Issue Brief: Corporate Tax Expenditures

State and local government often provide special tax cuts to corporations to promote economic development. These tax breaks are called tax expenditures because they are basically a government spending program. For example, the only difference between a tax expenditure and the Department of Human Services budget is the government does not appropriate money to the corporation, the corporation simply pays less tax, thus the government receives less tax revenue. Essentially, a tax expenditure is a special tax incentive for business that reduces the amount of taxes the corporation pays to state or local government. Corporate tax expenditures in Illinois add up to over $1.5 billion annually. This Issue Brief provides an overview of the tax expenditures available to corporations in Illinois.