Illinois State Tax Incentives

Illinois is rapidly emerging as a premier destination for data center development, thanks to a robust suite of state tax incentives designed to attract large-scale digital infrastructure projects. Recognizing Illinois as an ideal state for data center development, Stream Data Centers continues to expand its footprint in Elk Grove Village, which includes its Chicago III-V data center.

Overview of Illinois Data Center Incentives

The Illinois Data Center Investment Program, administered by the Department of Commerce and Economic Opportunity (DCEO), provides a comprehensive package of tax exemptions and credits to qualifying data centers. These incentives are aimed at fostering job creation, encouraging capital investment, and promoting environmentally sustainable operations to ultimately support expanding digital opportunities and create tax and economic advantages for nearby communities. The Data Center Investment Program 2024 Annual Report details the guidelines and performance of the Program since inception in mid-2019 through December 31, 2024.

Key Incentives Available

1. Sales and Use Tax Exemptions
   Qualified data centers receive exemptions from state and local sales and use taxes on a wide range of tangible personal property essential to operations. These include:

• Servers, computers, and data storage devices
• Electrical and climate control systems
• Network and telecommunications infrastructure
• Software and building materials physically incorporated into the facility

2. Construction Employment Tax Credit
   For data centers located in underserved areas, Illinois offers a 20% income tax credit on wages paid to construction workers involved in building the facility. This credit is designed to stimulate economic development in regions with high poverty or unemployment rates.
3. EDGE Tax Credit Program
   The Economic Development for a Growing Economy (EDGE)program provides annual corporate tax credits to qualifying data centers and other businesses in Illinois that support job creation and capital investment and will improve the standard of living for all Illinois residents.
4. Long-Term Tax Exemption Certificates
   Certified data centers in Illinois can receive tax exemption certificates valid for up to 20 years, issued in renewable 5-year increments. These are contingent on continued compliance with investment, job creation, and sustainability requirements

Eligibility Requirements

To qualify for these incentives, data centers must meet the following criteria:

• Capital Investment: New and existing data centers and their tenants collectively making a capital investment of at least $250 million over a 60-month period.
• Job Creation: The data center owner/operator and its tenants create at least 20 full-time or full-time equivalent new jobs associated with the operation or maintenance of the data center. Total compensation for these jobs must be equal or exceed 120% of the median wage paid to full-time employees in the county where the data center is located.
• Sustainability: The data center must be carbon neutral or attain certification under one or more green building standards (e.g., LEED, ENERGY STAR, ISO 50001).
• Location in Underserved Area: To receive the construction employment tax credit, the project must be located in an underserved area based on certain statutory criteria.

Why Illinois is an Ideal State for Data Center Development

Illinois ranks among the top states for data center capacity, offering:

• Central geographic location with robust fiber infrastructure
• Competitive energy rates and renewable energy options
• Skilled workforce and proximity to major markets
• Strong government support for tech and innovation sectors