees, the company must agree to make a capital investment of $1million and create at least 5 new full time jobs in Illinois.

High Impact Business Program (HIB) The HIB program is designed to encourage large-scale economic development activities, by providing tax incentives (similar to those offered within an Enterprise Zone) to companies that propose to make a substantial capital investment in operations and will create or retain an above-average number of jobs.

Authorization
The High Impact Business Program is managed by DCEO and authorized by statute 20 ILCS 605.

How the Program Works
Businesses may qualify for: investment tax credits, a state sales tax exemption on building materials, an exemption from state sales tax on utilities, a state sales tax exemption on manufacturing equipment purchases, repair and replacement parts. The project must involve a minimum of $12 million investment,causing the creation of 500 full-time jobs, or an investment of $30 million causing the retention of 1500 full-time jobs. The investment must take place at a designated location in Illinois outside of an Enterprise Zone. The program has been expanded to include projects involving coal-fueled electric generating plants and new, reopened or expanded coal mines that result in the creation of 150 new coal mining jobs.

Tax Increment Financing District (TIF) Illinois law allows units of local government the ability to designate areas within their jurisdiction as TIF districts.

Authorization
Tax Increment Financing is found in statute 20 ILCS 620.

How the Program Works
These specially designated districts are used by local governments as a way to spur economic growth by dedicating the sales tax revenues and additional property tax revenues generated within the TIF for improvements within the district with the hope of encouraging new economic development and jobs.

Tax increment financing is locally initiated and administered. No federal approval is required. Local units of government must: determine that the proposed TIF area is either "blighted", a "conservation" area, or an "industrial park conservation" area; develop a redevelopment plan for the area; structure a related financing plan for the redevelopment activities; conduct a public hearing on the proposed TIF designation of the area; establish a joint review board comprised of the various taxing bodies; formally enact an ordinance designating the redevelopment project area; approve a redevelopment plan and project; and adopt tax increment financing.

An additional 0.5% tax credit is available for any year in which the firm's base employment increases by one percent or more over the preceding year. If the increased employment is less than one percent, the additional credit will be reduced proportionately.

Illinois Property Tax Abatement Program - Any industrial or commercial firm may receive up to $3 million per project through an abatement of all or part of property taxes to any Illinois taxing district for up to ten years if it meets one of the following conditions, and the local taxing district determines that it wants to provide the abatement:
1. The firm located within the taxing district during the preceding calendar year from out of state or from another country;
2. The firm was newly created in Illinois during the past year and proposes to, or has located an industrial or commercial operation in the taxing district; or
3. The firm expands a previously existing facility in the taxing district.

Sales/Use Tax Exemptions - Illinois provides the following major exemptions from sales/use taxes: (1) manufacturing machinery, as well as replacement parts and computers used to control manufacturing machinery; (2) farm machinery; and (3) pollution control facilities-- any system, devices or appliance sold to prevent or reduce air and water pollution or pre-treat a potential pollutant.