About this programme
EDGE for Startups (Economic Development for a Growing Economy) is a tax credit program run by the Illinois Department of Commerce and Economic Opportunity (DCEO). It is a startup-focused version of the state's regular EDGE program, built for companies that have not yet turned a profit and so have no Illinois income tax liability to offset.
Instead of crediting income tax, EDGE for Startups credits Illinois withholding tax, the tax a company already deducts from employee paychecks. That lets a pre-profit company benefit from the incentive years before it owes any income tax. The credit runs for up to 10 years or until the company becomes profitable, at which point it converts into the regular EDGE program and starts offsetting income tax instead.
The program applies to companies incorporated within the last 10 years that plan to hire and invest in Illinois, in eligible sectors including manufacturing, processing, assembling, warehousing, distribution, agricultural processing, office industries (including SaaS), R&D, and tourism services. Retail and health services are excluded.
How it works
The credit is 50% of withholding tax for new hires and 25% for retained jobs, with an additional 25% bonus for businesses located in underserved areas.
A separate 10% credit applies to new-employee training costs.
Companies with 100 or fewer employees worldwide must create jobs equal to the lesser of 5% of their current workforce or 50 jobs, with no minimum investment required (credits cannot exceed the project's investment). Companies with more than 100 employees worldwide must create the lesser of 10% of workforce or 50 jobs, and must invest at least $2,500,000.
Applicants must satisfy a 'but for' requirement: the company has to show the tax credit is a deciding factor in choosing to invest in Illinois.
Capital investment counted toward the requirement includes purchases, renovations, equipment, land, buildings, R&D costs, and lease payments where the lease term matches the 10-year agreement. Wages are not counted.
Before receiving credits, the applicant must complete a one-time Agreed Upon Procedures (AUP) examination, described as less involved than a full audit, to confirm job creation and capital investment.
Independent contractors (1099s) cannot be counted toward the withholding-tax job calculations.
Companies initially have 2 years to meet their job-creation and investment commitments. Failing to meet commitments, violating the 'but for' clause, or missing required reports can make a company ineligible.
Who can apply
The business must be incorporated within the last 10 years and must never have had Illinois income tax liability.
It must be ready to hire full-time W2 employees, and must operate in an eligible sector (manufacturing, processing, assembling, warehousing, distribution, agricultural processing, office industries including SaaS, R&D, or tourism services). Retail and health services do not qualify.
Businesses with 100 or fewer employees worldwide need job creation of the lesser of 5% of workforce or 50 jobs, with no minimum capital investment. Businesses with more than 100 employees worldwide need job creation of the lesser of 10% of workforce or 50 jobs, plus at least $2,500,000 in capital investment.
How to apply
- Email ceo.edge@illinois.gov to schedule an informational call about the program.
- Review the application requirements and eligible-sector details on DCEO's EDGE for Startups pages.
- Submit the application and demonstrate the 'but for' case that the credit is a deciding factor in locating the investment in Illinois.
- Meet job-creation and capital-investment commitments within the initial 2-year window.
- Complete the required Agreed Upon Procedures (AUP) examination to confirm job creation and capital investment before credits are issued.
- File required annual reports to keep the credit.
Frequently asked
How is EDGE for Startups different from regular EDGE?
EDGE for Startups is for companies incorporated 10 years or less that have never had Illinois income tax liability. They claim credits against withholding tax rather than income tax, since a pre-profit company has no income tax to offset.
How long can I keep claiming the credit?
You receive the withholding tax credit for up to 10 years or until the company becomes profitable, whichever comes first. Once profitable, the credit converts to the regular EDGE program and applies against income tax instead.
What counts as capital investment?
Purchases, renovations, equipment, land, buildings, R&D costs, and lease payments where the lease term matches the 10-year program agreement. Wages are excluded.
Do I need a minimum investment amount?
Only if your company has more than 100 employees worldwide, in which case you need at least $2,500,000 in capital investment. Companies with 100 or fewer employees have no minimum investment requirement, though credits cannot exceed the project's investment.
Can I count independent contractors toward my job creation numbers?
No. 1099 independent contractors cannot be included in the withholding tax job calculations; only W2 employees count.
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Reviewed 2026-09-25. Programmes change, so check eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private firm and is not part of any government body.