Illinois Enacts Exemption on Production-Related Tangible Personal Property

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Illinois legislature recently passed Senate Bill 689, enacted as Illinois Public Act 101-0009, which includes a broader exemption on manufacturing machinery and equipment to include production-related tangible personal property purchased on or after July 1, 2019. The intent of the change was to reduce the effects of the prior repeal of the Illinois Manufacturer’s Purchase Credit. 

According to the June 2019 Illinois Department of Revenue Informational Bulletin, the definition includes the following:

  • Tangible personal property purchased by a manufacturer for incorporation into real estate within a manufacturing facility for use in a production-related process, or tangible personal property purchased by a construction contractor for incorporation into real estate within a manufacturing facility for use in a production-related process
  • Production-related tangible personal property that’s primarily used or consumed in activities such as research and development, preproduction material handling, receiving, quality control, inventory control, storage, staging and packaging for shipping and transportation purposes
  • Supplies and consumables primarily used in a manufacturing process in a manufacturing facility, including fuels, coolants, solvents, oils, lubricants and adhesives, hand tools, protective apparel and fire and safety equipment primarily used or consumed within a manufacturing facility in a manufacturing process

Nonqualifying tangible personal property may include items used within or without a manufacturing facility in nonmanufacturing roles such as sales, purchasing, accounting, marketing or human resources. It also should be noted this exemption doesn’t cover any piece of tangible personal property that must be titled or registered with any department, agency or unit of federal, state or local government.

For more information regarding this exemption, contact your BKD trusted advisor or use the Contact Us form below.


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