Illinois · research and development · IL-RD-001
Research and Development Credit
Publication revised September 24, 2026. Sourcebook page 103.
Credit amount / calculation
6.5% of qualifying Illinois research and development expenditures over the three-year base-period average under current law.
Business fit and eligible activity
Qualified Illinois research can generate an incremental income-tax credit. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
For forest products, research credits usually live on the mill floor rather than in a laboratory. Scanner settings, drying schedules, process-control changes, product testing, and equipment modifications can matter when the work is experimental rather than routine. A logging company has a narrower path, but equipment-control, software, or process-development work can sometimes qualify if it satisfies the same technical tests.
Illustrative business benefit
A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 6.5%, the state credit would be about $13,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit.
Official sources
- Illinois Department of Revenue - Schedule 1299-I (illinois.gov)
- Illinois Department of Commerce and Economic Opportunity - (illinois.gov)
- Illinois DCEO - EDGE (illinois.gov)
- Illinois Department of Revenue - Schedule 1299-I (in.gov)
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