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Manufacturing Illinois Chips for Real Opportunity Act (MICRO)
In April 2022, Governor JB Pritzker and the General Assembly passed SB3917, the Manufacturing Illinois Chips for Real Opportunity Act (MICRO). Four months later, President Joe Biden signed federal Creating Helpful Incentives to Produce Semiconductors (CHIPS) legislation into law. These stacked incentives, coupled with Illinois’ existing tech and innovation workforce, make Illinois a very welcoming and strategic location for manufacturers of microchips, semiconductors, and quantum computers looking for their next U.S. manufacturing site.
Eligible companies manufacture microchips, semiconductors, quantum computers and associated component parts.
The MICRO program incentives are based on minimum capital investment and job creation commitments. Benefits are available for two different tiers levels, Tier 1 and Tier 2.
Tier 1 projects include semiconductor, microchip, and quantum computer manufacturers as well as component part manufacturers, and companies engaged in research and development. In order to receive benefits, companies are required to meet the following job and capital investment minimums within four years to receive benefits:
- Capital investment minimum: $2.5 million
- Job creation minimum: 50 full-time jobs or 10% of the worldwide headcount, whichever is less
- Tier 2 projects are eligible for benefits if jobs and capital investment thresholds are met within five years in one of the following categories: microchip, semiconductor, or quantum computer manufacturer, or a manufacturer of related component parts, or a company focusing on research and development in the manufacturing process:
- Capital investment minimum: $1.5 billion
- Job creation minimum: 500 jobs
- Microchip, semiconductor or a quantum computer component parts manufacturer, or a company focusing on research and development in the manufacturing process:
- Capital investment minimum: $300 million
- Job creation minimum: 150 jobs
- Manufacturers converting an existing Illinois manufacturing facility to microchip, semiconductor or a quantum computer component parts manufacturing facility, or a company focusing on research and development in the manufacturing process:
- Capital investment minimum: $100 million
- Job creation minimum: 75 new jobs (or new jobs equivalent to 10% of statewide employment baseline for taxpayer, whichever is less)
Job Creation and Retention Benefits
These tax credits may be claimed immediately by retaining payroll withholding, equivalent to the credit amount, instead of remitting to the Illinois Department of Revenue.
Maximum benefits, 100% of withholding for new jobs created or retained jobs, are obtained by projects locating in underserved or energy transition areas.
The regular benefit is 75% of income tax withholdings attributable to new employees or retained employees once the new jobs threshold is met.
The length of the credit is dependent on the size of the project:
10 years for Tier 1 projects with the opportunity for one renewal
15 years for Tier 2 projects with the opportunity for one renewal
Credits for Training Costs
All projects are eligible for a credit up to 25% of eligible training costs for new employees, with the baseline being 10% of training costs for all projects.
An additional 15% for trainees is available for projects that hire recent Illinois graduates, certificate holders or credential recipients from four-year public and private universities, community colleges, vocational/technical schools, Clean Jobs Workforce Network Program, and USDOL certified apprenticeship programs.
All projects are eligible for a credit up to 10% of training costs to upskill retained employees.
Investment Credit
All MICRO projects receive an investment credit on qualified property (0.5%) for use in the year the property was placed in service or reaches their jobs and investment threshold.
Tax Exemptions for Larger Projects
Tier 2 projects receive additional benefits including an exemption on retailers’ occupation tax paid on building materials (five years); an exemption on state utility tax for electricity and natural gas (up to 30 years); and an exemption on telecommunication excise tax and waiver of the ICC administrative charge.
Credit for Construction Jobs
A MICRO benefit that mirrors the Blue Collar Jobs Act benefits is a tax credit against Corporate Income Tax liability for projects with a Project Labor Agreement in an amount equal to:
50% of the amount of the incremental income tax attributable to the construction wages paid in connection with construction of the project facilities as a jobs credit for workers hired to construct the project.
75% if project in underserved area or energy transition area.
Review the MICRO application.
Manufacturing Illinois Chips for Real Opportunity (MICRO) Act Agreements
For more information about this program, please contact CEO.MICRO@illinois.gov in the Office of Business Development so we may start assessing the benefits for your project.