Manufacturer’s Purchase Credit
May 12, 2014
Time is running out for Illinois manufacturers to meet the June 30, 2014, filing deadline for the Manufacturers Purchase Credit!
The MPC is earned on sales and use tax-exempt purchase of manufacturing equipment or machinery (and their repair parts), and is equal to half of what the tax would have been if the purchase had not been exempt. The credit can be applied against state sales or use tax on future purchases of production-related tangible personal property that does not otherwise qualify for the manufacturing machinery and equipment exemption.
Many manufacturers are not aware of this special tax credit for a couple of reasons: 1) it is not a credit reported or earned by filing your normal business income tax returns, and 2) it does not result in a direct tax refund, but rather it is a dollar for dollar credit used to offset sales and use tax.
The tax savings made possible by the MPC can be a tremendous boost to cash flow. More Illinois manufacturers should take advantage of this incentive to expand manufacturing capabilities within the state.