ILLINOIS R&D TAX CREDIT SUMMARY
Illinois State R&D Tax Credit
For tax years ending before January 1, 2022, a non-refundable credit is allowed against the regular income tax for increasing research activities in Illinois in an amount equal to 6.5% of qualifying expenditures.
- Qualifying expenditures” means qualifying expenditures as defined for the federal credit for increasing research activities that would be allowed under IRC § 41 and that are conducted in Illinois
- “Qualifying expenditures for the base period” means the average of the qualifying expenditures for each year in the base period
- The base period is the three years immediately preceding the tax year for which the credit is calculated
- Qualified research is defined in IRC § 41(d). IRC § 41(b) as the sum of in-house research expenses and contract research expenses paid or incurred by the taxpayer during the taxable year in carrying on any trade or business of the taxpayer
- Qualifying expenditures also include basic research payments, as that term is defined in IRC § 41(e)
How to obtain the credit?
Corporations must complete and file Form IL-1120.
Refundable/Transferable Tax Credit – No
Carry-forward
Any credit in excess of tax liability for the tax year can be carried forward for five years or until it is fully used, whichever occurs first.
