- Illinois Income Tax Act (IITA) – Primary statute governing Illinois state income taxation.
- IITA Section § 201(k) (Research and Development Credit) – Specific section establishing the R&D tax credit.
- 35 ILCS § 5/201(k) – Official citation for Illinois R&D credit law.
- Illinois Department of Revenue (IDOR) – State agency administering tax laws and collections.
- Schedule 1299-C (Income Tax Subtractions and Credits for Individuals) – Form for individual income tax credits.
- Schedule 1299-D (Income Tax Credits for Corporations and Fiduciaries) – Form for corporate income tax credits.
- Schedule 1299-I (Income Tax Credits Information and Worksheets) – Instructions and worksheets for income tax credits.
- Credit Code 5340 (R&D Credit) – Code identifying R&D credit on tax forms.
- Qualifying Expenditures (for increasing research activities) – Costs eligible for the R&D credit calculation.
- Internal Revenue Code (IRC) Section 41 – Federal law defining qualified research activities.
- Qualified Research Expenses (QREs) – Eligible costs for research conducted in Illinois.
- Research Conducted in this State (Illinois) – Activities physically performed within Illinois borders.
- Base Amount (for R&D calculation) – Historic spending level used for credit calculation.
- Average Qualifying Expenditures (3 preceding tax years) – Average R&D spending over three preceding years.
- Credit Percentage (6.5%) – Statutory rate applied to qualifying R&D expenses.
- Nonrefundable Credit – Credit cannot exceed tax liability; no cash back.
- Carryforward Period (5 Years) – Unused credits usable for five future years.
- Forfeited Credit – Unused credits expiring after carryforward period.
- In-House Research Expenses – Wages and supplies for internal R&D work.
- Contract Research Expenses – Payments to third parties for research services.
- Basic Research Payments (IRC § 41(e)) – Payments to qualified organizations for scientific study.
- Wages for Qualified Services – Pay for employees directly involved in research.
- Cost of Supplies – Expenses for materials used in R&D.
- Rental or Lease Costs of Computers – Fees for computers used in research.
- Qualified Research (IRC § 41(d) Four-Part Test) – Federal criteria determining if work qualifies.
- Process of Experimentation – Testing alternatives to resolve technical uncertainty.
- Technological in Nature – Relies on hard sciences like engineering or physics.
- Elimination of Uncertainty – Effort to discover information not currently known.
- Business Component – Product, process, software, or technique being improved.
- New or Improved Function, Performance, Reliability, or Quality – Enhancement to performance, reliability, or quality.
- Exclusion: Research After Commercial Production – Activities occurring after product is ready for market.
- Exclusion: Adaptation of Existing Component (Customer Need) – Modifying product for specific customer requirement.
- Exclusion: Duplication of an Existing Product or Process – Reverse engineering or copying existing products.
- Exclusion: Surveys or Studies – Market research and routine data collection excluded.
- Exclusion: Research on Internal-Use Computer Software – Software for internal admin generally excluded.
- Exclusion: Research Outside Illinois – Work performed outside state borders is ineligible.
- Exclusion: Research in Social Sciences, Arts, or Humanities – Non-technical research fields are not eligible.
- Exclusion: Government-Funded Research – Projects paid for by grants or contracts.
- Distributive Share of Credit – Allocated credit amount for partners or shareholders.
- Pass-Through Entities (Partnerships, S corporations, LLCs) – Organizations passing income/credits to owners’ returns.
- Partnership’s or S corporation’s Schedule K-1-P – Form reporting partner’s share of income/credits.
- IITA Section § 201(a) and (b) (Tax Imposed) – Statutes imposing Illinois income tax.
- IITA Section § 201(c) and (d) (Personal Property Tax Replacement Income Tax) – Statutes imposing replacement tax.
- Taxable Year – Fiscal period used for tax reporting.
- Unused Credit – Credit amount exceeding current tax liability.
- Unitary Taxpayer/Group – Related companies filing combined Illinois tax return.
- Written Agreement (for credit distribution by S Corps/Partnerships, post-2023) – Contract specifying credit allocation among partners.
- Public Act 103-0595 (R&D credit extension to 12/31/2031) – Law extending R&D credit through 2031.
- Quantum Information Science Research and Development Tax Credit – Incentive for quantum computing research activities.
- Qualifying Quantum Information Science Expenditures – Costs eligible for quantum science credit.
