Both Illinois and Missouri offer a wide range of tax credits and other economic incentives.
Missouri Works: These tax incentives help eligible businesses facilitate the creation of quality jobs. Tax incentives are awarded based on the number of jobs created, the amount of private capital investment and the wages offered compared to the county averages. Other discretionary benefits may be offered based on the overall size of the project, the company’s financial stability and its location in an Enhanced Enterprise Zone, among other factors.
Missouri One Start: Missouri partners with community colleges to offer technical and leadership training as well as recruiting services for a wide range of eligible industries. Missouri One Start requires capital investments or the creation of new jobs as well as the presence of permanent, full-time employees with competitive wages.
Business Use Incentives for Large-scale Development: The BUILD program provides refundable state tax credits to certain businesses for debt service payments for industrial revenue bonds related to a portion of project infrastructure costs. Manufacturing, services (in interstate commerce) and research and development projects are eligible if within three years the capital improvements exceed $15 million ($10 million for office projects) and 100 new jobs (500 for offices) are created.
Missouri Chapter 100 Bonds: Chapter 100 industrial revenue bonds allow local governments to offer personal property and real property tax abatement. Terms such as length and percentage of the abatement are subject to negotiation. To facilitate this transaction, the company transfers the title of the property to the city or county “in name only” and then subleases that property back at a rate equal to the principal and interest on the bonds. Sales tax abatement on construction materials and personal property may also be available.
Data Center Incentives: Data centers may be eligible to receive an exemption from state and local sales and use taxes on construction materials, equipment and utilities. New centers are required to invest $25 million ($5 million for expansions) and create 10 jobs (5 for expansions) with wages of at least 150 percent of the county average or state average wage, whichever is lower.
Tax Increment Financing: TIF can help fund costs incurred by, or incidental to, a development project in a blighted area. Up to 100 percent of the new local real property taxes and 50 percent of the new local economic activity taxes (sales, wage and utility taxes) created by the project for 23 years can be captured and bonded to underwrite project costs. Instead of bonds, local governments may issue TIF notes, which can in turn be held by the company benefiting from the TIF incentive (thus acting as a rebate on captured tax revenues) or pledged to obtain private bank financing to help underwrite project costs.
Economic Development For A Growing Economy tax credit program: The EDGE tax credit encourages businesses to locate or expand in Illinois. EDGE provides tax credits of 50% of state income taxes for new jobs (75% if in an “underserved area”) for ten years. EDGE credits have job creation thresholds and larger companies (100+ employees) must also invest $2,500,000. Tax credits for large companies can’t exceed the amount of their investment. Additional credits for qualifying job training costs are available.
Industrial Development Revenue Bond Program: Bonds are issued for manufacturers and not-for-profit organizations to finance fixed assets including land, buildings (new or renovated) and equipment. These bonds provide long-term financing of up to 100 percent of project costs at rates lower than conventional financing. Tax-exempt bonds are usually the lowest cost form of financing offering an interest rate typically 2-3 percent lower than taxable debt. Interest due to bondholders on Industrial Development Revenue Bonds is exempt from federal but not state income taxation.
Tax Increment Financing: Illinois cities may also utilize TIF to fund development related costs. Up to 100 percent of the new local real property taxes and sales taxes in some cases are eligible. These incremental taxes can be captured and bonded for 23 years to underwrite project costs. Instead of bonds, local governments may utilize a range of financing options including bonds, loans and notes. Illinois TIF may be used for public and institutional properties as well as vacant land. TIFs may be approved to be extended an additional 12 years for a total of 35 years.
High Impact Business: This program is designed to support large economic development projects. It provides tax incentives to businesses making a capital investment of $12 million and creating 500 jobs or investing $30 million and retaining 1,500 jobs. Benefits may include investment tax credits and selected state sales tax exemptions. Investments must occur in designated locations outside of an Enterprise Zone.
Federal, local: In addition to these and other state incentive, a range of federal and local incentive programs may be available, including several zone-based programs designed to incentivize investment in underserved areas such as federal Enterprise Zones, Opportunity Zones, Promise Zones and New Market Tax Credits. Need help seeing which programs your company can take advantage of? Contact us.