Sales Tax Exemption for Wind and Solar Energy - High Impact Business

December 05, 2023

Summary

A business establishing a new wind power facility in Illinois that is not located in an Enterprise Zone* may be eligible for designation as a "High Impact Business" (HIB). After receiving the designation, the facility is entitled to a full exemption of the state sales tax (6.25%) and any additional local state sales taxes (up to an additional 3.5%) for building materials incorporated into the facility. The project must involve a minimum of a $12 million investment creating 500 full-time jobs or an investment of $30 million causing the retention of 1,500 full-time jobs.

A wind power facility must be new or an expansion of an existing facility and placed in service on or after July 1, 2009. It must generate electricity using wind turbines that have a capacity of 500 kilowatts or greater. The associated transmission lines, substations, and related equipment are included in the definition of a wind power facility.

With the passage of the Climate and Equitable Jobs Act in 2021, utility-scale solar facilities are also eligible for this exemption. Solar facilities must be greater than 5 MW in nameplate capacity and be placed in service on or after July 1, 2021 . The solar facility includes any associated energy storage.

Other HIB Tax Incentives

Note that while other qualifying HIBs may be eligible for additional tax incentives including an investment tax credit, an exemption from state gas and electric tax, and a state sales tax exemption on personal property used or consumed in the manufacturing process or in the operation of a pollution control facility, a Wind Energy / High Impact Business only qualifies for the sales tax exemption on building materials.

Claiming the Exemption

Developers should apply and be certified for HIB designation before commencement of the project, including purchase of building material. Here is a link to the Illinois Department of Revenue rules outlining the process for building material sales tax exemption.

A wind power facility must apply to the Department of Commerce and Economic Opportunity (DCEO) for designation as Wind Energy Business within the High Impact Business Program. Applications are accepted throughout the year. Once an application is received, DCEO will respond within 30 days. Required application information is available in the administrative code (14 Ill. Adm. Code, Part 520.603).

Once designation is granted, the business will be eligible for the sales tax benefits. As a condition of designation (and to receive the tax benefits), a Wind Energy Business will be required to comply with the Prevailing Wage Act for construction labor.

*Locating within an Enterprise Zone offers businesses a different package of incentives and makes them ineligible for designation as a High Impact Business.

Program Overview

Implementing Sector:	State
Category:	Financial Incentive
State:	Illinois
Incentive Type:	Sales Tax Incentive
Web Site:	https://dceo.illinois.gov/expandrelocate/incentives/highimpactbusinessprogram.html
Administrator:	Illinois Department of Commerce and Economic Opportunity
Start Date:	07/01/2009
Eligible Renewable/Other Technologies:	Solar Photovoltaics Wind (All)
Incentive Amount:	100% exemption of Retailers' Occupation Tax for building materials incorporated into the facility
Maximum Incentive:	None specified
Equipment Requirements:	Wind facility must have a nameplate capacity of at least 0.5 MW Building materials must be physically incorporated into the building in order to qualify for exemption

Incentives

This program has 2 incentives

Technologies:	Wind (All)
Sectors:	Commercial
Parameters:	The incentive is 100.00 %, The system has a maximum of 0.50 MW

Technologies:	Solar Photovoltaics
Sectors:	Commercial
Parameters:	The incentive is 100.00 %, The system has a maximum of 5.00 MW

Authorities

Name:	§ 20 ILCS 655/5.5
Date Enacted:	06/30/2009
Effective Date:	07/01/2009

Name:

14 Ill. Adm. Code, Part 520

Name:

Public Act 102-0662

Contact

Name:	Information - High Impact Business
Organization:	Illinois Department of Commerce and Economic
Address:	620 East Adams Street Springfield IL 62701
Phone:	(217) 785-6145

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.