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Illinois Taxpayers Can Earn a $2,500 Tax Credit For Each New Employee Hired

On April 13, 2010, Illinois Governor Pat Quinn signed Senate Bill 1578 into law, creating the Small Business Job Creation Tax Credit Act. The $2,500 withholding tax credit is available for each new, full-time Illinois job created during the incentive period that results in a net increase in full-time Illinois employees. Employers with fifty or fewer total employees who hire new, full-time Illinois employees from July 1, 2010 through June 30, 2011 are eligible to obtain the credit. If credits exceed the current period’s withholding tax, the credit can be carried forward and applied against the taxpayer’s liability for the five succeeding calendar years.

The maximum credits awarded under this Act will be $50 million, which could equate to 20,000 jobs. With 95% of Illinois businesses having fewer than fifty employees, the window of opportunity to obtain the credit may be limited.  Therefore it is important to act quickly.

To qualify for the credit, the new full-time job must pay at least $25,000 annually and be sustained for at least one year. Employees hired for this new job must average at least thirty-five hours per week. Further, 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 applicant cannot have more than fifty full-time employees as of June 30, 2010. This fifty employee threshold includes all employees in Illinois and other states. Related businesses will be treated as one business for determining the fifty employee threshold.

Applications for the credit must be submitted online to the Illinois Department of Commerce and Economic Affairs.  Once approved, the taxpayer will be issued a tax credit certificate that can be used for the first calendar year ending on or after the date on the certificate. Applicants may apply for the credit as soon as a new, full-time Illinois employee is hired and begins providing services within the incentive period, July 1, 2010 through June 30, 2011.

If you have questions or need assistance with the application process, please contact Jason Parish at jparish@BlackmanKallick.com or 312-980-2959, or your Blackman Kallick representative. Our thanks to Deb Rood for her contribution to this article. 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.