Illinois Research and Development Credit

Program overview

Illinois grants a credit equal to a percentage of the increase in qualified research expenses conducted within the state over the average of the three preceding years. The credit has been extended several times and currently runs through the 2027 tax year. Illinois follows the federal definition of qualified research but restricts eligible spending to activities physically performed in Illinois, so multi-state taxpayers must apportion wages, supplies and contract research carefully.

Eligibility

Corporations and pass-through entities with increasing qualified research expenditures conducted in Illinois. Pass-through entities may distribute the credit to partners and shareholders.

Benefits

Non-refundable credit against Illinois income tax liability.

Illinois IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

1. S1Confirm the research was physically performed within Illinois.
2. S2Provide the Illinois qualified research expense calculation and base amount.
3. S3Reconcile Illinois expenses to the federal Form 6765.
4. S4Show how wages and supplies were apportioned between Illinois and other locations.
5. S5Provide the Illinois return and credit schedule for each year claimed.
6. S6Show the carryforward schedule for unused Illinois credits.
7. S7Confirm the entity claiming the credit is the entity subject to Illinois tax.

Draft questions for illustration, reviewed by a specialist before any engagement.