05.08.14 |
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Illinois Replacement Tax Investment Credit

Illinois imposes a replacement tax on corporations to replace funds lost by local governments when their authority to impose personal property taxes on businesses was removed.  The replacement tax is equal to 2.5% of income for corporations and is computed and reported on the Illinois corporate income tax return.  For corporations subject to the replacement tax, a credit is allowed against the tax if certain criteria are met.Illinois

To be eligible for the credit, a business must have placed qualified property into service in Illinois during the respective tax year. The credit is equal to 0.5% (.005) of the basis of qualified property placed in service, with an additional credit of up to 0.5% (.005) of the basis allowed if a business’ base employment increased over the preceding year or for businesses new to Illinois.

The business must be primarily engaged in manufacturing, retailing or certain mining activity to be eligible.

Qualified property, for purposes of this credit, must meet certain requirements, including:

  • Must be tangible and depreciable
  • Must have a useful life of four or more years
  • Must be acquired by purchase (new or used)

The Replacement Tax Investment Credit will expire for costs incurred after December 31, 2018 unless extended by law.

According to internal ADP data, up to 50% of the billions of dollars in tax savings available nationwide go unclaimed. Find out more about the ADP SmartComplianceSM Tax Credits Module here.




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