Incentives & Foreign Trade Zones

Enterprise Zone Program

Various Incentives

The Illinois Enterprise Zone Program is designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state through state and local tax incentives and regulatory relief. Businesses located or expanding in an Illinois enterprise zone may be eligible for the following state and local tax incentives:

State Incentives and Exemptions
• Sales tax exemption on construction materials
• An investment tax credit of 0.5% of qualified property
• Expanded state sales tax exemptions on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility
• An exemption on the state utility tax for electricity and natural gas
• An exemption on the Illinois Commerce Commission’s administrative charge and telecommunication excise tax

Local Incentives and Exemptions
In addition to state incentives, each zone offers local incentives to enhance business development projects. These most often include local real property tax abatement (PILOTs) or Real Property Tax Rebates (through refunding of paid taxes in local TIF districts). These are negotiated locally and can range from 10-100% abatement or a negotiate percentage/amount of reimbursement of taxes against TIF eligible expenses. 

Missouri Works

State Payroll Tax Retention/Exemption and Tax Credits (Refundable)

Program benefits are (a) the retention of the state withholding tax of the new jobs and/or (b) state tax credits, which are refundable, transferable and/or saleable. The program benefits are based on a percentage of the payroll of the new jobs. The program benefits are not provided until the minimum new job threshold is met and the company meets the average wage and health insurance requirements.

The tax credits may be applied to Chapter 143 (state income tax, excluding withholding tax) and Chapter 148 (financial institution tax). Tax credits must be claimed within one year of the close of the taxable year for which they were issued. Tax credits can only be applied to tax liability for the year in which they were earned. Any annual unused balance is fully refundable. The credits may also be transferred, sold or assigned.

For Projects in an Enhanced Enterprise Zone, average wage of jobs must be 80% of the County or State average. 2 net new jobs within two years are required. Retention of state withholding taxes / payroll tax exemption for up to 6-years. For projects elsewhere, 10 net new jobs at 90% of the County or State average wage are required. Retention of payroll taxes for up to 6-years with potential for additional refundable tax credits equal to 1-3% of gross payroll for competitive projects with other states. For large job creation projects (100+ or more jobs) with high wages 120-140% of County average, 6-7% of new payroll in the form of payroll tax retention /exemption and refundable state tax credits is possible. 

Economic Development for a Growing Economy (EDGE) Tax Credit

Tax Credits (Non-Refundable)

The EDGE program provides an incentive to businesses to support job creation and capital investment. The non-refundable income tax credit is equal to 50% of the income tax withholdings of new job created in the state. This percentage increases to 75% if the business expansion project is located in an “underserved area” census tract which meets one of the following four tests:
1. Poverty rate of at least 20%; or 2. 75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program for a period of at least two (2) consecutive calendar years preceding the date of the application; or 3.
At least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP) for a period of at least two (2) consecutive calendar years preceding the date of the application; or 4. Average unemployment rate that is more than 120% of the national unemployment average, for a period of at least two (2) consecutive calendar years preceding the date of the application. Additional credits are also available as reimbursement for qualifying training costs. Ten percent of eligible training costs of newly hired full-time employees positions at the project may also be included as part of annual credits. Qualifying credits are identified as costs incurred to upgrade the technological skills of Full-Time Employees in Illinois and include:
1. curriculum development; training materials (including scrap product costs);
2. trainee domestic travel expenses;
3. instructor costs (including wages, fringe benefits, tuition and domestic travel expenses);
4. rent, purchase or lease of training equipment; and other usual and customary training costs

Missouri Works Training and On The Job Training

Grant / Reimbursement of Training Expense Through Payroll Taxes

Missouri Works Training can be used as a result of new products or processes, new technologies, competition-driven quality or productivity improvement, or relocation or expansion. The program is funded either through a competitive cash grant process or through retention of withholding taxes that are used to reimbuse eligible training costs. Additionally, some funds for On The Job Training are available through Federal funds and the State Division of Workforce Development to be administered at the local level. For approved training projects, the incentive can reimburse up to 50% of wages for the length of the training period, not to exceed 6th months and $10/hour.

High Impact Business

Various Incentives

The HIB program is designed to encourage large-scale economic development activities, by providing tax incentives to companies that propose to make a substantial capital investment in operations and will create or retain above average number of jobs. Businesses may qualify for: investment tax credits, a state sales tax exemption on building materials and/or utilities, a state sales tax exemption on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility.

Missouri Build

Bond / Tax Credit (Refundable)

Provides a financial incentive for the location or expansion of large business projects. The incentives are designed to reduce necessary infrastructure and equipment expenses if a project can demonstrate a need for funding.

The bonds may be used to finance public or private infrastructure to support the project, or the new capital improvements of the business at the project location. Bond proceeds may not be used for working capital, inventory or other operating costs of the business or another entity. This tax credit is refundable, and can be applied to:
Ch. 143 – Income tax, excluding withholding tax
Ch. 148 – Bank Tax, Insurance Premium Tax, Other Financial Institution Tax.

Tax Increment Financing (TIF)

Gap Financing

Tax Increment Financing (TIF) is a powerful tool that enables municipalities to self-finance its redevelopment programs. TIF funds can pay for public improvements and other economic development incentives using the increased property tax revenue the improvements generate. A TIF District’s revenues (“tax increment”) come from the increased assessed value of property and improvements within the District. Once a TIF District is established, the “base” assessed value is determined. As vacant land and dilapidated properties develop with TIF assistance, the equalized assessed valuation (EAV) of those properties increases. New property taxes resulting from the increased assessed valuation above the base value create an incremental increase in tax revenues generated within the TIF District. The maximum life of a TIF District is 23 years. When the TIF ends and the town’s investments in both public and private redevelopment projects within the TIF redevelopment area are fully repaid, property tax revenues are again shared by all the taxing bodies. All taxing bodies then share the expanded tax base – the growth which would not have been possible without the utilization of Tax Increment Financing.

Chapter 353 Abatement

Real Property Tax Abatement

This incentive can be utilized by cities to encourage the redevelopment of blighted areas by providing real property tax abatements. Tax abatement is available for a period of up to 25 years, which begins to run when the Urban Redevelopment Corporation takes title to the property. During the first 10 years, the property
is not subject to real property taxes except in the amount of real property taxes assessed on the land, exclusive of improvements, during the calendar year preceding the calendar year during which the Urban Redevelopment Corporation acquired title to the real property. During the next 15 years, the real property may be assessed up to 50% of market value. Payments in lieu of taxes (PILOTS) may be imposed on the Urban Redevelopment Corporation by contract with the city. PILOTS are paid on an annual basis to replace all or part of the real estate taxes,which are abated. The PILOTS must be allocated to each taxing district according to their proportionate share of ad valorem property taxes.

Payment in Lieu of Taxes (PILOT)

Property Tax Abatement

Payments in lieu of taxes may be imposed by contract between a city, village, or incorporated town and a neighborhood redevelopment corporation that receives a tax abatement on property. The governing body of the city, village, or incorporated town furnishes the collector with a copy of any contracts requiring payment in lieu of taxes. The collector allocates all revenues received from the payment in lieu of taxes among all taxing districts whose real estate tax revenues are affected by the abatement on the same pro rata basis and in the same manner as the real estate tax revenues received by each taxing district from that property in the year the payments are due.

Chapter 68, 99 and Chapter 100 Tax Abatement

Real and Personal Property Tax Abatement; Sales Tax Exemption on Building Materials

Tax abatement can be implemented and negotiated at the local level through MO Chapter 99 and MO Chapter 100 Tax Abatement. Under Chapter 99, a project area is declared blighted and a redevelopment plan implemented to ameliorate the blight is approved by local municipal authorities with Chapter 99 powers that effectuates real property tax abatement. Length and percentage abatement is all subject to local negotiations. Under MO Chapter 100, no blight finding is required and personal property taxes (FF&E) can also be abatement. Both MO Ch 99 and MO Ch 100 offer the ability for sales and use tax exemption on building materials and Ch 100 also allows for sales tax exemption on purchases of non-manufacturing personal property (manufacturing personal property is exempt “as of right” in the tax code). Tax abatement under these mechanisms are faciltated through an industrial revenue bond structure and lease between the Company and local unit of government or government authority. For Chapter 68, the same mechanisms apply with a local Port Authority acting as the unit of government.

Electric Rates

Economic Development Tariff

Payments in lieu of taxes may be imposed by contract between a city, village, or incorporated town and a neighborhood redevelopment corporation that receives a tax abatement on property. The governing body of the city, village, or incorporated town furnishes the collector with a copy of any contracts requiring payment in lieu of taxes. The collector allocates all revenues received from the payment in lieu of taxes among all taxing districts whose real estate tax revenues are affected by the abatement on the same pro rata basis and in the same manner as the real estate tax revenues received by each taxing district from that property in the year the payments are due.

Ameren Smart Energy Incentive

Rate Reduction

The Ameren Missouri Smart Energy Plan economic development incentive (EDI) is a benefit offered to qualifying new and existing businesses seeking to locate or expand in Missouri. The Smart Energy Plan, which was developed with the passage of Missouri Senate Bill 564. The incentive will offer qualifying business customers an average 40 percent discount(1) from base rates over an agreement term of five years. To be eligible, businesses must: 1. Be receiving (or requesting) service from Ameren Missouri under Rate 3M – LGS, Rate 4M – SPS or Rate 11M – LPS. 2. Be an industrial and/or commercial facility not directly selling or providing goods and/or services to the general public; 3. Be receiving state, regional, or local economic development incentives in conjunction with its expansion/location project; 4. Must apply for the Ameren Missouri Smart Energy Plan EDI prior to a public announcement of the expansion/location project; 5. Have an average monthly demand increase of at least 300 kW and 55 percent load factor; 6. Discounted rates must be greater than Ameren Missouri’s marginal cost. Some of the most common industries eligible for the discount are manufacturing operations, data centers, research and development operations, large-scale agriculture processing facilities and wholesale warehouse/distribution centers.