Businesses that make investments within the Rock Island Enterprise Zone are eligible for state and local tax incentives. To confirm that your business or development property is in the zone, please call the Rock Island Community and Economic Development Department at 732-2920.

Investment Tax Credit

Individuals and corporations are allowed a 0.5% tax credit against Illinois income tax due for investments in qualified property placed in service in the Rock Island Enterprise Zone. This credit is in addition to the state’s regular investment tax credit. Unlike the regular credit, the enterprise zone credit is not restricted to manufactures and retailers.

“Qualified property” means new or used tangible property that is:

• Depreciable under IRC 167 and has a useful life of at least four years;
  
• Acquired by IRC 179(d); and
  
• Has not previously been used by a person that would have qualified for either the Enterprise Zone Investment Credit or the regular Investment Tax Credit. Unused credit may be carried forward five years.
  
  

Sales Tax Deduction on Building Materials

Enterprise Zone businesses or contractors may purchase building materials sales tax exempt from eligible retailers. Eligible materials include:

• lumber, sheet rock, concrete block, nails, screws, windows, doors,
  
• furnaces, ductwork plumbing, electrical systems, central air conditioners,
  
• carpet, paint, landscaping, and all other materials which are “permanently affixed to the property.”
  
  

An approved certificate of sales tax exemption is required. For an exemption certificate and specific rules for purchasing materials, contact the Community and Economic Development Department.

Jobs Tax Credit

Employers in enterprise zones receive an income tax credit for hiring “eligible” employees within an enterprise zone. The credit is equal to $500 per eligible employee. Taxpayers must hire at least five eligible employees during the taxable year, and total employment within the zone must increase by five over the previous year in which the credit was claimed. Eligible employees must be employed for at least 180 consecutive days.

Eligible employees are economically disadvantaged workers who meet income guidelines or dislocated workers who have been laid off, terminated, or are unemployed due to a business closure. Eligibility criteria may be obtained from Partners in Job Training, 309-764-8383 ext.211.

Interest Subtraction

Banks are allowed a subtraction from Illinois base income for interest received from loans that are secured with property located within an enterprise zone. The subtraction from income is limited to the amount of interest earned on loans or portions of loans secured by property which is eligible for the enterprise zone investment tax credit. Institutions who are eligible for the subtraction may be willing to offer a slightly lower interest rate to the enterprise zone customer.

Enterprise Zone Loan Program

The Illinois Department of Commerce and Community Affairs (DCCA), in cooperation with financial institutions, offers below market rate loans for businesses located in Illinois Enterprise Zones.

• Participating financial institutions must enter into a Participation Agreement with DCCA.
• DCCA may participate in an eligible loan for $10,000 to $750,000. DCCA’s participation will not exceed 25% of the total project (NOT total borrowed).
  
  
• DCCA’s rate is two percent below prime rate but not less than three percent.
  
  
• DCCA’s term will match the term of the participating bank but may not be amortized longer than 10 years unless there is a balloon payment provision.