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Investment Tax Credit
The investment tax credit allows a .5% credit against the state income tax for investments in qualified property which is placed in service in an enterprise zone.
To qualify a property must be newly built or have an improvement or addition made to it on or after the date the zone was designated.
Sales Tax Deduction
The cost of building materials that will be incorporated into real estate as part of a building project may be deducted from the sale receipts when calculating the tax imposed for these materials.
To receive these deductions the purchaser must ask the retailer for cooperation in this incentive and have a Certificate of Eligibility for Sales Tax Exemption, which is not a difficult to receive but one must file an application with the Enterprise Zone Administrator.
EZ Machinery and Equipment Sales Tax Exemption
A company in an enterprise zone may be able to receive a 6.25% sales tax exemption on all tangible property which is used or consumed within an enterprise zone in the process of manufacturing.
To be eligible for this incentive the company must either, create 200 full-time jobs in Illinois; retain a minimum of 2,000 full-time jobs, or retain 90% of existing jobs when moving into the enterprise zone. The items and materials may be purchased anywhere in Illinois.
Utility Tax Exemption
A company in an enterprise zone my be eligible for a 5% state tax exemption on gas, electricity, the Illinois Commerce Commission .1% administrative charge and the excise taxes on originating telecommunications. Local units of government may also exempt their taxes on gas, electricity and water.
To be eligible for these benefits the company must meet one of three conditions: One, the business must make an investment of at least $5,000,000 into the enterprise zone and create a minimum of 200 full-time jobs; two, make an investment of $175,000,000 in to the zone and create a minimum of 150 full-time jobs; or three, Make an investment of $20,000,000 and retain at lease 1,000 full-time jobs when moving into the zone.
An eligible investment may be purchasing a building, the improvement/renovation of a building or investments in efficiency, capacity, product quality or competitive position.
Job Tax Credits
A tax credit of $500 per qualified employee may be giving to an enterprise zone company that hires individuals who are certified as economically disadvantaged or as dislocated workers. These workers must be found through the local administrative office of the Workforce Investment Act.
Property Tax Incentives
A company in an enterprise zone may have the increase in property taxes due to new improvements or renovations abated. This is useful because every time a property is improved it is reassessed, and therefore the taxes increase. Typically this incentive is marginally beneficial at best.
Income Tax Deduction for Financial Institutions
Financial institutions in Illinois are eligible for special deductions on their Illinois corporate income tax return. Such institutions may deduct from their taxable income an amount equal to the interest received from a loan for development in an enterprise zone. This is limited to the interest earned on loans or portions of loans secured by property which is in an enterprise zone.
Dividend Deductions
Taxpayers may deduct from their taxable income an amount equal to those dividends which were paid to them by a corporation which conducts substantially all of its operations in an enterprise zone or zones.
Corporate Contribution Deductions
Corporations may make donation to designated zone organizations for projects approved by the Illinois Department of Commerce and Economic Opportunity (DCEO), and claim an income tax deduction at double the value of their contribution as long as it is approved by the DCEO.
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