The Illinois Capitol   

The House advanced a large and wide-ranging tax incentives package designed to attract new businesses by creating new tax credits or expanding existing programs.  

The House voted 98-14 on Wednesday to pass HB817 by Rep. Dave Vella (D-Rockford) to pass the far-ranging list of tax breaks. The goal is to make Illinois more competitive with other states in attracting businesses behind emerging technology or popular industries other states have tax credits in place to attract.   

“It will take Illinois’ business climate to the next level,” Vella said.   

According to a Republican analysis of the bill, Rep. Patrick Windhorst (R-Metropolis) said the incentives package is expected to cost $294 million. Vella countered that the estimate was accurate, but it would drive $20 million of economic activity. He added that it is still unclear when the state would be hit with costs by the incentives as the state remains in conversations with several businesses about taking advantage of the proposed credits.  

The part of the bill Gov. JB Pritzker seems most excited by is the Quantum Enterprise Zone. The program is accounted for in Pritzker's proposed Fiscal Year 2025 budget through a $500 million capital request to attract federal funding through the CHIPS Act in addition to a $20 billion private investment. The zone would provide a business with a series of tax exemptions within its boundaries.   

“Illinois is already a global competitor in the quantum sector, and we want to ensure that we have the workforce and talent to engage in our unprecedented progress and innovation,” Pritzker said in a news release last month.  

Vella said Illinois is primarily competing against Colorado and New York for quantum computing businesses.    

New provisions to attract battery energy storage systems to the state were also added. The businesses will be eligible under the High Impact Business Program. The goal is to attract battery energy storage businesses to the state as Illinois faces a growing need to improve the state’s electric grid capacity.  

However, Rep. Jeff Keicher (R-Sycamore) worried that Illinois’ grid capacity could be strained by some of the businesses covered under the incentives package because they are heavy consumers of energy.   

“What I’m told is this coupled with the AI explosion coupled with the data center incentive that we have is very quickly going to absorb all of the available extra energy we have out in the grid,” Keicher said.   

The state’s Economic Development for a Growing Economy (EDGE) Program would see the duration of credit eligibility extended from 10 years to 15 years for qualified large-scale job creators.   

Illinois’ popular Reimagining Energy and Vehicles (REV) Act would receive several new definitions to allow more businesses to take advantage of the program. It also would extend a tax exemption under the law to last for 30 years to outlast competition in neighboring states.   

The Manufacturing Illinois Chips for Real Opportunity (MICRO) Program would also have new definitions to encompass more computing companies in areas such as semiconductors, quantum and microchips. A tax exemption would also be extended to last for 30 years to attract businesses to Illinois over other states.   

Seven new communities will be considered River’s Edge Redevelopment Zones to support downtown business development: Moline, East Moline, Ottawa, LaSalle, Peru, Rock Island and Quincy.   

The popular Film Tax Credit will be expanded to include game shows, reality TV competitions and other unscripted shows.   

Some tweak will be made to the Blue Collar Jobs Act to change how credits for construction wages are calculated and measures to protect the privacy of construction workers working on projects under the law.   

The Research and Development Tax Credit would also be extended by five years.   

“Research and development are central to the success of our state’s manufacturing sector, with manufacturers constantly creating new products and improving existing ones. By extending this important tax credit for another five years, manufacturers can continue to invest in new technologies to grow our economy and revolutionize our world, including electric vehicle battery development and quantum research,” Illinois Manufacturers’ Association CEO Mark Denzler said in a statement.   

But what about existing Illinois businesses, Republicans asked.   

“What I don’t understand is why year after year we will come here, put together incentives packages, but we refuse to address underlying problems of just creating natural business growth in Illinois,” Rep. Dan Ugaste (R-Geneva) said.   

Rep. CD Davidsmeyer (R-Murrayville) suggested lawmakers pay more attention to small businesses, especially as legislators consider new tax hikes on businesses to pay for the Fiscal Year 2025 budget.   

“We’re asking current Illinoisians to pay more while we give tax breaks to others that come in,” Davidsmeyer said. “The reality is all of these things only go to big business, large corporations. And the small businesses in the state of Illinois are left to foot the bill.”