There are a couple of common concerns that we hear about when we talk with employers. Recently, one of those is the new minimum wage law that went into effect on January 1, 2020.

The Illinois Department of Revenue (IDOR) is reminding small businesses they can utilize the Minimum Wage Credit starting January 1, 2020. The new tax credit is designed to help small businesses offset the state’s minimum wage rate that will gradually increase to $15 an hour over the next six years. Businesses can claim now the credit on their quarterly Illinois Withholding Income Tax Returns.

Beginning this year, businesses and nonprofits with 50 full-time equivalent employees or less are eligible to offset a portion of the minimum wage increase cost from their withholding income taxes. The maximum credit amount allowed is 25 percent of the difference between the new minimum wage and what each employee was paid previously. The percentage allowed each proceeding year will decrease before sunsetting in 2026 for most small businesses. Eligible businesses can claim this credit by filing Form IL-941, Illinois Withholding Income Tax Return, and a new schedule.

Intern Education Assistance

Effective January 1, 2020, employers are allowed a tax credit for qualified educational expenses associated with qualifying apprentices. Employers may receive a credit of up to $3,500 per apprentice against the taxes imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act, and an additional credit of up to $1,500 for each apprentice if (1) the apprentice resides in an underserved area or (2) the employer’s principal place of business is located in an underserved area.

“Illinois small businesses should take advantage of this tax credit,” said acting Director David Harris. “Raising the wage for hardworking Illinois families was one of Governor Pritzker’s top priorities and he worked to ensure that small businesses and nonprofits remain competitive during the transition period. Along with a new capital bill and tax credits for apprenticeship programs and research investments, this measure will help fulfill this administration’s goal of fostering an environment that will grow jobs and reward hardworking families.”

Beginning this year, businesses and nonprofits with 50 full-time equivalent employees or less are eligible to offset a portion of the minimum wage increase cost from their withholding income taxes. The maximum credit amount allowed is 25 percent of the difference between the new minimum wage and what each employee was paid previously. The percentage allowed each proceeding year will decrease before sunsetting in 2026 for most small businesses. Eligible businesses can claim this credit by filing Form IL-941, Illinois Withholding Income Tax Return, and a new schedule.

Illinois’ minimum wage was last raised in 2010 (to $8.25). Raising the wage to $15 an hour is estimated to impact 1.4 million Illinoisans, according to the Illinois Economic Policy Institute at the University of Illinois