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Semiconductor Incentives

Governor J. B. Pritzker signed the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act into law in April of 2022. This incentives package supports the in-state production of semiconductors, microchips, and their component parts amid a global shortage that is impacting the availability of goods ranging from automobiles to cell phones.

The measure was included in the state’s newly enacted FY2023 budget and provides various tax incentives for high-tech manufacturers of semiconductors, microchips and their component parts. The law is aligned with President Biden’s renewed efforts to provide over $50 billion in additional federal funds to expand American manufacturing and rebuild supply chains. The Illinois Manufacturing Association was a proponent of this legislation.

Structured similarly to the Reimagining Electric Vehicles (REV) Illinois Program, the law creates a three-tiered system of incentives for large chip manufacturers, component manufacturers, or companies that may convert their facilities.

The new law would provide qualifying manufacturers with an enhanced version of the EDGE tax incentive from 10 - 15 years with an option to renew one additional term, providing 20-30 years of benefits.. Employers would receive a tax break on 75% of income tax withholdings attributable to new or retained employees, which would increase to 100% if a production facility is located in an underserved area. Additional credit is available for employee training costs.

To qualify, companies must meet diversity reporting requirements about their workforce and board of directors, outline a hiring plan and commitments to recruit and hire from underserved areas, and pay employees equal to or greater than 120% of the average wage paid to full-time employees where the project is located.

For more details, visit the DCEO website.

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