The major industrial sites in the St.Louis Regional Freightway all enjoy support from state and local governments to attract new industrial development. While the availability of different incentive programs may vary by location and on a site by site basis, generally the following programs can be applied to companies investing new capital and creating new jobs.
The Illinois Edge (Economic Development for a Growing Economy) Program is a targeted tax incentive program that provides tax credits for businesses that create and/or retain jobs and make capital investments in Illinois. Illinois EDGE credits are: (1) calculated from the personal income tax collected on salaries paid for the created and/or retained jobs; and (2) taken as a non-refundable tax credit against corporate income taxes assessed over a period not to exceed 10 taxable years. (These tax credits can be carried forward for five years). Businesses must invest at least $5 million in capital improvements and create a minimum of 25 new jobs. The EDGE tax credit program has been extended until April 30, 2017.
Illinois Enterprise Zone & Benefits
A State of Illinois Enterprise Zone is a specific area designated by the State of Illinois in cooperation with a local government to receive various tax incentives and other benefits to stimulate economic activity and neighborhood revitalization. Several Enterprise Zone areas of the St. Louis Regional Freightway have been designated by the State of Illinois and participating local governments to provide special tax incentives to encourage businesses to locate and expand.
Property owners that improve or renovate industrial, commercial, or manufacturing property within the zones (and not within Tax Increment Financing Districts) are eligible to receive property tax abatement on the assessed value of the improvements.
A 6.25 percent State sales tax exemption for building materials used to improve or renovate real property within the Enterprise Zones is available to individuals or businesses that purchase their building materials from Illinois retailers or suppliers.
A 6.25 percent state sales tax exemption is available for 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, an investment of $40 million for the retention of 2,000 full-time jobs in Illinois, or an investment of $40 million and retaining 90 percent of the present jobs.
A state utility tax exemption on gas, electricity, and the Illinois Commerce Commission’s administrative charge 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 $20 million for the retention of 1,000 full-time jobs in Illinois.
A state investment tax credit of .5 percent is allowed to a taxpayer that invests in qualified property in an Enterprise 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 .5 percent investment tax credit that is available throughout the state as well as a .5 percent credit for taxpayers who increase their employment in Illinois by one percent over the preceding year.
Individuals, corporations, trusts and estates can deduct from their taxable earnings an amount equal to the dividends paid by a corporation that conducts substantially all of its operations in an Enterprise Zone.
Employers that operate businesses within the Enterprise Zone and expand their operations to hire at least five additional “economically disadvantaged or dislocated workers” are eligible to receive a $500 State tax credit for each eligible employee that they hire to work within the Enterprise Zone.
The Missouri Works Program is a program geared at offering incentives to targeted business projects paying at least 90 percent of the state average wage (80 percent within a state Enterprise Zone). The incentives come in the form of retention of withholding taxes collected on new payroll generated in the state plus the possibility for bonus refundable taxes equal to up to nine percent of total payroll for a period of five years (six for companies who have been in the State of MO for at least 10 years). Minimum job creation to obtain MO works benefits are two net new jobs in a MO Enterprise Zone and 10 new jobs outside of an Enterprise Zone. For projects creating 100 jobs or more at 120-140 percent or more of the state average, an automatic benefit of six to seven percent of new payroll in the form of retained withholdings and refundable tax credits is automatically available.
Tax Credits & Abatements
A Missouri Chapter 99 or Chapter 100 Property Tax Abatement
A Missouri Chapter 99 or Chapter 100 Property Tax Abatement is another way to effectuate tax abatement. Under Chapter 99 or 100, a local government authority or city takes title through real property assets via a bond issue and leaseback structure from the government authority to the business benefiting from the tax abatement. Accordingly, because the property to be abated is government owned it is exempt from taxes. Many local governments do not offer a full exemption but rather partial tax abatement, therefore a payment in lieu of taxes may be due for some period of the term the tax abatement is in effect. Under MO Chapter 100 a similar structure can be used to implement personal property tax abatement. Follow this link on the Missouri website for more information.
State of Missouri Enterprise Zone Tax Abatement
State of Missouri Enterprise Zone Tax Abatement is a locally-administered, real property tax incentive. The Enterprise Zones of Missouri offer real property tax abatement on new real property investment for a period of up to 10 years at a minimum of 50 percent.
The Illinois Business Development Public Infrastructure Program provides low interest loans and grants for public improvements to local governments on behalf of businesses with expansion or relocation projects that meet program criteria and that demonstrate the greatest potential in the creation and retention of jobs. The infrastructure improvements must be made on public property and must directly result in the creation or retention of private sector jobs. Funds may be used for a wide variety of public infrastructure improvements including streets, access roads, water and sewer lines, and water and sewage treatment facilities.
Missouri BUILD 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. Tax Credits are issued in the principal and interest amount of a bond issue which is redeemed by the beneficiary company and whose proceeds are used to fund infrastructure needs related to the project. The tax credits are refundable and saleable.