JERSEYVILLE ECONOMIC DEVELOPMENT COUNCIL COPYRIGHT 2017. ALL RIGHTS RESERVED.

Personal Taxes

Income earned in Illinois or received by Illinois residents is taxed at 3.75%. Partnerships and S-corporations pay a 1.5% personal property replacement tax and S-corporations’ owners pay the 3 percent personal income tax on their share of the corporation’s income.

Advantages:

  • There are no local personal income taxes in Illinois.
  • Retirement income is not taxed in Illinois.

http://www.illinois.gov/dceo/ExpandRelocate/Incentives/taxassistance/Pages/incentives-advantages.aspx

Corporate Taxes

Corporate income apportioned to Illinois is taxed at 7.75%, which includes a 5.25% state income tax and a 2.5 percent personal property replacement tax (S-corporations pay 1.5 percent). A unitary group of corporations files a combined return in Illinois.
Advantages:

  • The 2.5% replacement tax generates a credit equivalent to deducting the replacement tax before paying the regular corporate income tax.
    Income apportionment is based solely on in-state sales.
  • Corporations with more than 80% of their payroll and property outside the U.S. are not included in combined returns. Corporations with unique apportionment formulas are not included in combined returns.
  • Credits include a 0.5 percent credit for investment in mining, manufacturing or retailing, plus an additional 0.5% if employment increases over 1%; and an additional 0.5% investment tax credit plus a $500 jobs tax credit in Illinois Enterprise Zones.
  • The new Illinois EDGE program provides a credit equal to 3% of the wages of a new or expanding business’ added employees.
  • Dividends paid by corporations operating in Illinois Enterprise Zones and interest on loans to Enterprise Zones businesses are deductible.
  • There are no local corporate income taxes in Illinois.

Sales Taxes

Illinois has a number of exemptions, including:

  • Sales of tangible personal property to interstate carriers for hire used as rolling stock (e.g., semi-tractor trailers, railroad cars)
  • Sales of machinery and equipment that will be used primarily in graphic arts production or in manufacturing/assembling of tangible personal property for wholesale or retail sale or lease and production agriculture
  • Qualified sales of building materials that will be incorporated into real estate as part of a project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the enterprise zone administrator
  • Qualifying purchases of tangible personal property used in a manufacturing or assembling process by businesses located in an enterprise zone and certified by the DCEO as qualifying to make these purchases because jobs will be created or retained
  • Fuel used for international flights
  • Certain second division motor vehicles and trailers if the Commercial Distribution Fee administered by the Secretary of State is paid
  • A manufacturer may earn a credit when purchasing exempt manufacturing machinery and equipment.  The credit is known as the Manufacturer’s Purchase Credit (MPC).  The amount of the credit is limited to 50% of the 6.25% state tax that would have been incurred if the machinery had been taxable.  The credit may be used to satisfy Use Tax or Service Use Tax liability incurred on the purchase of qualifying production related tangible personal property.

Utility Taxes

Illinois imposes a tax on those in the business of selling, distributing, supplying, or furnishing electricity or natural gas for use or consumption. The state’s telecommunications tax is 7% with local taxes adding on additional 1% to 5%. The electricity tax is 5%, 0.32 cents per kilowatt-hour, or taxed at a declining graduated rate based on usage, whichever is lower. Some local governments also collect utility taxes.

Incentives:

  • Illinois does not tax water and sewer utilities.
  • Electricity and natural gas tax exemptions are available in Illinois Enterprise Zones (certain job creation criteria apply).
  • Natural gas bought from producers outside the state is not subject to the natural gas tax.

Property Tax

Property tax information for Jersey County is maintained by the Jersey County Government and can be found at the following link:

Unemployment

An unemployment compensation tax is applied to the first $9,800 in wages paid to each employee annually. A “new employer” rate applies for the first three years of operation; after 13 months experience in Illinois, an “experience-adjusted” rate is calculated. When an employer has been in business in Illinois at least 13 months, but less than 36 months, that employer pays the higher of the two rates; after 36 months, the employer pays its “experience adjusted” rate. The 2004 New Employer rate is 4.0 percent. Adjusted rates may vary from 0.9 percent to 8.6 percent.

Incentives:

  • The maximum rate for an employer with less than $50,000 in total wages in a given quarter is 5.4 percent.
  • Source: Illinois Dept. of Commerce & Economic Opportunity (DCEO) www.illinoisbiz.biz
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