On Aug. 2, 2019, Illinois Gov. J.B. Pritzker signed Senate Bill 1591, creating the apprenticeship education expense tax credit.
The new law provides a non-refundable credit against Illinois income tax for 100% of the qualified education expenses of a qualifying apprentice. The credit allowed is up to $3,500, per apprentice per tax year, for tuition, book fees, and lab fees at the school or community college in which the apprentice is enrolled. A taxpayer may be eligible for an additional $1,500 credit if the principal place of business is located in an underserved area or if the apprentice resides in an underserved area. The credit is available for tax years beginning on Jan. 1, 2020, through Dec. 31, 2024.
A qualifying apprentice is an individual that meets the following requirements:
- An Illinois resident
- At least 16 years old at the end of the school year in the year the credit is sought
- A full-time apprentice enrolled in a program registered with the Office of Apprenticeship through the U.S. Department of Labor during the year the credit is sought, and
- Employed by the taxpayer in Illinois
In order to claim this credit, a taxpayer must be pre-certified by the Illinois Department of Commerce and Economic Opportunity. The aggregate amount of credits available through the program is limited to $5 million per calendar year. The statute does not allow for the sale or transfer of these credits, however, credits earned by pass-through entities may flow through to the owners.
The new apprenticeship education expense credit follows the June 2019 enactment of the Blue Collar Jobs Act, a package of tax credits intended to incentivize investment in the state. Specifically, the Act provides incentives for construction jobs based on various types of investment. For more information on the credits and incentives included in the Blue Collar Jobs Act, please see our alert discussing Senate Bill 689 titled "Illinois enacts broad tax changes".
Businesses that are considering hiring apprentices, or that would like to learn more about the myriad of recent Illinois incentives, should reach out to their tax advisers for more information.