Illinois Enterprise Zone Program

Benefits of the Enterprise Zone Program

STATE INCENTIVES

The Illinois Enterprise Zone program offers numerous state incentives to encourage companies to locate or expand in Enterprise Zones. Currently, the following incentives are available:

Enterprise Zone Investment Tax Credit – The Investment Tax Credit provides for a 0.5% credit against the state income tax for investments made in “qualified property” that are placed in service in an Enterprise Zone. The credit shall be 0.5% of the basis for such property. The specific terms and conditions governing this tax credit are regulated by the Illinois Department of Revenue. Qualified property is statutorily defined in Sections 201(f) and (h) of the Illinois Income Tax Act.

Enterprise Zone Building Materials Exemption Certificate (BMEC) – A 6.25% state sales tax exemption is permitted on building materials to be incorporated into real estate located within an Enterprise Zone established by a county or municipality under the Act. Receipts for materials used for remodeling, rehabilitation or new construction may be deducted
from such sales when calculating the tax imposed. For purposes of this exemption, “qualified sale” means a sale of building materials that will be incorporated into real estate as part of a
building project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the Illinois Department of Revenue.

Enterprise Zone Utility Tax Exemption – A state utility tax exemption on gas, electricity, and the Illinois Commerce Commission’s administrative charge, as well as the telecommunication excise tax, is available to businesses located within an Enterprise Zone. Eligibility for this exemption is contingent upon one of the following:

  • the business making a minimum eligible investment of $5 million in an Enterprise Zone, which results in the creation of a minimum of 200 full-time equivalent jobs in Illinois; or
  • the business making a minimum eligible investment of $20 million in an Enterprise Zone, which results in the retention of a minimum of 1,000 full-time jobs in Illinois.

The majority of the jobs created or retained must be located in the Enterprise Zone in which the investment occurs. A business must submit an application to and be certified by the Department in order to receive an initial five-year exemption, not to exceed the termination date of the Enterprise Zone. At the expiration of this initial five-year period, certified businesses may apply to the Department for renewals of the exemption for additional five-year periods, not to exceed the termination date of the Enterprise Zone. Eligibility for renewal of the exemption is contingent upon
the business maintaining the requisite number of full-time equivalent jobs in Illinois with the majority of the jobs being located within the Enterprise Zone in which the investment was made.

Enterprise Zone Manufacturing Machinery and Equipment/Pollution Control Facilities (MM&E) Sales Tax Exemption – A 6.25% state sales tax exemption is available on purchases of:

All tangible personal property used or consumed in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease, or in the process of graphic arts
production:

  • Repair and replacement parts for machinery and equipment used in the manufacturing or assembling of tangible personal property, or in the process of graphic arts production for wholesale or retail sale or lease; and
  • Equipment, manufacturing or graphic arts fuels, material, and supplies for the maintenance, repair, or operation of such manufacturing, assembling, graphic arts machinery or equipment.

Eligibility for this exemption is contingent upon one of the following:

  • the business making a minimum eligible investment of $5 million in an Enterprise Zone that results in the creation of a minimum of 200 full-time equivalent jobs in Illinois; or
  • the business making a minimum eligible investment of $40 million in an Enterprise Zone that results in the retention of a minimum of 2,000 full-time jobs in Illinois; or
  • the business making a minimum eligible investment of $40 million that results in the retention of at least 90% of the jobs in place on the date on which the exemption is granted for the duration of the exemption.

The majority of the jobs created or retained must be located in the Enterprise Zone in which the investment occurs. A business must submit an application to and be certified by the Department in order to receive an initial five-year exemption, not to exceed the termination date of the Enterprise Zone. At the expiration of this initial five-year period, certified businesses may apply to the Department for renewals of the exemption for additional five-year periods, not to exceed the termination date of the Enterprise Zone. Eligibility for renewal of the exemption is contingent upon the business maintaining the requisite number of full-time equivalent jobs in Illinois with the majority of the jobs being located within the Enterprise Zone in which the investment was made.

Enterprise Zone construction jobs credit – A business entity in a certified Enterprise Zone that makes a capital investment of at least $10 million in an Enterprise Zone construction jobs project may receive an Enterprise Zone construction jobs credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount equal to 50% of the amount of the incremental income tax attributable to Enterprise Zone construction jobs credit employees employed in the course of completing an Enterprise Zone construction jobs project. However, the Enterprise Zone construction jobs credit may equal up to 75% of the amount of the incremental income tax attributable to Enterprise Zone construction jobs credit employees if the project is located in an underserved area.

LOCAL INCENTIVES

Local governments, through the assistance and coordination of IEZA Zone Administrators, may provide a variety of local incentives to further encourage economic growth and investment in enterprise zones. The incentives offered are determined by the local governments. The following list is not inclusive but serves as an example of the most common local enterprise zone incentives offered:

  • Abatement of property taxes on new improvements
  • Homesteading and shop-steading programs
  • Waiver of business licensing and permit fees
  • Streamlined building code and zoning requirements
  • Special local financing programs and other resources.

WANT MORE INFO?

Check out our Illinois Enterprise Zone FAQ.