Economic Incentives Make Doing Business Here Affordable
If you’re considering building or expanding your business in the St. Louis region, both Missouri and Illinois offer various tax credits and other economic incentive programs to help lower operating costs. These include enterprise zones, workforce training programs, competitive tax credit programs, and property tax abatements and workforce training grants. Explore the options below, and connect with our business attraction team to learn more.
These tax incentives help eligible businesses facilitate the creation of quality jobs. Tax incentives are awarded based on the number of jobs created, private capital investment, and wages offered compared to the county averages. Other discretionary benefits may be offered based on the overall size of the project, the company’s financial stability, and its location in an Enhanced Enterprise Zone, among other factors.
The EEZ is a discretionary program that offers state tax credits, accompanied by local real property tax abatement, to Enhanced Business Enterprises. Tax credits may be provided each year for up to five tax years after the project commences operations. To receive tax credits for any of the years, the facility must maintain certain requirements.
Missouri partners with community colleges to offer technical and leadership training and recruitment services for a wide range of eligible industries. Missouri One Start requires capital investments or the creation of new jobs and the presence of permanent, full-time employees with competitive wages.
The Missouri Department of Economic Development offers a wide range of flexible services and experienced staff to assist your company. Through Skilled Workforce Missouri, we partner with community colleges and other local educational agencies to meet the needs of your company.
The BUILD program provides refundable state tax credits to certain businesses for debt service payments for industrial revenue bonds related to a portion of project infrastructure costs. Manufacturing, services (in interstate commerce), and research and development projects are eligible if within three years the capital improvements exceed $15 million ($10 million for office projects) and 100 new jobs (500 for offices) are created.
Chapter 100 industrial revenue bonds allow local governments to offer personal property and real property tax abatement. Terms such as length and percentage of the abatement are subject to negotiation. To facilitate this transaction, the company transfers the title of the property to the city or county “in name only” and then subleases that property back at a rate equal to the principal and interest on the bonds. Sales tax abatement on construction materials and personal property may also be available.
Data centers may be eligible to receive an exemption from state and local sales and use taxes on construction materials, equipment and utilities. New centers are required to invest $25 million ($5 million for expansions) and create 10 jobs (five for expansions) with wages of at least 150% of the county average or state average wage, whichever is lower.
TIF can help fund costs incurred by, or incidental to, a development project in a blighted area. Up to 100% of the new local real property taxes and 50% of the new local economic activity taxes (sales, wage and utility taxes) created by the project for 23 years can be captured and bonded to underwrite project costs. Instead of bonds, local governments may issue TIF notes, which can in turn be held by the company benefiting from the TIF incentive (thus acting as a rebate on captured tax revenues) or pledged to obtain private bank financing to help underwrite project costs.
The EDGE tax credit encourages businesses to locate or expand in Illinois. EDGE provides tax credits of 50% of state income taxes for new jobs (75% if in an underserved area) for ten years. EDGE credits have job creation thresholds and larger companies (100+ employees) must also invest $2,500,000. Tax credits for large companies can’t exceed the amount of their investment. Additional credits for qualifying job training costs are available.
Bonds are issued for manufacturers and not-for-profit organizations to finance fixed assets including land, buildings (new or renovated) and equipment. These bonds provide long-term financing of up to 100% of project costs at rates lower than conventional financing. Tax-exempt bonds are usually the lowest cost form of financing, offering an interest rate typically 2 to 3% lower than taxable debt. Interest due to bondholders on Industrial Development Revenue Bonds is exempt from federal but not state income taxation.
Illinois cities may also utilize TIF to fund development-related costs. In some cases, up to 100% of the new local real property taxes and sales taxes are eligible. These incremental taxes can be captured and bonded for 23 years to underwrite project costs. Instead of bonds, local governments may utilize a range of financing options including bonds, loans and notes. Illinois TIF may be used for public and institutional properties as well as vacant land. TIFs may be approved to be extended an additional 12 years for a total of 35 years.
This program is designed to support large economic development projects. It provides tax incentives to businesses making a capital investment of $12 million and creating 500 jobs or investing $30 million and retaining 1,500 jobs. Benefits may include investment tax credits and selected state sales tax exemptions. Investments must occur in designated locations outside of an Enterprise Zone.
This program is designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state through state and local tax incentives, regulatory relief, and improved governmental services. Businesses located or expanding in an Illinois enterprise zone may be eligible for state and local tax incentives.
FEDERAL AND LOCAL
In addition to these and other state incentives, a range of federal and local incentive programs may be available, including several zone-based programs designed to incentivize investment in underserved areas such as federal Enterprise Zones, Opportunity Zones, Promise Zones, and New Market Tax Credits.
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