Illinois Passes Act Further Incentivizing Quantum Industry

Article co-written by Yuri Levin-Schwartz, Ph.D., a law clerk at MBHB.

On June 26, 2024, Illinois Governor J.B. Pritzker signed a collection of bills (HB5005, now Public Act 103-0595) into law.[1] This package of bills provides tax incentives for various industries, such as the film industry and the electric vehicle industry. More notably, though, the package also shows a real investment by the state in the quantum computing industry.

One important piece of the law (20 ILCS 605-1115, to be exact) formally defines “quantum computing campuses” and provides multiple tax exemptions and credits for tenants of such “quantum computing campuses.” The tax exemptions and credits include exemptions for building materials used to create the quantum computing campus, exemptions from utilities taxes (e.g., gas, electricity, telecommunications), and, most notably, income tax credits. The income tax credit (based on the updated portion of 35 ILCS 5/241) is equal to 20 percent of the wages paid to full-time and part-time employees. The Illinois Department of Commerce and Economic Opportunity is responsible for administering these tax credits and exemptions. Further, the tax credits and exemptions may be awarded for up to 20 years and then renewed one time for an additional 20 years. In a similar fashion, retailers who sell building materials used to construct a “quantum computing campus” can also take advantage of a tax exemption. Namely, such retailers can deduct the sales of such building materials when calculating their tax burden (35 ILCS 120/2-29).

This law is very expansive in terms of what is considered a “quantum computing campus.” A “quantum computing campus” is defined as a campus of between 0.5 and 4.0 square miles where “quantum computer operators and research facilities, data centers, manufacturers and assemblers of quantum computers and component parts, cryogenic or refrigeration facilities, and other facilities determined, by industry and academic leaders, to be fundamental to the research and development of quantum computing for practical solutions” are located. Such a definition ensures that almost any conceivable research and development effort of sufficient size in the realm of quantum computing would be covered. Perhaps somewhat unfortunately, though, such a definition does not appear, at least on its face, to be broad enough to cover other quantum technologies outside of quantum computing (e.g., quantum sensing).

The collection of bills also expands the Manufacturing Illinois Chips for Real Opportunity (MICRO) program (35 ILCS 45/110-20) to cover quantum computer manufacturers and quantum computer component parts manufacturers. This program, which was initially instituted to encourage the manufacturing of microchips and semiconductors within the state of Illinois[2], now provides tiered incentives for investment in quantum computing based on the size and scale of the investment.

The signing of these bills into law comes only a few months after Governor Pritzker unveiled a proposed budget for FY2025 in which he earmarked $500 million for investment in quantum technology, which included $300 million for the creation of a state-of-the-art quantum facility.[3] Further, at the back end of 2023, The Bloch Tech Hub (a consortium led by Chicago Quantum Exchange[4]) was designated as a “Tech Hub” under the federal Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act (which aims to jump start further semiconductor, artificial intelligence and quantum computing research and development across the U.S.).[5],[6] Each of these recent steps further solidifies Illinois’s place as one of the world’s prominent centers of quantum computing and, according to the governor, is part of a larger plan to attract up to $11 billion in federal funding and up to $20 billion in private investment.[7]

The sunset provision for receiving an initial certificate of exemption under the newly passed act is July 1, 2030. Given this, and the recent quantum activity in and around Chicago, I surmise that one or more quantum R&D facilities will be built close to the Windy City in the near future.