Illinois comes in at 23rd on the Tax Foundation’s 2017 State Business Tax Climate Index. The index, an overall view of state tax systems, weighs the burden of corporate, individual, sales, unemployment and property taxes to create a picture of each state’s business environment. Illinois falls roughly at the mid-point of all 50 states when it comes to business competitiveness based on tax policy. However, Illinois businesses may gain an edge by taking advantage of state tax incentives designed to make the Land of Lincoln more business-friendly.
Illinois Enterprise Zones
Businesses located in one of the 104 Enterprise Zones in Illinois may be eligible for incentives and exemptions. Statewide, these include an exemption on building materials taxes, an investment tax credit and exemptions on certain state sales, utilities and telecommunication excise taxes. Individual zones may offer additional incentives. The Enterprise Zone Program is administered by the Illinois Department of Commerce and Economic Opportunity (DCEO).
River Edge Redevelopment Zone
Zones within Aurora, East St. Louis, Elgin, Peoria and Rockford have been designated River Edge Redevelopment Zones. The program’s purpose is to revive properties along Illinois Rivers. Eligible businesses may qualify for Environmental Remediation Tax credits, interest and dividend income deductions, sales tax exemption on building materials and property tax abatement. The River Edge Redevelopment program is administered by the Illinois DCEO.
High Impact Business Program
This program targets businesses located outside Enterprise Zones that generate large-scale economic activity. To qualify for the High Impact Business Program, a business must invest a minimum of $12 million into a project that creates 500 full-time jobs or, $30 million to retain 1,500 full-time jobs. Incentives are similar to those in the Enterprise Zone Program, which include investment tax credits and sales tax exemptions on building materials and utilities. This program is also administered by the DCEO.
Illinois Historic Preservation Tax Credit Program
Businesses located in a River Edge Redevelopment Zone may qualify for this program designed to assist property owners with the rehabilitation of certified historic structures. Structures include individual buildings or those within a district listed on the National Register of Historic Places. The Illinois Historic Preservation Agency (IHPA) can help to determine eligibility of a particular structure.
The program offers a state income tax credit equal to 25 percent of expenditures to rehab qualifying properties. This is in addition to income tax credits offered at the federal level. To qualify, the structure must be used to generate income. This includes rental income, commercial, agricultural and industrial use. To qualify, expenditures must equal or exceed $5,000 and represent at least 50 percent of the properties purchase price. The program is administered jointly by the Illinois DECO and the IHPA.
Illinois Film Services Tax Credit
With the goal of attracting filmmakers to Illinois, the State Assembly passed the Film Production Tax Credit Act in 2008, which offers a 30 percent tax credit on production and post-production expenditures for producers filming in Illinois. Qualifying expenses include amounts paid to Illinois vendors and wages paid to state residents up to $100,000 per individual. The program is administered by the Illinois Film Office.
This article was written by Gillian Burdett for CBS Small Business Pulse