On November 16, Illinois enacted the Reimagining Electric Vehicles Act (REV Act) which states that its purposes include “reduc[ing] carbon emissions, creat[ing] new good-paying jobs, and generat[ing] long-term economic investment in the Illinois business economy.”
The REV Act provides income tax credits for electric vehicle (EV) manufacturers, including EV parts suppliers such as battery and charging station manufacturers, tax credits for costs to train new or retained employees, and a suite of other tax incentives.
According to the Governor’s Office, the new law is intended to attract new manufacturers to Illinois while incentivizing existing manufacturers to invest in their Illinois facilities and employees in order to position Illinois as a national leader in EV and battery production.
Qualifying for the Program
Companies seeking to take advantage of the REV Act financial incentives must apply for designation of a project as a REV Illinois Project, and enter into an agreement with the Illinois Department of Commerce and Economic Opportunity (DCEO). In addition to certifying that the project will achieve carbon neutrality or will meet one or more green building standards, and demonstrating its commitment to recycling, an applicant must satisfy the following category-specific criteria to qualify for the program.
|Manufacturing Category||Minimum Capital Investment||In-Service Deadline After Application is Approved||Minimum New Full-Time Employee Jobs|
EV parts manufacturers
EV power supply equipment manufacturers or other EV and EV parts manufacturers that do not qualify in the above categories
Existing EV or parts manufacturers seeking to expand or traditional manufacturers seeking to convert
|$100M||60 months||75 (or, if less,
10 percent of the statewide baseline applicable to the applicant)
The REV Act provides tax credits against Illinois income tax or employer withholding beginning in 2025 with respect to REV Illinois Projects. The tax credits created by the new law range from 75 to 100 percent of the incremental income tax attributable to new employees at the REV Illinois Project location or 25 to 50 percent for retained employees, depending on factors such as company location and the number and type of employees hired, favoring the construction of new facilities in underserved areas or certain communities with a recently-retired fossil-fueled power plant or coal mine. A credit equal to 10 percent to 25 percent of the training expenses of new and retained employees is also available. The credits, while they can be used only beginning in 2025, can be awarded by the DCEO beginning in 2022. The duration of the credits varies between 10 and 15 taxable years.
There also are tax credits for construction wages paid in connection with the construction of the REV Illinois Project facilities, ranging from 50 to 75 percent of the incremental income tax attributable to those wages. Applicants seeking the certification of construction tax credits must require their contractors to enter into project labor agreements that conform with the Illinois Project Labor Agreements Act.
An investment tax credit is available equal to 0.5 percent of the basis of qualified property that is placed in service at the site of a REV Illinois Project. Additionally, the REV Act includes an up to five-year tax exemption from state and local sales and use taxes on building materials for the construction of project facilities, and local taxing districts can elect to abate real property taxes otherwise levied on a REV Illinois Project facility.
For continued designation as a REV Illinois Project, there are certain obligations that need to be fulfilled, including, among others, submitting regular reports and maintaining operations for at least 10 to 15 years.
Funding and Incentives in the Federal Infrastructure Investment and Jobs Act
Illinois adopted the REV Act on the same day that President Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law, which directs investments into EV charging infrastructure. Illinois is estimated to receive $149 million over five years to support the expansion of an EV charging network. In addition, Illinois will have an opportunity to apply for grant funding specifically set aside in the IIJA for EV charging infrastructure.
Taken together, the federal and state legislation provide significant new incentives for the EV sector in Illinois. Please reach out to any member of the Schiff Hardin Environmental or Tax practice groups with questions.