Companies performing qualified research and development activities in Illinois are one step closer to a much-improved state R&D credit. Historically, companies in Illinois must have experienced an increase in qualified research expenditures (QRE) over the previous three years to receive the state tax credit.
Illinois State Representative Tony McCombie has introduced a bill for an Illinois research & development tax credit change. This bill amends the Illinois Income Tax Act and changes the credit calculation by cutting the base amount by 50 percent. The base amount is the amount above which a taxpayer must spend in the credit year to receive a credit. This base amount is currently 100% of the three prior year average QRE.
Should this bill pass, companies experiencing flat, or even slightly decreasing R&D spending, could receive the tax credit. The bill will make the research and development credit permanently applicable, and once passed, the amending bill will be effective immediately.
The Illinois research and development credit was originally set to expire by December 31, 2021.
These are exciting times for research and development, and companies should take advantage of these opportunities to reduce taxes that are due or paid. Reach out to our R&D specialists to see if you may qualify for the R&D tax credit or if you have any questions. Contact Us.
About the Author
Michael Maroney – Director
Michael Maroney is a director with KBKG at our Chicago, IL office. He advises clients on tax matters related to federal and state R&D tax credits. He has advised numerous Fortune 1000 clients across a variety of industries. He has successfully defended his client’s R&D claims before the IRS and state taxing authorities. He has been an instructor on these topics for numerous CPA and industry associations and has authored articles related to federal and state R&D tax credits. » Full Bio