R&D Tax Credits in Illinois

Can I Claim R&D Tax Credits in Illinois?

Yes, you can claim R&D tax credits in Illinois. The state offers a research and development tax credit program known as the Research & Development Credit.


Illinois extends a beneficial research and development (R&D) tax credit until January 1st, 2027, incentivizing taxpayers to partake in research initiatives within the state. By engaging in such activities, individuals and businesses can offset their income tax. The credit is equivalent to 6.5% of qualifying expenses that surpass a predetermined base amount. This base amount is determined by averaging the qualifying research expenses (QREs) attributed to Illinois over the previous three years. Additionally, any unused credits can be carried forward for a maximum of five years, granting taxpayers the flexibility to utilize them in future tax periods.

What are the Potential Benefits of the Illinois R&D Tax Credit?

The Illinois R&D tax credit offers several potential benefits for businesses and taxpayers engaged in research and development activities. Some of these benefits include:

  • Tax Savings
  • Incentives for Innovation
  • Cash Flow Improvement
  • Competitiveness and Growth


In credits claimed
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Who Can Claim the Illinois R&D Tax Credit?

Entities eligible to claim the Illinois R&D tax credit include C-Corporations, S-Corporations, LLCs, and partnerships. C-Corporations, encompassing larger companies, and businesses structured as C-Corporations can claim the credit. S-Corporations, which distribute income to shareholders, can also claim the tax credit. LLCs, irrespective of their tax classification, qualify for the credit in Illinois. This encompasses disregarded entities, partnerships, and S-Corporations.

Additionally, partnerships, functioning as pass-through entities, are eligible for the credit, with individual partners reporting the credit on their personal tax returns.

The activities that qualify for the Illinois R&D tax credit are the same ones driving growth in your business.

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How Do I Claim the Illinois R&D Tax Credit?

To claim for the Illinois R&D tax credit, assess your business eligibility and collect data on Qualified Research Expenses (QREs) from the previous three years. Compute the credit by deducting the average QREs from the current year's QREs and multiplying the surplus by 6.5%.

Properly include the R&D tax credit on your Illinois tax return, and remember that any unused credits can be carried forward for a maximum of five years. Make sure to submit your tax return promptly, including all necessary documents, to meet the deadline.