Illinois’ EDGE Tax Credit Program

Illinois’ EDGE Tax Credit Program

February 8, 2017

Legislation has recently been signed by Illinois Governor Bruce Rauner to extend the Illinois Economic Development for a Growing Economy (EDGE) Tax Credit program through April 30th 2017.  The EDGE Tax Credit Program is a targeted tax incentive program that provides tax credits for businesses that create new full-time jobs and invest in capital improvements within Illinois.  In a global economy, where Illinois is competing for jobs and investments worldwide, this program is designed to level the playing field for the new jobs and development to increase economic opportunities and the quality of life for Illinois residents.

The EDGE program provides a non-refundable income tax credit to encourage companies to locate or expand their operations in Illinois when there is an active consideration of a competing non-Illinois location.  Awarded tax credits are equal to the amount of state income taxes withheld from the newly created jobs over a ten-year period.  The intent of the EDGE program is to reduce the cost of doing business in Illinois when compared with similar costs in other states where operations could have been located. 

The EDGE Tax Credit is a discretionary program awarded by the Illinois Department of Commerce and Economic Opportunity (DCEO).  DCEO will consider an award for a company if a company is considering creating the new jobs and investments in a competing location within another state or country.   Specifically, the company must be able to demonstrate that multiple state options are available and that it could reasonably and efficiently locate outside of the state.  A company may also demonstrate that receipt of tax credits is a significant factor in its decision and that, without the incentive, the organization likely would not create jobs in Illinois. 

Additional eligibility requirements for the EDGE Tax Credit program include the following:

  • The Company will invest at least $5,000,000 in capital improvements and employ at least 25 new full-time employees at a designated site in Illinois; or
  • The Company will invest at least $2,500,000 in capital improvements and employ at least 50 new full-time employees at a designated site in Illinois; or
  • A Company with 100 or fewer full-time employees will invest at least $1,000,000 in capital improvements and employ at least five (5) new full-time employees at a designated site in Illinois.
  • A Company will not create requisite amount of jobs and/or will not meet the requisite level of capital investments, but will fulfill at least one (1) of the following conditions:
    • The Company is located in a distressed community with an employment rate which is higher than the State’s average;
    • The Company is located in an area with limited economic development prospects as evidenced by prior and current development activities;
    • Approval would support a business with potential to generate additional growth in the area and create jobs as a result of spin-off business; or
    • Approval would avert loss of one of the area’s major sources of employment.

Capital Improvements include, but are not limited to investments in build-out costs, leases and furniture, fixtures and equipment.  Companies have twenty-four month from the date of the EDGE Agreement to meet the minimum thresholds for investments and job creation.  Upon entering into an Agreement with DCEO, companies will be entitled to tax credits for a period of ten years.  In order to be eligible for the program, all EDGE applications need to be submitted to DCEO no later than March 31st, 2017.  Final EDGE Agreements must be executed by DCEO and the Company by April 28th, 2017.

Joseph Stachnik
Ernst & Young LLP

The views expressed are those of the author and do not necessarily reflect the views of Ernst & Young LLP.  


The author’s contact detail is:
 
Joe Stachnik | State & Local Tax Services | Business Incentives & Site Selection
Ernst & Young LLP
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