The Illinois Enterprise Zone Act was signed into law December 7, 1982. The purpose of the Act is to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state. Businesses located (or those that choose to locate) in a designated enterprise zone can become eligible to obtain special state and local tax incentives, regulatory relief, and improved governmental services, thus providing an economic stimulus to an area that would otherwise be neglected.
Property tax abatement (property tax abatement is not available when the Enterprise Zone and TIF overlap)
Industrial – 7 years
Commercial – 3 years
Newly constructed multi-family residential – 3 years
Newly constructed single-family residential – 5 years
Sales tax exemption for permanently affixed building materials on industrial and commercial projects, newly constructed single-family and multi-family residential projects, and residential rehabilitation projects with a total project cost of $50,000 or more
Properties located within the Enterprise Zone boundaries may have a part of its property taxes abated. The portion abated includes the added improvements to the property. This means the abatement amount will be the property tax increment that is created from the improvement. Taxes are not abated on the existing property value.
No. Taxes generated by the increase in assessed valuation within a TIF district — the tax increment — go into a special allocation fund used fund improvements within the TIF district boundaries. This is set by State statute.
The purchase of qualified building materials from a retailer that charges Illinois State Sales Tax is eligible for a sales tax exemption. Any contractor purchasing qualified building materials must submit an application to the Enterprise Zone Administrator. The application information will then be given to the Illinois Department of Revenue (IDOR) and they will issue the sales tax exemption certificate directly to the purchaser.
Building materials that are eligible for the enterprise zone sales tax deduction include items that are permanently affixed to real property such as lumber, mortar, glued-down carpets, paint, wallpaper and similar affixed items. Please contact the Zone Administrator if you have further questions on what is considered an eligible building material.
The Revenue Act 35 ILCS 120/1d-1f, as amended allows a business enterprise that is certified by DCEO, that either creates a minimum of 200 full-time equivalent jobs in Illinois; or retains a minimum of 2,000 full-time jobs in Illinois; or which retains 90% of the existing jobs, a 6.25 percent state sales tax exemption on all tangible personal property which is used or consumed within an enterprise zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease. This exemption includes repair and replacement parts for machinery and equipment used primarily in the wholesale or retail sale or lease, and equipment, manufacturing fuels, material and supplies for the maintenance, repair or operation of manufacturing, or assembling machinery or equipment.
The Illinois Income Tax Act 35 ILCS 5/201, as amended allows a .5 percent credit against the state income tax for investments in qualified property, which is placed in service in an enterprise zone. The investment tax credit will be filed for on your yearly tax return.