Tax credit offered to small businesses in wake of minimum wage hike
Effective Jan. 1, Illinois’ minimum wage increased from $8.25 per hour to $9.25 per hour, putting additional cost burdens on small-business owners across the state. Wages will continue to increase incrementally to $15 per hour by 2025.
To help offset increased costs to the business community, small businesses are being encouraged to take advantage of a tax credit available to businesses and nonprofits with 50 full-time equivalent employees or fewer.
The Minimum Wage Credit will allow small businesses a maximum credit of 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 it sunsets in 2026. Businesses can begin to claim the credit on their quarterly Illinois Withholding Income Tax Returns.
While this is not a long-term solution for small businesses, it will provide a measure of relief to employers as they face the hardships imposed by the minimum wage increase. For more information on the Minimum Wage Credit and how to calculate this credit, visit tax.illinois.gov.
Content courtesy of Senator Jil Tracy’s Senate in Review 2020
