New Economic Development Incentives Poised to Bring Jobs and Investment to Illinois
Illinois recently passed major new economic development legislation that is set to boost the state’s economic competitiveness. The incentives, signed into law by Governor JB Pritzker February 3, provide stronger financial assistance for businesses to relocate to or expand in the state, and makes it easier for them to qualify for existing programs, particularly in key industries such as electric vehicles, sustainable energy, and microchips. Here are six key takeaways from the legislation:
- New “closing fund” to seal the deal: The Invest in Illinois fund devotes $400 million to high-priority projects that commit to investing and creating jobs in Illinois. This means that expanding or relocating companies can receive cash assistance to help with up-front costs associated with their projects. Safeguards are in place to ensure that job creation and investment numbers are met, but the process for allocating funds to worthy projects is simple and intended to help large deals close quickly.
- Bigger, simpler tax credits: The new policy revises Illinois’ Economic Development for a Growing Economy (EDGE) Tax Credit with new provisions that substantially ease “but/for” requirements. One impact is that businesses no longer have to report on incentives from competing states. It also doubles the credits for retained employees in underserved areas to 50% from 25%. A termination clause gives businesses five years to achieve their job creation and investment commitments.
- Supercharging EV projects: Illinois is positioned at the forefront of the energy transition. The Reimagining Electric Vehicles (REV) Act, passed in 2021, offers highly competitive incentives, including 75-100% income tax withholdings exemptions and credits for workforce training, construction jobs and investment, to attract companies in the electric vehicle sector. New updates change its name to Reimagining Energy and Vehicles and expands the eligible companies to include manufacturers of solar, renewables, and energy storage components. The minimum investment threshold was also lowered to $2.5 million from $20 million. Companies are required to create 50 new jobs or a number equivalent to 10% of their global workforce, whichever is lower, within four years.
- Big credits for tiny chips: The microchips found in everything from smartphones to pickup trucks have seen surging demand, supply chain issues, and a drive to “reshore” the manufacturing of critical technologies. Last April, Illinois passed the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act to attract semiconductor companies looking to relocate or expand in the U.S. The new legislation significantly boosts tax credits for retained employees of semiconductor projects from 25% to 75%, rising even further to 100% for those locating in an underserved or energy transition area.
- Larger enterprise zones: Illinois’ existing Enterprise Zone Program was designed to stimulate economic growth and the revitalization of disadvantaged areas of the state through a variety of tax incentives, regulatory relief and improved governmental services. The act amends the program to expand the size of these zones, allowing for local communities to be more competitive when attracting businesses.
- Leading in SAF: Illinois is now the only state in the nation with a sustainable aviation fuel (SAF) tax incentive, providing a $1.50/gallon tax credit for SAF sold to or used by an air carrier. SAF is seen as a critical component in the decarbonization of the aviation industry, which has long advocated for policy support to help offset the higher cost of SAF production compared with traditional jet fuel. The credit is one more step to positioning Illinois as a leader in the energy transition.
Overall, these measures advance Illinois’ competitiveness when it comes to business attraction and retention. To learn more about these and other incentives or to get help on finding a site with growth potential, reach out to us here.
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