Written By: Steve Garrels, CPA, CM&AA, Partner
On June 16, 2025, Illinois House Bill 2755 was signed and created a new tax credit that can be taken for select manufacturers called the Advancing Innovative Manufacturing (AIM) credit.
The purpose of the credit is to attract capital investment in manufacturing including, but not limited to, automotive, machine, chemical, energy, metal fabrication, robotics and production of advanced materials manufacturing.
What is the credit?
- The credit is non-refundable and is based on capital investments of $10 million or more.
- The program has three tiers of credit percentages as follows:
- 3% on total capital investment from $10-$50 million
- 5% from $50 to $100 million
- 7% from $100 million or more
- Capital investment thresholds would include the purchase, renovation, rehabilitation or construction of land, buildings, structures, equipment, furnishings as well as organizational costs, R&D and permanent tangible assets incurred in Illinois.
- Credits can be used to offset future Illinois income tax and carry forward up to 10 years. In addition, if agreed upon by the Illinois Department of Commerce & Economic Opportunity (DCEO) and the taxpayer, the credit could be used for Illinois payroll taxes liabilities.
Who is eligible?
I think I qualify, now what?
- Submit a formal written letter of request to the DCEO.
- Includes project description, company name and project location.
- Comprehensive documentation of all qualifying capital improvements including acquisition, renovation, rehabilitation, or construction of permanent tangible assets.
- Employment impact metrics demonstrating job creation and retention commitments.
- Project descriptions will be incorporated into the final project agreement between the DCEO and the taxpayer. The terms of the agreement will become public information.
- The DCEO evaluates applications based on several metrics including economic viability, fiscal impact on Illinois, and community benefits. Projects in underserved areas, high capital improvement projects, and projects that significantly contribute to job creation may receive special consideration.
What dates should I keep in mind?
- Credit is effective for taxable years beginning on or after January 1, 2026.
- DCEO is authorized to begin awarding credits on January 1, 2027.
- DCEO cannot enter into new agreements after December 31, 2030.
- The investment period must be made within a 5-year period.
In addition to AIM, the Bill also expanded the REV. The purpose of this credit is to provide tax incentives for the manufacturing of renewable energy and renewable energy products. The minimum capital investment is $2.5 million, and the creation of 50 jobs or 10 percent of the company’s statewide baseline (whichever is lower).
Changes to the REV were as follows:
- Allowed Credit Renewals
- Allows Tier 1 projects to renew an additional 10 years (20 total years)
- Allows Tier 2 projects to renew an additional 15 years (30 total years)
- Increased credit for retained employees
- It was 25% and changed to 75%
- In underserved or energy transition areas changed from 50% to 100%
- EDGE Credit Integration
- Projects currently under the EDGE Tax Credit cannot be reclassified as REV projects
- If a project loses REV eligibility, it can continue receiving EDGE credit.
A final item relates to the Renewable Energy definition being updated. Illinois now includes nuclear energy in the definition of “renewable energy”, potentially extending credit eligibility to nuclear-related projects.
We will continue to monitor and evaluate these matters as they develop and will provide further guidance when appropriate. Manufacturers with current or expected presence in Illinois should consult with their tax advisers to evaluate these programs. Our team at Porte Brown is here to help you assess your position, update your planning models, and stay ahead of what’s coming.
