On September 18, 2017, the state of Illinois enacted into law H.B. 162, reinstating the expired Economic Development for a Growing Economy (EDGE) Tax Credit Program until June 30, 2022. The purpose of the EDGE Tax Credit Program is to provide tax incentives that inspire companies to either build a new location or expand existing operations in Illinois. To partake in this program, taxpayers must apply for designation and enter into a written agreement with the Illinois Department of Commerce and Economic Opportunity (DCEO).
The reinstated EDGE Tax Credit Program has several important changes, including the items summarized below:
- The previous EDGE Tax Credit was offered as a percentage of up to 100% of personal income tax withheld of new employees in connection with a project. Credit awards are now capped at the lesser of 50% of the incremental personal income tax withheld attributable to new employees plus 10% of the training costs for new employees, or 100% of the incremental personal income tax withheld attributable to new employees at an EDGE applicant’s project.
- For projects in “underserved areas,” the 50% option above is increased to 75%. Underserved areas are geographic areas that meet one or more of the following conditions:
- poverty rate of at least 20%,
- 75% or more of the children in the area participate in the federal free lunch program,
- at least 20% of households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP), and/or
- the area has an average unemployment rate that is more than 120% of the national unemployment rate for a period of at least two consecutive calendar years preceding the date of application.
- In very unique circumstances, applicants may be eligible for up to 25% of the incremental personal income tax withheld attributed to retained employees for a project.
- To be eligible for the EDGE Tax Credit, applicants must have a project that achieves one of the following criteria:
- Companies with more than 100 employees must:
- Employ a number of new employees in Illinois equal to the lesser of 50 new full-time jobs or 10% of their full-time world-wide employees at the date of application.
- Make at least $2.5 million in capital investment in Illinois. This update reduces the amount of required investment of $5 million.
- Companies with less than 100 employees must:
- Employ a number of new employees in Illinois equal to the lesser of 50 new full-time jobs or 5% of their full-time worldwide employees at the date of application.
- There is no minimum capital investment required.
- Companies with more than 100 employees must:
In addition to the updates above, to qualify for the EDGE Tax Credit, applicants must demonstrate that the project would not occur in Illinois but for the EDGE credit.
The reinstatement of the EDGE Tax Credit will be used to enhance economic development opportunities throughout the state of Illinois.
TECHNICAL INFORMATION CONTACT:
Michael Falleroni
Team Leader
Ryan
412.535.4400
michael.falleroni@ryan.com