Illinois Small Business Jobs Creation Tax Credit

Small Business Jobs Creation Tax Credit Program FAQ’s

What is the purpose of the Small Business Job Creation Tax Credit?

Previously the Small Business Jobs Creation Tax Credit (Public Act 096-0888) was a pilot

program created to help reverse the trend of high unemployment in Illinois and to help

spur the economy to recovery, by assisting and encouraging small businesses in the

creation of local, sustainable, new jobs.

Public Act 096-1498, signed by Governor Quinn on January 17, 2011, expanded the Tax

Credit to include businesses of any size that employ worker-trainees from the “Put Illinois

to Work” program.

Due to the overwhelming positive response from the pilot program that ran from July 1,

2010 to June 30, 2011. The Small Business Job Creation Tax Credit was re-enacted and

extended (Public Act 097-0636) by the General Assembly on December 16, 2011.

What businesses are eligible for this tax credit?

There are two categories of businesses eligible to receive this credit:

Small businesses with 50 or fewer full-time employees on July 1, 2012. The determination

of whether an employer has 50 or fewer employees on July 1, 2012, includes all

employees in every location, which includes both in Illinois and out of state employment

totals.

Any-sized business that hires a 2010 “Put Illinois to Work Program” worker-trainee.

The business must be located within the State of Illinois and must be engaged in interstate

or intrastate commerce.

An eligible business must maintain a consistent/positive headcount in order to receive the

tax credits. If a business has 30 full-time employees, they create 5 new positions that they

register for tax credit consideration, however, during that year they decided to eliminate 7

unrelated positions; then they would not be eligible to receive any tax credits.

Calculation of the net increase in the number of full-time Illinois employees is based on

the employer’s number of Illinois employees as of June 30, 2012 (onset of the extended

program) added to the number of jobs the created and registered with the program. If a

business had 5 full-time employees as of June 30, 2012, they create and register 2 new

positions for tax credit consideration, then when each job is ready to be attested to (one

year from the hire date); they must have at least 7 full-time employees currently

employed with the business in order to maintain a positive headcount.

New businesses hiring their first Illinois employee(s) may qualify for the credit.

How much is the tax credit worth?

For small businesses under 50 full-time employees: The credit is for $2,500 per job (that

can be carried forward) and it must be applied against their Illinois withholding tax. The

employer is entitled to one credit ($2,500) if the position is filled for one year.

For any-sized businesses hiring “Put Illinois to Work” worker-trainees: Employers in this

category are entitled to one-half of the credit ($1,250) allowable if that employee is

employed for at least 6 months after the date of hire. The employer is entitled to the other

half of the credit ($1,250) if that employee is employed for at least 12 months after the

date of hire.

A credit can be taken against a company’s withholding tax liability.

The program is capped at $50 million worth of credits issued.

What are the guidelines for the new position to be eligible for the credit?

The position must have been created between July 1, 2012 and June 30, 2016.

The position must pay no less than $10.00 per hour or the equivalent salary for a new

employee for a minimum of $18,200 annualized.

For small businesses: Eligibility for the credit does not require that a particular individual

employee be retained for one year, only that a new, full-time Illinois job be created and

sustained for one year.

For businesses hiring “Put Illinois to Work” worker-trainees: The worker-trainee hired into

a full-time position must be employed for at least 6 months to be eligible for one-half of

the credit, and that same individual employed for at least 12 months for the business to be

eligible for the other half of the credit.

The credit may be claimed for an hourly employee working an average of at least 35 hours

per week or for a full-time salaried employee, but not for a partner or an independent

contractor.

An eligible new job cannot be filled by a person who was previously employed by the

business applicant 6 months prior to the onset of this program (6 months prior to July 1st).

For businesses hiring through “Put Illinois to Work”: The position can be filled by someone

who previously worked for the applicant’s business under the “Put Illinois to Work”

program.

The position cannot be filled by any individual who has a direct or indirect ownership

interest of at least 5% in the profits, capital or value of the business.

How will companies apply for the tax credit and how will it work?

Eligible companies must register that they have created a new position online at

JobsTaxCredit.illinois.gov.

Beginning July 1, 2012, online registration for the credit may be made as soon as a new,

full-time Illinois employee is hired and begins providing services.

For small business: Approximately one year after filling the new position, the business will

provide supporting data as requested online in order to be issued its tax credit

certificate(s). The credit certificates will be issued beginning July 1, 2013

For businesses hiring “Put Illinois to Work” worker-trainees: The business may apply for

one-half of the tax credit at any time after the conclusion of the 6 month period, and again

at any time after the conclusion of the 12 month period for the other half of the tax credit.

Tax credits granted will not change the recognition of withholding tax paid for either

employer or employee.

Is there a cut-off date for businesses to register their company and their newly created job(s) in

this program?

Yes, businesses must register their company information and their newly created job(s) no

later than June 30, 2016.

Interested businesses can become registered with our program by visiting,

JobsTaxCredit.Illinois.gov.

What will be the impact of the credit?

Small businesses are the backbone of the Illinois economy. 95% of Illinois businesses have

fewer than 50 employees. This tax credit encourages small businesses to hire today,

instead of next year, to get their business and the economy growing again. The tax credit

also provides a strong incentive for businesses to hire worker-trainees from the 2010 “Put

Illinois to Work” program. The credit could be awarded for the creation of up to 20,000

full-time jobs.

Who will manage the program? Will it require more money or employees?

DCEO will work with the Department of Revenue as it does with various other tax credit

programs already in place. Current staff is tasked with managing this extended program.

Are any small businesses exempted?

No.

Is the tax credit limited to a particular industry? Does it exclude retail or restaurants?

No, as long as the position created is FT and the position pays no less than $10.00 per hour

or the equivalent salary for a new employee for a minimum of $18,200 annualized.

Are there any salary requirements?

The position must pay no less than $10.00 per hour or the equivalent salary for a new

employee for a minimum of $18,200 annualized