HB 1769 - Senate amendment 1 - Stadelman Here is a quick summary of the tax incentives contained in the amendment:

·      Establishes the “Reimagining Electric Vehicles in Illinois Act”

·      Provides incentives to Electric Vehicle manufacturers, their suppliers, and electric vehicle power supply manufacturers.

·      Incentive agreements entered into with DCEO (similar to EDGE agreements)

·      Eligible projects:

o  Manufacture of electric vehicles (Electric Vehicles have to be plug-ins, hybrids do not qualify),

o  Manufacture electric vehicle component parts,

o  Manufacture electric vehicle power supply equipment

·      Requirements: 

o  Electric vehicle manufacturer;

Minimum investment of $1.5 billion in capital improvements

Placed in service within 60 months of application approval

Create at least 500 new full-time employee jobs

o  Electric vehicle component parts manufacturer;

Minimum investment of $300 million in capital improvements

Manufacture one or more parts primarily used for electric vehicle manufacturing

Placed in service within 60 months of application approval

Create at least 150 new full-time employee jobs

o  Electric vehicle manufacturers, electric vehicle power supply manufacturer, or electric vehicle component part manufacturer (Staats note: the language “that does not qualify under paragraph (2) above” – perhaps a typo, should probably be paragraphs (1) or (2))

Minimum investment of at least $20 million in capital improvements

For electric vehicle component part manufacturers – manufacture one or more parts that primarily used for electric vehicle manufacturing

Placed in service within 48 months of application approval

Create at least 50 new full time jobs

o  Electric vehicle manufacturers or vehicle component parts manufacturers with existing operations in Illinois that intend to convert or expand an existing facility to electric vehicles, electric vehicle component parts manufacturing or electric vehicle power supply equipment manufacturing;

Minimum investment of $100 million in capital improvements

 Placed in service within 60 months

Create the lesser of 75 new full-time jobs or new full-time employee jobs equivalent to 10% of the statewide baseline applicable to the taxpayer and any related member at the time of application

o  Jobs must have a total compensation equal to or greater than 120% of the average wage paid to full-time employees in the county where the project is located.

o  Can’t enter into an agreement under this Act “with respect to a single address or location for the same period of time for which the taxpayer currently holds an active EDGE agreement.”

May submit an application under this program after terminating an existing EDGE agreement “for the same address or location"

·      Income Tax credit awards:

o  DCEO can award credits on and after 1/1/2022

o  Credit against the regular income tax not to exceed the sum of 75% of the incremental income tax attributable to new employees at the applicant’s project, and 10% of the training costs of the new employees (training costs defined in statute).

o  Credit against the regular income tax in an “underserved area” not to exceed the sum of 100% of the incremental income tax attributable to new employees at the applicant’s project, and 10% of the training costs of the new employees.

o  Training costs can be increased by an additional 15% if new employees that are recent graduates, certificate holders, or credential recipients from “an institution of higher education in Illinois or apprenticeship program located in Illinois and approved by U.S. Dept. of Labor Bureau of Apprenticeship.”

o  If an applicant agrees to hire the required new employees – the maximum amount of the credit can be increased by an amount not to exceed 25% of the incremental income tax attributable to retained employees, or 50% if the project is located in an underserved area. (Staats note: How do you have incremental income tax from a retained employee?)

o  Construction Jobs credit – 50% of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities, or up to 75% if the project is in an underserved area.

·      The credits can be taken against the regular income tax beginning with tax years beginning on and after 1/1/25 (Staats note: The credits are earned beginning in 2022, but may not be taken until beginning in 2025. However, note that in the income tax credit there is language that credits may be carried forward for 5 years from when they are earned. If I’m reading the language correctly, there is a limited carry forward period for credits earned in 2022 through 2024 because the 5 year carry forward period begins to run before the credits can be utilized.)

·      Taxpayers can elect to use the income tax credits against the income tax withholding obligations in lieu of claiming the credit against the regular income tax. The credit against the withholding tax can’t be utilized until after 12/31/2024.

·      The duration of the agreement with DCEO for electric vehicle manufacturers, component parts manufacturers either new or existing who want to convert to electric vehicles and component parts is 15 years, and 10 years for power supply manufacturers (Staats note: As I read this it also allows for a 10 year agreement for electric vehicle manufacturers and component parts manufacturers who do not qualify under the investment and job creation minimums in the legislation? – in other words a smaller investment or job creation number?)

·      Clawback – cease operations prior to the end of the agreement – the entire credit amount awarded is clawed back.

·      Sunset date – no new agreements between DCEO and taxpayers after 12/31/2027 – This appears to be like EDGE, because any agreement entered into before the sunset date will be valid for the full length of the agreement.

·      Utility Tax exemptions – can be certified under the agreement with DCEO. Doesn’t appear to extend to locally-imposed and collected electricity taxes. “The taxpayer is also exempt from any additional charges added to the taxpayer’s utility bills at the project site as a pass-on of State utility taxes under Section 9-222 of the Public Utilities Act” – this exemption can’t exceed 10 years from the date of Department’s initial certification.

·      Investment tax credit – Against the regular Illinois income tax for the tax year in which the taxpayer invests in qualified property placed in service at the project. The credit is .5% of the basis of the property.  Excess credits can be carried forward for 5 years.

·      Building materials exemption from sales tax – This exemption can’t extend for more than 5 years. It appears to apply to both state and local sales taxes.

·      Property Tax Exemption – Any taxing district may upon a majority vote of its governing body may abate any portion of real property taxes “otherwise levied or extended by the taxing district” on a facility owned by an electric vehicle manufacturer, electric vehicle component parts manufacturer, or an electric vehicle power supply manufacturer subject to an agreement with DCEO during the period of time the agreement is in effect.

·      Telecommunications Tax Exemption – same exemption as currently can be provided to companies located in Enterprise Zones or Foreign Trade Zones.