Illinois State Tax Credits

Illinois Economic Development for a Growing Economy (EDGE) Tax Credit

Overview:
The Illinois EDGE Tax Credit Program incentivizes businesses to create new full-time jobs and make capital investments within the state by offering non-refundable income tax credits based on the state income tax withholdings from newly created jobs. Additional training reimbursements and enhanced credits are available for projects in underserved areas.

Who It’s For:
Illinois businesses of all sizes planning to expand operations, hire new employees, and invest capital in Illinois, especially those operating in underserved communities or undertaking major investment projects.

Four Key Highlights:

1. Income Tax Credit Based on New Job Withholdings

   • Businesses receive 50% of state income tax withholdings for new jobs, and 75% if located in an underserved area.

2. Flexible Eligibility for Small and Large Businesses

   • Tier 1: Small businesses (≤100 employees) need to create the lesser of 5% of workforce or 50 jobs (no investment minimum).

   • Larger businesses must create 10% of workforce or 50 jobs and invest at least $2.5 million.

3. Training Cost Reimbursements

   • Businesses can include 10% of qualified training expenses (like materials, instructor costs, and travel) into their tax credit totals annually.

4. Long-Term Incentive Duration

   • Up to 10 years of credits for Tier 1 businesses and up to 15 years for Tier 2 major investments, supporting sustained growth and expansion.

Illinois Apprenticeship Education Expense Tax Credit Program

Overview:
The Illinois Apprenticeship Education Expense Tax Credit offers businesses tax credits for covering educational expenses of apprentices enrolled in USDOL-registered programs. This program aims to boost workforce development by supporting employer investment in apprenticeship training.

Who It’s For:
Illinois employers with registered USDOL apprenticeship programs who pay qualified educational expenses (like tuition and books) for apprentices who are Illinois residents and employed within the state.

Four Key Highlights:

1. Up to $5,000 Per Apprentice in Tax Credits

   • Businesses can claim up to $3,500 per apprentice, with an additional $1,500 bonus if the apprentice or business is located in an underserved area.

2. Strict Qualification Requirements

   • Only USDOL-registered apprenticeship programs qualify; apprentices must be Illinois residents and enrolled full-time.

3. Qualified Educational Expenses Only

   • Eligible expenses include tuition, book fees, and lab fees at qualified Illinois schools offering industry-recognized credentials.

4. First-Come, First-Served Allocation with $5 Million Statewide Cap

   • Credits are awarded based on application date until the $5 million cap is reached, making early application critical.

Illinois Angel Investment Tax Credit Program

Overview:
The Illinois Angel Investment Tax Credit Program encourages investments in innovative Illinois startups by offering investors a 25% or 35% state income tax credit on qualifying equity investments. Designed to boost early-stage business growth, the program supports minority-, women-, and disability-owned businesses as well as rural startups.

Who It’s For:

• Businesses seeking QNBV (Qualified New Business Venture) certification to attract investors.

• Investors looking to receive tax credits for investing in innovative Illinois-based startups.

Four Key Highlights:

1. Substantial Tax Credit on Eligible Investments

   • Investors receive a 25% tax credit for investments in certified QNBVs, and a 35% credit for investments in minority-, women-, disability-owned, or rural businesses.

2. Strict QNBV Certification for Businesses

   • Businesses must be under 10 years old, have fewer than 100 employees, be primarily located in Illinois, and engage in qualifying innovation sectors to achieve QNBV status.

3. Minimum and Maximum Investment Thresholds

   • Minimum eligible investment is $10,000, and credits apply to a maximum of $2 million per investor per QNBV.

4. Five-Year Carryforward for Unused Credits

   • If the tax credit exceeds the investor’s Illinois income tax liability, the unused portion can be carried forward for up to 5 years.

Illinois Gives Tax Credit Act

Overview:
The Illinois Gives Tax Credit Act incentivizes philanthropic giving by offering taxpayers a 25% state income tax credit for contributions made to permanent endowment funds held by Qualified Community Foundations (QCFs). This initiative strengthens charitable resources dedicated to Illinois residents and charitable projects.

Who It’s For:
Illinois individuals, married couples, and businesses who want to contribute to approved community foundations while earning significant state tax credits.

Four Key Highlights:

1. 25% Tax Credit on Contributions to Community Foundations

   • Donors receive a 25% income tax credit on approved contributions, up to $100,000 per taxpayer per year (or $200,000 for married couples filing jointly).

2. Strict Contribution and Foundation Approval Requirements

   • Donations must be made only to preapproved QCFs after receiving a Contribution Authorization Certificate (CAC) via MyTax Illinois.

3. Statewide Annual Cap and First-Come, First-Served Allocation

   • There’s a $5 million total state cap annually, with 25% reserved for smaller gifts (donations of $25,000 or less), emphasizing quick application action.

4. Five-Year Carryforward for Unused Credits

   • Unused credits can be carried forward for up to five years (but cannot be refunded or carried back to previous years).