The most prevalent tax credit to stimulate statewide growth in Illinois is the Economic Development For A Growing Economy (EDGE) program. This tax credit program was created to offer a special incentive that encourages companies to locate or expand operations in Illinois when there is active consideration of a competing location in another state.

Qualifying companies may receive a tax credit equal to the amount of the state income taxes withheld from the salaries of employees in the newly created jobs. The non-refundable tax credit may be used against corporate income taxes to be paid over a period not to exceed 10 years.

The amount of the Illinois EDGE tax credit is calculated on a case-by-case basis. The credits have the potential to be as high as the amount of tax receipts collected from the Illinois income taxes paid by newly hired and/or retained employees of the firm as pertaining to the expansion project.

The EDGE program allows companies to reduce the costs of doing business in the state of Illinois, compared to similar costs associated with expanding their business in other states. And, while each annual tax credit awarded may not be larger than the company’s state income tax liability, the credit may be carried forward for up to five years.

Your company would also have to maintain the jobs created and/or retained along with the capital investment concurrent with the period in which it claims Illinois EDGE tax credits.

• The development project must add to the export potential of Illinois, which includes manufacturing or services, but not retail trade or personal services.

• The project must be an expansion of an existing operation or a new location. Company relocations within Illinois are eligible for consideration only if there are documented and substantial reasons why their current location is inadequate.

• Each project must commit to making a capital investment of at least $5 million in the state, and must create at least 25 new jobs (excluding recalls, transfers, etc.).
  
  
• The applicant must provide documentation of evidence to demonstrate that, if not for the tax credit, the project would not occur in Illinois.

• The cost differential should be identified, using the best available data, in the projected costs for the applicant’s project compared to the projected costs in the competing state. This includes the impact on the competing state’s tax incentive programs.

Navigating The Illinois EDGE Tax Credit Program

Between 1999 and 2013, the Illinois EDGE tax credit has approved $832.7 million in credits, so it is potentially very beneficial for companies. However, the EDGE tax program has seen recent new conditions for those companies seeking the credits, each  with its own set of complex eligibility requirements and program administrative details.

That’s why it is recommended you contact an outsourced tax consultant who is well-versed in Illinois state employment incentives. A tax expert guides you through the program details and develops a solid plan for capturing the tax incentives, from meeting eligibility requirements to accurately filing applications.

Discover what tax incentive programs are available in your state below.