Illinois Launches Innovative Manufacturing Tax Credit Program

New tax credit offers 3-7% for manufacturers investing +$10 million in Illinois facility upgrades or expansions.

Illinois is doubling down on its commitment to manufacturing innovation with the introduction of the Advancing Innovative Manufacturing (AIM) for Illinois Tax Credit Act. This new, performance-based incentive offers tax credits ranging from 3-7% for manufacturers investing at least $10 million in capital improvements. Designed to attract cutting-edge production and technology-driven industries, the program supports upgrades that automate, modernize, or streamline manufacturing operations.

Targeted at sectors such as aerospace, clean energy, life sciences, robotics, and advanced materials, the Act aims to modernize Illinois’ manufacturing landscape, spur job creation, and enhance the state’s competitive edge. The credit applies to tax years beginning January 1, 2026, giving forward-thinking manufacturers a window to align their investments with this lucrative opportunity.

SNAPSHOT

• Illinois creates the Advancing Innovative Manufacturing for Illinois Tax Credit Act.

• Eligible capital improvements must modernize, upgrade, automate, or streamline a manufacturing or production process of a new or existing facility in Illinois.

• Program offers 3-7% in tax credits for manufacturers investing $10 million or more.

• The credit applies to tax years starting January 1, 2026.

PROGRAM BENEFITS

• Credit Determination: The Department determines both the amount and duration of the tax credit, guided by statutory limits.

• Basis for Credit: The credit is calculated based on the total capital improvement investment made.

• Tax Credit Tiers:

  • Investments $10 million to $50 million → Up to 3% tax credit

  • Investments $50 million to $100 million → Up to 5% tax credit

  • Investments +$100 million → Up to 7% tax credit

• Credit Issuance: The tax credit is granted only after the project is placed in service.

PROGRAM ELIGIBILITY

• Project Location: Located within the State of Illinois.

• Eligible Applicant: Engaged in the manufacturing of critically demanded goods.

• Capital Investment Requirement: Project must include at least $10 million in capital improvement investment.

• Qualifying Capital Improvements: Includes purchase, renovation, rehabilitation, or construction of:

  • Permanent tangible land and buildings

  • Structures, equipment, and furnishings

  • Organizational and R&D costs incurred in Illinois

• Job Creation: Creation of new full-time jobs and retaining existing employment.

• Exclusivity Clause: Applicant cannot hold an active agreement for the same address or time period under the following programs:

  • EDGE Tax Credit Act

  • Reimagining Electric Vehicles in Illinois Tax Credit Act

  • Manufacturing Illinois Chips for Real Opportunity Act

  • Data Center Investment Tax Exemptions and Credits

CONNECT WITH HICKEY’S ILLINOIS INCENTIVES TEAM

• The Hickey & Associates incentives team has advised companies navigating the complex incentives process across Illinois. Contact us for more specifics, including eligibility criteria, application details, and funding requirements.

• If you’d like our support throughout the application process, we are here to help.