The begin of June brought the end of the Spring General Assembly session and a fury of activity as it relates to the business community. Thanks to the Illinois Economic Development Association, the SBA is able to provide a snapshot of some of the new policies that can benefit and impact businesses:
- Blue Collar Jobs Act - Beginning January 1, 2021, four new (or expanded) income tax credits. For the purposes of these credits:
- Underserved areas refer to a geographic area that meets any of the following conditions [pg170]:
- 20% poverty rate
- 75% of children in federal free lunch program
- 20% of households receive Supplemental Nutrition Assistance Program (SNAP)
- Average Unemployment rate is more than 120% of the national average The total aggregate amount of credits awarded under the Blue-Collar Jobs Act shall not exceed $20,000,000 in any State fiscal year. Eligible projects include building a structure/building or making improvements to real property, undertaken and commissioned by an eligible business. This does not include the routine operation, repair, or maintenance of existing structures, buildings, or real property. A credit may not reduce the taxpayer’s liability to less than zero. If the amount of the credit exceeds the taxpayer’s liability, the excess may be carried forward and applied against succeeding years
- Leveling the Playing Field for Illinois Retail - After the Wayfair v South Dakota decision, Illinois can now require that remote retailers (Amazon, Ebay, Facebook, etc) collect State and local Retailers’ Occupation Tax (ROT) rather than use tax. The Illinois Retail Merchants Association states (more information here) that Illinois would raise $460 million annually, with $368 million to the state and $92 million to localities by formula, plus any additional ROT where applicable. IRMA states that local governments win with an increase in their tax share, and they get all of any locally-imposed ROT. Finally, there is no change in this matter for Illinois retailers or anyone with a warehouse or distribution center in Illinois.
- Manufacturing Machinery & Equipment Credit - Manufacturing machinery and equipment exemption which includes production-related tangible personal property purchased on or after July 1, 2019. Adds to the definition of “production related tangible personal property” to include supplies & consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel and fire and safety equipment used or consumed within a manufacturing facility. The maximum amount of the exemption may not exceed 5% of the price of the property. The aggregate amount for the exemption may not exceed 10 million.
- Repeal of the Franchise Tax - The Illinois franchise tax is being phased out. New provisions in the Business Corporation Act exempt the first $X in liability “from the tax imposed under this Section” as follows:
- 2020: $30
- 2021: $1,000
- 2022: $10,000
- 2023: $100,000
- 2024+: No Payment Due
For a more detailed analysis of the economic consequences of the Spring session please follow the link for the Daily Herald’s summary of the activity and impacts of the General Assembly in Springfield.