The Purpose of State Legislation Allowing the Creation of Enterprise Zones is to assist in the revitalization of distressed areas by offering financial and tax incentives to stimulate business growth and neighborhood improvement.
The City of Rockford has two Enterprise Zones:
Enterprise Zone Incentives
Investment Tax Credit
Enterprise Zone businesses may claim an extra 0.5% of the cost (“basis”) of qualified depreciable property placed in service in the Enterprise Zone as a credit on their state income taxes. This credit is in addition to the existing 0.5% investment tax credit allowed to all manufacturers in Illinois on state income taxes.
Building Material Sales Tax Exemption
Any building materials used in new construction or rehabilitation of properties located within Rockford’s Enterprise Zone and permanently attached to the real estate may be sales tax exempt (8.25%) if a retailer is provided with a Certificate of Eligibility issued by the Illinois Department of Revenue. To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by Illinois Department Of Revenue. Purchasers, whether contractor or owner, must apply for the Certificate of Eligibility from the City of Rockford Enterprise Zone Administrator.
*Project Completion Report must be completed and submitted within 30 days of the project completion.
Applications can be submitted to Susan Diehl by e-mail, [email protected], in person or by mail, 425 E. State Street, 2nd Floor, Rockford, IL 61104.
The Utility Tax Exemption
The Public Utilities Act 220 ILCS 5/9-222.1, as amended and the Telecommunications Excise Tax Act 35 ILCS 630/2(a)(5), as amended allows a business enterprise that is certified by Illinois Department of Commerce and Economic Opportunity, as making an investment in a zone that either creates a minimum of 200 full-time equivalent jobs in Illinois or retains a minimum of 1,000 full-time jobs in Illinois, a 5 percent state tax exemption on gas, electricity and the Illinois Commerce Commission .1 percent administrative charge and excise taxes on the act or privilege of originating or receiving telecommunications. Local units of government may also exempt their taxes on gas, electricity and water.
The Machinery and Equipment Sales Tax Exemption
The Revenue Act 35 ILCS 120/1d-1f, as amended allows a business enterprise that is certified by DCEO, that either creates a minimum of 200 full-time equivalent jobs in Illinois; or retains a minimum of 2,000 full-time jobs in Illinois; or which retains 90% of the existing jobs, a 6.25 percent state sales tax exemption on all tangible personal property which is used or consumed within an enterprise zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease. This exemption includes repair and replacement parts for machinery and equipment used primarily in the wholesale or retail sale or lease, and equipment, manufacturing fuels, material and supplies for the maintenance, repair or operation of manufacturing, or assembling machinery or equipment.
The High Impact Service Facility Machinery and Equipment Sales Tax Exemption
This exemption applies specifically to “jet fuel and petroleum products sold to and used in the conduct of its business of sorting, handling and redistribution of mail, freight, cargo or other parcels in the operation of a high impact service facility that is located within an enterprise zone established pursuant to the Illinois Enterprise Zone Act which shall be exempt from the tax imposed by this Act. The minimum period for which an exemption from taxes is granted by this Section is 10 years, regardless of the duration of the Enterprise Zone.
*For projects that are qualified and approved by Illinois Department of Commerce and Community Affairs, a sales tax exemption on the purchase of jet fuel.
City of Rockford Property Tax Abatement
For commercial and industrial (as defined in the City Zoning Ordinance, Rockford I-90, Enterprise Zone 1) projects occurring on parcels or properties located within the boundaries of the Zone, City of Rockford taxes shall be abated for four (4) years on the increased assessment amount due to rehabilitation, expansion, or new construction as follows:
- Year 1 80%
- Year 2 60%
- Year 3 40%
- Year 4 20%
Year 1 of the abatements shall be the assessment year after the qualifying improvements have been placed in service, as determined by the Zone Administrator. Abatements shall terminate upon expiration of the term of the Zone.
Property Tax Abatements will not be available for projects located within a TIF District.
For more information contact: Susan Diehl, CED Fiscal Coordinator at 779-348-7418.