Client Alerts The Illinois Small Business Job Creation Tax Credit

Publication
09.04.12

The Illinois Small Business Job Creation Tax Credit creates a $2,500 tax credit against withholding tax for small employers who hire new, full-time Illinois employees beginning July 1, 2012. The program is an extension of the pilot program that expired on June 30, 2011.

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The Illinois Small Business Job Creation Tax Credit creates a $2,500 tax credit against withholding tax for small employers who hire new, full-time Illinois employees beginning July 1, 2012. The program is an extension of the pilot program that expired on June 30, 2011.

Who Qualifies?

  • An employer paying wages that has 50 or fewer full-time employees on July 1, 2012 and creates a new full-time Illinois position.
  • For purposes of this credit, a full-time employee is one who works at least 35 hours per week.
  • To qualify, the position must pay at least $10 per hour and be sustained for one year.
  • A particular individual does not need to be retained for one year, just the position needs to be sustained.
  • The 50 employee determination includes both Illinois and out-of-state locations, as well as “related” businesses.
  • New small businesses hiring their first Illinois employee(s) can qualify for the credit.

A person previously employed by the employer or who is a 5% or more owner or a “related” member does not qualify.

How to Apply?

Eligible companies will apply for the credit online and ultimately will be issued a tax credit certificate. As soon as a new, full-time employee is hired and begins providing services, the application should be completed online. The actual credits will be issued one year from the hire date.

How is the Credit Calculated?

The credit is $2,500 multiplied by the net increase in jobs amount. This amount is determined by subtracting the total full-time Illinois employees on July 1, 2012 from the total on June 30, 2013.

Other Considerations

This is a credit against future withholding tax, so any type of entity paying wages can benefit from it, including not-for-profit organizations and Professional Employer Organizations. The credit program expires June 30, 2016 or earlier if the statewide cap of $50 million is met.

This credit might provide your business with valuable tax savings but many rules apply, so please contact us for the details or to ask any questions.

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