As part of the State of Illinois fiscal year 2011 budget, Governor Pat Quinn is proposing the Illinois Small Business Job Creation Tax Credit. This proposed legislation creates a $2,500 tax credit (that can be carried forward) on withholding tax for employers with 50 or fewer total employees who hire new, full-time Illinois employees during the 12-month period beginning July 1, 2010. It is estimated that this tax credit will help create up to 20,000 jobs.
The credit would be available to qualifying employers for each new, full-time Illinois job created and sustained for at least one year. To qualify, a job must pay at least $25,000 per year, and calculation of the net increase in the number of Illinois employees will be based on the employer’s number of Illinois employees as of June 30, 2010. The legislation proposes a cap of $50 million on the total amount of credits issued.
Eligible companies will apply for the credit online and ultimately will be issued a tax credit certificate.
- Application for the credit may be made as soon as a new, full-time Illinois employee is hired and begins providing services.
- New small businesses hiring their first Illinois employee(s) may qualify for the credit.
- The credits will be issued beginning July 1, 2011.
- The determination of whether an employer has 50 or fewer employees on June 30, 2010 will include all employees in every location, which includes both in Illinois and out of state employment totals.
- Employer subsidiaries created for purposes of benefiting from the credit will not qualify for the credit under aggregation rules; related businesses will be treated as one business for purposes of determining whether an employer has 50 or fewer employees.
- 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.
- 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.
- Tax credits granted will not change the recognition of withholding tax paid for either employer or employee.
UPDATE 4/13/10: Today, Governor Quinn signed into law the bill creating the IL Small Business Job Creation Tax Credit. Read the press release here.