Urbana Tax Exemptions

Description: Here are some answers to common tax exemption questions for Urbana businesses:

What is the sales tax exemption?
The “Retailers‘ Occupation Tax Act“ 35 ILCS 120/5k (State Bar Edition, as amended) provides that: “Each retailer whose place of business is within a county or municipality which has established an enterprise zone pursuant to the “Illinois Enterprise Zone Act“ and who makes a sale of building materials to be incorporated into real estate in such enterprise zone by remodeling, rehabilitation or new construction, may deduct receipts from such sales when calculating the tax imposed by this Act.”

What is the EZ Manufacturing Machinery and Equipment (M, M & E) Sales Tax Exemption?
The Revenue Act 35 ILCS 120/1d-1f (State Bar Edition, as amended) allows a business enterprise that is certified by DCCA, as making a $5 million investment that either: creates a minimum of 200 full-time equivalent jobs in Illinois; or retains a minimum of 2,000 full-time jobs in Illinois; or which retains 90% of the existing jobs, a 6.25 percent state sales tax exemption on all tangible personal property which is used or consumed within the Urbana Enterprise Zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease. This exemption includes repair and replacement parts for machinery and equipment used primarily in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease, and equipment, manufacturing fuels, material and supplies for the maintenance, repair or operation of manufacturing, or assembling machinery or equipment.

How does a business become eligible for the M, M & E Sales Tax Exemption?
To be eligible for this incentive, DCCA must certify that the business has made an investment of at least $5 million in the Urbana Enterprise Zone and has created a minimum of 200 full-time equivalent jobs in Illinois or has made an investment of at least $40 million in the Urbana Enterprise Zone and has retained a minimum of 2,000 full-time jobs in Illinois or has made an investment of $40 million in the Urbana Enterprise Zone and retained 90 percent of the jobs in place after July 1, 1985. A business must submit an application to DCCA documenting the eligible investment and that the job creation or job retention criteria will be met.

What is the Utility Tax Exemption?
The Public Utilities Act 220 ILCS 5/9–222.1 (State Bar Edition, as amended) allows a business enterprise that is certified by DCCA, and makes an investment in the Urbana Enterprise Zone that either creates a minimum of 200 full-time equivalent jobs in Illinois or retains a minimum of 1,000 full-time jobs in Illinois, a 5 percent state tax exemption on gas, electricity and the Illinois Commerce Commission 0.1 percent administrative charge. The City of Urbana does not exempt its local taxes on gas, electricity and water.

How does a business become eligible for the Utility Tax Exemption?
To be eligible for this incentive, DCCA must certify that the business makes an investment of at least $5 million in the Urbana Enterprise Zone and has created a minimum of 200 full-time equivalent jobs in Illinois or makes an investment of at least $20 million in the Urbana Enterprise Zone and has retained a minimum of 1,000 full-time jobs in Illinois. A business must submit an application to DCCA documenting the eligible investment and that the job creation or job retention criteria has been met.

Source: City of Urbana
Date Last Revisited: 5/7/07