The Illinois Department of Revenue (IDOR) is reminding small businesses of a new tax credit to help the bottom line now that minimum wage is going up.
Businesses can utilize the Minimum Wage Credit as of 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.
The Department of Revenue says that businesses can now claim 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.
For information on how to calculate this credit, as well as for additional resources, go to the Department of Revenue’s website at tax.illinois.gov