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Illinois R&D Tax Credits

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Illinois R&D Tax Credits

Find out if you qualify for R&D tax credits in Illinois and recharge your business.

Illinois provides a research and development (R&D) tax credit. Until January 1st, 2027, an R&D credit is allowed against income tax for research activities in Illinois state. The credit is equal to 6.5% of qualifying expenditures over a comparative base amount. The base amount is the average of the prior three years of QREs attributed to Illinois. Excess credits not utilized in a tax year can be carried forward up to five years.

Businesses or taxpayers cannot take this credit for the following kinds of activities:

• research conducted after the beginning of commercial production;

• research adapting an existing product or process to a particular customer’s need;

• duplication of an existing product or process;

• surveys or studies;

• research relating to certain internal-use computer software;

• research conducted outside Illinois;

• research in the "soft sciences", social sciences, arts, or humanities;

• research funded by another person (or government entity).

Illinois’ biggest R&D sectors are pharmaceuticals, machinery, and not surprisingly, agricultural. The state also sees innovations in the banking and insurance sectors.

Learn more about Illinois' R&D Tax Credit law here and here

R&D Tax Credit Available:

Yes

Eligible Entities:

C-Corporations, S-Corporations, LLCs, Partnerships

Deadline for Tax Filing:

Due with Illinois Tax Return

Data Required to Compute Credit:

Claim Period Qualified R&D Expenses (QREs)

What Information is needed?

QREs for Prior 3 Years

Credit Carryforward:

5 Years

The R&D tax credit equals:

  • 6.5% on the excess of IL qualified research expenses over the average amount of QREs for the three preceding taxable years.

Specific Item to Note:

  • The Illinois research credit will expire on December 31st, 2027, unless additional legislation is passed.

Ready to calculate your R&D tax credits?

To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.

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Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.