Enterprize Zone

Enterprise Zone Benefits-The Use of Incentives

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.
Tax Exemptions
Sales Tax Exemptions-A 6.25 percent state sales tax exemption is permitted on building materials to be incorporated into real estate in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act by remodeling, rehabilitation or new construction, may deduct receipts from such sales when calculating the tax imposed by this act. For purposes of this Section, ”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 administrator of the enterprise zone in which the building project is located. To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by the administrator of the enterprise zone into which the building materials will be incorporated.
Enterprise Zone Machinery and Equipment/Pollution Control Facilities Sales Tax Exemption
-At 6.25 percent state sales tax exemption is available on purchases of tangible personal property to be used or consumed in the manufacturing or assembly process or in the operation of a pollution control facility within an enterprise zone. Eligibility for this exemption is contingent upon a business making a $5 million investment which causes the creation of 200 full-time equivalent jobs in Illinois, or an investment of $40 million for the retention of 2,000 full-time jobs in Illinois, or an investment of $40 million which causes 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 make application to and be certified by DCEO for this exemption. DCEO also has the authority to determine the length of the exemption. This exemption shall not be allowed beyond the term of the certified Enterprise Zone.

The exemption is applicable to the following:

  • Hand tools used to maintain, repair or operate machinery and equipment;
  • Abrasives, acids, polishing compounds or lubricants used or consumed in the manufacturing or assembly process;
  • Coolants, adhesives, solvents or cleaning compounds used to maintain, repair or operate machinery and equipment;
  • Manufacturing fuels;
  • Protective clothing and safety equipment; and
  • Fuels, chemicals and catalysts used in the operation of pollution control facilities.

 

Enterprise Zone Utility Tax Exemption-A state utility tax exemption on gas, electricity and the Illinois Commerce Commission’s administrative charge and telecommunication excise tax is available to businesses located in enterprise zones. Eligibility for this exemption is contingent upon a business making a $5 million investment which causes the creation of 200 full-time equivalent jobs in Illinois, or an investment of $175 million for the creation of 150 new full-time equivalent jobs in Illinois, or an investment of $20 million for the retention 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 make application to and be certified by DCEO for the state utility tax exemption. DCEO also has the authority to determine the term of the exemption, not to exceed twenty years, and the percentage of the exemption. Local units of government may further exempt their public utility taxes on gas, electricity and water for eligible businesses.

Tax Credits

Enterprise Zone Investment Tax Credit-A state investment tax credit of .5 percent is allowed a taxpayer who invests in qualified property in a zone. Qualified property includes machinery, equipment and buildings. The credit may be carried forward up to five years. This credit is in addition to the regular .5 percent investment tax credit which is available throughout the state as well as a .5 percent credit for businesses that increase their employment in Illinois by one percent over the preceding year.

Jobs Tax Credit-The Enterprise Zone Jobs Tax Credit allows a business a $500 credit on Illinois Income taxes for each job created in the zone for which a certified dislocated worker or economically disadvantaged individual is hired. The credit may be carried forward for up to five years. A minimum of five eligible employees must be hired to qualify for the credit.

Income Tax Deductions

Dividend Income Deduction-Individuals, corporations, trusts and estates are not taxed on dividend income from corporations doing substantially all their business in a zone.

Interest Deduction-Financial institutions are not taxed on the interest received on the loans for development within an enterprise zone.

Contribution Deduction-Businesses may deduct, from taxable income, double the value of a cash or in-kind contribution to an approved project of a designated zone organization.

LOCAL INCENTIVES

Local governments 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 shopsteading programs;
  • Waiver of business licensing and permit fees;
  • Streamlined building code and zoning requirements; and
  • Special local financing programs and other resources.

 

FOR MORE INFORMATION

For information on the Illinois Enterprise Zone Programs, contact:

Illinois Department of Commerce and Economic Opportunity Enterprise Zone Program
620 East Adams, 3rd Floor
Springfield, IL 62701
217/785-6145; TDD, 800/785-6055

Enterprise Zones

Enterprise Zones are among Illinois’ most important tools to stimulate economic growth and neighborhood revitalization. The Enterprise Zone program depends upon a creative partnership between state and local government, businesses, labor and community groups to encourage economic growth in the areas designated as Enterprise Zones. Although the program is administered at the state level by the Department of Commerce and Economic Opportunity (DCEO), its ultimate success depends on the level of local commitment.

There are currently 93 Enterprise Zones in Illinois, the maximum number that may be designated according to Illinois law. All offer the same mix of state incentives designed to encourage companies to locate or expand within a zone. In addition, each zone offers distinctive local incentives to enhance business or neighborhood development efforts. Such local incentives include homesteading and shopsteading programs, waiver of business licensing and permit fees, streamlined building code and zoning requirements, and special local financing programs and resources.

State Incentives

Sales Tax Exemption-A 6.25 percent state sales tax exemption is permitted on building materials to be used in an Enterprise Zone. Materials must be permanently affixed to the property and must be purchased from a qualified retailer.

Enterprise Zone Machinery and Equipment Consumables/Pollution Control Facilities Sales Tax Exemption-A 6.25 percent sales tax exemption on purchases of tangible personal property to be used in the manufacturing or assembly process or in the operation of a pollution control facility within an Enterprise Zone is available. Eligibility is based on a business making an investment in an Enterprise Zone of at least $5 million in qualified property that creates a minimum of 200 full-time-equivalent jobs, a business investing at least $40 million in a zone and retaining at least 2,000 jobs, or a business investing at least $40 million in a zone which causes the retention of at least 90 percent of the jobs existing on the date it is certified to receive the exemption.
Enterprise Zone Utility Tax Exemption-A state utility tax exemption on gas, electricity and the Illinois Commerce Commission’s administrative charge and telecommunication excise tax is available to businesses located in Enterprise Zones. Eligible businesses must make an investment of at least $5 million in qualified property that creates a minimum of 200 full-time equivalent jobs in Illinois, an investment of $20 million that retains at least 1,000 full-time-equivalent jobs, or an investment of $175 million that creates 150 full-time-equivalent jobs in Illinois. The majority of the jobs created must be located in the Enterprise Zone where the investment occurs.

Enterprise Zone Investment Tax Credit-A state investment tax credit of 0.5 percent is allowed a taxpayer who invests in qualified property in a Zone. Qualified property includes machinery, equipment and buildings. The credit may be carried forward for up to five years. This credit is in addition to the regular 0.5 percent investment tax credit, which is available throughout the state, and up to 0.5 percent credit for increased employment over the previous year.

Dividend Income Deduction-Individuals, corporations, trusts and estates are not taxed on dividend income from corporations doing substantially all their business in an Enterprise Zone.

Jobs Tax Credit-The Enterprise Zone Jobs Tax Credit allows a business a $500 credit on Illinois income taxes for each job created in the Zone for which a certified eligible worker is hired. The credit may be carried forward for up to five years.  A minimum of five workers must be hired to qualify for the credit. The credit is effective for people hired on or after January 1, 1986.

Interest Deduction-Financial institutions are not taxed on the interest received on loans for development within an Enterprise Zone.

Contribution Deduction-Businesses may deduct double the value of a cash or in-kind contribution to an approved project of a designated Zone organization from taxable income.


Community Calendar
07/22/2017 08:00 AM
SHRED DAY

08/18/2017 08:00 AM
GARAGE SALE

08/19/2017 08:00 AM
VILLAGE GARAGE

08/20/2017 08:00 AM
VOS Garage Sale

08/26/2017 06:00 AM
Clean Up Day