There are a lot of advantages to doing business in Illinois. Beyond taking advantage of low corporate tax rates and one of the most diverse economies in the country, Illinois-based business owners can also apply for a handful of state-specific tax incentive programs.
Keep reading to discover which credits and exemptions your business may be eligible for.
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Illinois business tax incentives
Manufacturing Illinois Chips for Real Opportunity Act (MICRO) Incentive Program
Illinois companies that manufacture microchips, semiconductors, and component parts can apply for the Manufacturing Illinois Chips for Real Opportunity Act (MICRO) incentive program. The MICRO incentive program rewards companies for making minimum capital investments and creating new jobs.
There are two different tiers to the program. Tier 1 requires companies to invest $2.5 million and create at least 50 new full-time jobs or 10% of the worldwide headcount (whichever is less) within four years. The requirements for Tier 2 projects depend on your company’s industry and focus.
Eligible projects can claim the following benefits:
- A tax credit of 75% of income tax withholdings attributable to new employees or retained employees once the new jobs threshold is met
- A credit up to 25% of eligible training costs for new employees, with the baseline being 10% of training costs for all projects
- A 0.5% investment credit on the qualified property for use in the year the property was placed in service, or when a company reaches its jobs and investment threshold
Learn more about the MICRO program here.
Reimagining Energy and Vehicles (REV) Illinois Program
Reimagining Energy and Vehicles (REV) Illinois Program is designed to help create new jobs in the EV and renewable energy industries. Eligible companies have to commit to a minimum project capital investment and job creation quota to qualify for the credit.
Similar to the MICRO incentive program, companies must invest at least $2.5 million and create a minimum of 50 new full-time jobs to qualify for REV incentives.
The tax benefits include:
- Up to 100% income tax withholding for new or retained employees
- Up to 75% income tax credit equivalent to construction wages
- Tax credits covering up to 25% of employee training costs
- Tax credit equal to 0.5% of qualified property investments
Larger projects can also take advantage of a five-year state sales tax exemption on building materials for construction, remodeling, or rehabilitation, plus a 30-year state sales tax exemption on electricity and gas utilities.
Gather more information on REV here.
Illinois Angel Investment Tax Credit Program
The Illinois Angel Investment Tax Credit Program rewards investors for investing in certain early-stage startups in Illinois. Investors who invest in certified Qualified New Business Ventures (QNBVs) can get a state tax credit equal to 25% of their investment, up to $2 million.
If they invest in designated Set-Aside QNBVs (companies that are women-owned, minority-owned, or owned by someone with a disability), the tax credit increases to 35%, up to $2 million.
Get more details on the program here.
Economic Development for a Growing Economy (EDGE) Tax Credit Program
Part of the Blue Collar Jobs Act Tax Credit program, the Economic Development for a Growing Economy (EDGE) Tax Credit Program incentivizes Illinois businesses—and businesses willing to relocate to Illinois—to take on growth projects, create new jobs, and help raise the quality of life for all Illinois residents.
To qualify, a company needs to meet the following requirements:
- Companies with fewer than 100 global employees need to create at least 50 new full-time jobs (or 5% of their worldwide headcount, whichever is less)
- Companies with more than 100 global employees need to create at least 50 new full-time jobs (or 10% of their worldwide headcount, whichever is less) and make a capital investment of $2.5 million
Qualifying companies get a corporate income tax credit equal to 50% of the income tax withholdings of new jobs created in Illinois. They can also get a credit for 10% of their eligible training costs for new employees.
Apply for the credit here.
Illinois Film Services Tax Credit
The Illinois Film Services Tax Credit gives production companies a tax credit for filming in Illinois. Eligible production companies can get a credit equal to 30% of qualified production and post-production expenditures incurred in Illinois.
Companies can also get a 30% credit on Illinois production employees’ salaries, up to $500,000 per worker, as well as a 30% credit on non-resident labor up to $500,000 for up to nine non-resident employees in certain roles.
Production companies can also get an additional 15% credit on salaries of employees who live in economically disadvantaged areas of the state.
Learn more about the film credit and how to apply here.
High Impact Business Program
Illinois’s High Impact Business Program incentivizes large companies to make significant capital investments in operations or create a certain number of new jobs.
Eligible companies can qualify for investment tax credits, a construction jobs credit, a state sales tax exemption on building materials and utilities, and a state sales tax exemption on purchases of personal property used in the manufacturing process.
To qualify, companies must invest a minimum of $12 million in an eligible project and create at least 500 new full-time jobs.
Eligible projects include:
- Qualified new electric generating facility
- Production operations at a new coal mine
- New or upgraded transmission facility that supports creation of 150 Illinois coal-mining jobs, or a newly constructed gasification facility as a “Coal/Energy High Impact Business”
- Wind energy facilities contingent upon the business constructing a new electric generation facility or expanding an existing wind power facility
- New Utility-Scale solar facility at a designated location in Illinois
Get more information on the program here.
Illinois Apprenticeship Education Expense Tax Credit Program
Under the Illinois Apprenticeship Education Expense Tax Credit Program, eligible Illinois employers can get tax credits for paying for education-related expenses (like tuition and books) for their apprentices. The credit amount is $3,500 per qualified apprentice, plus an extra $1,500 if the apprentice or business is located in an underserved area.
To qualify for the credit, an employer’s apprentice must be:
- An Illinois resident
- At least 16 years old
- A full-time apprentice enrolled in an apprenticeship program that’s registered with the US Department of Labor
Apply for the credit here.
Related: How to hire interns legally.
Illinois Historic Preservation Tax Credit Program
Available through 2028, the Illinois Historic Preservation Tax Credit Program incentivizes businesses to rehabilitate certified historic properties in Illinois. Eligible businesses can get a credit equal to 25% of a project’s qualified rehabilitation expenditures, up to $3 million.
To qualify for the credit, you need to rehabilitate a property listed on the National Register of Historic Places. Learn about the rest of the program requirements here.
Sustainable Aviation Fuel Purchase Credit
The Sustainable Aviation Fuel Purchase Credit (SAFPC) gives all common air carriers and ST-70 filers a state sales tax credit on any sustainable aviation fuel used. The credit is $1.50 per gallon of fuel purchased.
Get more information on claiming the credit here.
Local Illinois business tax credits
Some local governments in Illinois have their own business tax incentive programs. Search your city, county, or municipality here to find out if yours does.
Business tax exemptions in Illinois
Illinois Enterprise Zone Program
The Illinois Enterprise Zone (EZ) Program helps support businesses established in or relocating to economically disadvantaged areas of the state. Businesses that make capital investments and create new jobs in designated EZs are eligible for a variety of tax exemptions, including:
- Exemption on retailers’ occupation tax paid on building materials
- Expanded state sales tax exemptions on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility
- An exemption on the state utility tax for electricity and natural gas
- An exemption on the Illinois Commerce Commission’s administrative charge and telecommunication excise tax
- Local tax exemptions
Learn more about the EZ program here.
Data Center Investment Tax Credit and Exemption
Illinois’s Data Center Investment Tax Credit and Exemption gives qualifying data centers a variety of state and local tax exemptions. To qualify, data centers need to meet the following requirements:
- Make a capital investment of at least $250 million over a 60-month period
- Create at least 20 full-time or full-time equivalent new jobs associated with the operation or maintenance of the data center, and pay wages that equal or exceed 120% of the median county wage
- Maintain carbon neutrality or receive a green building certification
If the project is located in an underserved area of Illinois, data center companies can also get a tax credit of 20% of the wages paid to construction workers.
Learn more about the incentive program here.
Financing for businesses in Illinois
State tax incentives only go so far if you need significant financial support. If you’re looking for a larger chunk of capital to start or grow your business, don’t forget to look into state-specific funding opportunities. Start by checking out Gusto’s complete guide to Illinois grants and loans.
Want even more resources? Browse these helpful posts about running a business in Illinois:
