§ 231 — Apprenticeship education expense credit

Illinois § 231

• Jurisdiction: Illinois
• Topic: GOVERNMENT
• Ch. 35: REVENUE
• Act 35 ILCS 5/: Illinois Income Tax Act.
• Art.: Article 2 - Tax Imposed

Text

(a) As used in this Section: "Accredited training organization" means an organization that: (1) incurs costs related to training apprentice employees; (2) maintains an apprenticeship program approved by the United States Department of Labor, Office of Apprenticeships, that results in an industry-recognized credential; and either (3) is affiliated with a public or nonpublic secondary school in Illinois and is: (A) an institution of higher education that provides a program that leads to an industry-recognized postsecondary credential or degree; (B) an entity that carries out programs that are registered under the federal National Apprenticeship Act; or (C) a public or private provider of a program of training services, including, but not limited to, a joint labor-management organization; or (4) is not affiliated with a public or nonpublic secondary school in Illinois but receives preapproval from the Department to receive tax credits under this Section. "Department" means the Department of Commerce and Economic Opportunity. "Employer" means an Illinois taxpayer who is the employer of the qualifying apprentice. "Qualifying apprentice" means an individual who: (i) is a resident of the State of Illinois; (ii) is at least 16 years old at the close of the school year for which a credit is sought; (iii) during the school year for which a credit is sought, was a full-time apprentice enrolled in an apprenticeship program which is registered with the United States Department of Labor, Office of Apprenticeship; and (iv) is employed in Illinois by the taxpayer who is the employer. "Qualified education expense" means the amount incurred on behalf of a qualifying apprentice not to exceed $3,500 for tuition, instructional materials, fees (including, but not limited to, book, license, and lab fees), or other expenses that are directly related to training the apprentices and that are preapproved by the Department. All expenses must be paid to or incurred for training at the school, community college, or organization where the apprentice receives training. (b) For taxable years beginning on or after January 1, 2020, and beginning on or before January 1, 2027, the employer of one or more qualifying apprentices shall be allowed a credit against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act. The credit shall be equal to $3,500 per qualifying apprentice. A taxpayer shall be entitled to an additional $1,500 credit against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act if (i) the qualifying apprentice resides in an underserved area as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act during the school year for which a credit is sought by an employer or (ii) the employer's principal place of business is located in an underserved area, as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act. In no event shall a credit under this Section reduce the taxpayer's liability under this Act to less than zero. For taxable years ending before December 31, 2023, for partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. For taxable years ending on or after December 31, 2023, partners and shareholders of subchapter S corporations are entitled to a credit under this Section as provided in Section 251. (c) The Department shall implement a program to certify applicants for an apprenticeship credit under this Section. Upon satisfactory review, the Department shall issue a tax credit certificate to an employer incurring costs on behalf of a qualifying apprentice stating the amount of the tax credit to which the employer is entitled. If the employer is seeking a tax credit for multiple qualifying apprentices, the Department may issue a single tax credit certificate that encompasses the aggregate total of tax credits for qualifying apprentices for a single employer. (d) The Department, in addition to those powers granted under the Civil Administrative Code of Illinois, is granted and shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this Section, including, but not limited to, power and authority to: (1) Adopt rules deemed necessary and appropriate for the administration of this Section; establish forms for applications, notifications, contracts, or any other agreements; and accept applications at any time during the year and require that all applications be submitted via the Internet. The Department shall require that applications be submitted in electronic form. (2) Provide guidance and assistance to applicants pursuant to the provisions of this Section and cooperate with applicants to promote, foster, and support job creation within the State. (3) Enter into agreements and memoranda of understanding for participation of and engage in cooperation with agencies of the federal government, units of local government, universities, research foundations or institutions, regional economic development corporations, or other organizations for the purposes of this Section. (4) Gather information and conduct inquiries, in the manner and by the methods it deems desirable, including, without limitation, gathering information with respect to applicants for the purpose of making any designations or certifications necessary or desirable or to gather information in furtherance of the purposes of this Act. (5) Establish, negotiate, and effectuate any term, agreement, or other document with any person necessary or appropriate to accomplish the purposes of this Section, and consent, subject to the provisions of any agreement with another party, to the modification or restructuring of any agreement to which the Department is a party. (6) Provide for sufficient personnel to permit administration, staffing, operation, and related support required to adequately discharge its duties and responsibilities described in this Section from funds made available through charges to applicants or from funds as may be appropriated by the General Assembly for the administration of this Section. (7) Require applicants, upon written request, to issue any necessary authorization to the appropriate federal, State, or local authority or any other person for the release to the Department of information requested by the Department, including, but not be limited to, financial reports, returns, or records relating to the applicant or to the amount of credit allowable under this Section. (8) Require that an applicant shall, at all times, keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the agreement in the custody or control of the applicant open for reasonable Department inspection and audits, including, without limitation, the making of copies of the books, records, or papers. (9) Take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance or participation required under this Section or any agreement entered into under this Section, including the power to sell, dispose of, lease, or rent, upon terms and conditions determined by the Department to be appropriate, real or personal property that the Department may recover as a result of these actions. (e) The Department, in consultation with the Department of Revenue, shall adopt rules to administer this Section. The aggregate amount of the tax credits that may be claimed under this Section for qualified education expenses incurred by an employer on behalf of a qualifying apprentice shall be limited to $5,000,000 per calendar year. If applications for a greater amount are received, credits shall be allowed on a first-come first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department. If more than one certificate is received on the same day, the credits will be awarded based on the time of submission for that particular day. (f) An employer may not sell or otherwise transfer a credit awarded under this Section to another person or taxpayer. (g) The employer shall provide the Department such information as the Department may require, including, but not limited to: (i) the name, age, and identification number of each qualifying apprentice employed by the taxpayer during the taxable year; (ii) the amount of qualified education expenses incurred with respect to each qualifying apprentice; and (iii) the name of the accredited training organization at which the qualifying apprentice is enrolled and the qualified education expenses are incurred. (h) On or before July 1 of each year, the Department shall report to the Governor and the General Assembly on the tax credit certificates awarded under this Section for the prior calendar year. The report must include: (1) the name of each employer awarded or allocated a credit; (2) the number of qualifying apprentices for whom the employer has incurred qualified education expenses; (3) the North American Industry Classification System (NAICS) code applicable to each employer awarded or allocated a credit; (4) the amount of the credit awarded or allocated to each employer; (5) the total number of employers awarded or allocated a credit; (6) the total number of qualifying apprentices for whom employers receiving credits under this Section incurred qualified education expenses; and (7) the average cost to the employer of all apprenticeships receiving credits under this Section.

Legislative History

(Source: P.A. 103-396, eff. 1-1-24; 103-1059, eff. 12-20-24; 104-6, eff. 6-16-25; 104-434, eff. 11-21-25.)