EDGE for Startups FAQ

• Incorporated no more than 10 years before filing an application
• The company has never had any Illinois income tax liability, excluding any Illinois income tax liability of a Related Member
• Startup companies claim the credit against their obligation to pay withholding tax
• Once profitable the benefit flips to regular EDGE and allows the company to use credit against company income tax liability

Eligible: Manufacturing, Processing, Assembling, Warehousing, Distribution, Agricultural Processing, Office Industries (including SaaS), R&D, and Tourism Services.

Ineligible: Retail, Retail Food, Health & Professional Services (except Headquarters or Distribution Centers).

You receive the tax credit on withholding tax for 10 years until the company become profitable and then the credit will automatically switch to the regular EDGE program that provides a certificate to use against your Illinois income tax liability.

You must certify within the application that without this credit, the project wouldn't happen in Illinois.

"Capital improvements" shall include the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment and furnishings in an approved project sited in Illinois and in expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures and equipment that are leased, the lease must equal or exceed the term of the 10-year Tax Credit Agreement and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments.

“Project costs” must exceed tax credits to be received and include all costs of the project incurred or to be incurred by the taxpayer including: capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; and lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans.

Wages do not count.

Startups less than 10 years old and unprofitable that are planning to expand or set up in Illinois.

Yes, companies are required to submit an Agreed-Upon Procedures Audit (AUP) to claim their first tax credit certificate to show investments and job creation commitments have been met.

Initially, 2 years.

No, unlike W-2 employees, 1099 independent contractors must handle their own tax withholdings.

• Failure to meet job creation and investment commitments.
• Not adhering to the "But for" clause.
• Failure to submit required reports like the Vendor Diversity/Sexual Harassment Policy Report.

Only Illinois withholding taxes. Once the company becomes profitable, the credit will automatically switch to the regular EDGE program that provides a certificate to use against your Illinois income tax liability.