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IL — State Policy Updated January 2026

Illinois

Statewide incentives and constraints, plus key municipal restrictions and active policy debates.

Data Center Investment Program Construction Employment Tax Credit Carbon neutrality or green building certification Project Labor Agreement requirements Utility cost-shift protections Utility Regulation

Overview

Illinois offers one of the nation’s most generous data center tax incentive packages through the Data Center Investment Program, which provides up to 20 years of sales and use tax exemptions for qualifying facilities. The program requires a minimum $250 million capital investment, 20 new jobs, and carbon neutrality or recognized green building standards within 2 years of operation. In 2025, ComEd filed new utility tariff rules to ensure large data center loads do not shift costs to other customers, and the City of Aurora enacted a temporary moratorium on new data center approvals.

Incentives

Data Center Investment Program

Illinois provides sales and use tax exemptions and income tax credits for qualifying data centers through the Data Center Investment Program, administered by the Department of Commerce and Economic Opportunity (DCEO).[1][2]

  • Tax exemptions: Qualifying data centers receive certificates of exemption from the Retailers’ Occupation Tax, Use Tax, Service Use Tax, Service Occupation Tax, locally imposed retailers’ occupation taxes administered by the Department of Revenue, and the Chicago non-titled Use Tax.[2]
  • Income tax credit: The program also provides a credit certification against Illinois income taxes.[2]
  • Minimum investment: At least $250 million in capital investment over 60 months (for new, existing, or upgraded facilities).[3]
  • Job requirement: At least 20 full-time or full-time equivalent new jobs over 60 months, with total compensation at least 120% of the county average wage.[3]
  • Program term: Exemptions may be granted for up to 20 years, with DCEO issuing 5-year increment certificates that are renewable if compliance is maintained.[1][4]

Construction Employment Tax Credit

This program provides an income tax credit equal to 20% of wages paid to construction workers for a new data center located in an underserved area, as defined by statute.[1][3]

Requirements and Conditions

Carbon Neutrality or Green Building Certification

To qualify for the Data Center Investment Program, facilities must certify carbon neutrality or achieve a recognized green building or energy standard within 2 years after being placed in service.[3] Acceptable certifications include LEED, ENERGY STAR, ISO 50001, BREEAM, or UL 3223.[3]

Project Labor Agreement Requirements

The program incorporates Project Labor Agreement (PLA) requirements under the Illinois Project Labor Agreements Act. Projects must submit specific documentation and maintain compliance throughout the investment period, particularly where multiple contractors are involved.[3]

Utility and Grid Rules

ComEd Large Load Tariff Protections

In June 2025, Commonwealth Edison (ComEd) filed revisions to its General Terms and Conditions tariff to ensure large demand project applicants do not shift costs to other customers.[5]

  • Deposits and security: The tariff requires deposits or security to recover engineering costs for large load interconnections, protecting other ratepayers from stranded investment risk.[5]
  • Long-lead material procurement: The filing facilitates procurement of long-lead materials without risk to other customers.[5]
  • Transmission revenue contributions: The tariff memorializes ComEd’s practice of ensuring large load customers contribute appropriate transmission revenues through FERC-jurisdictional rates.[5]
  • Cluster studies: The filing formalizes cluster studies for transmission and distribution impacts to speed review and reduce costs.[5]

Local Zoning

City of Aurora Moratorium

On September 25, 2025, Aurora enacted a 180-day moratorium on new data center and warehouse developments to draft zoning standards and study environmental, utility, and stormwater impacts.[6] The city allows conditional processing of applications during the moratorium but defers final approvals until new rules are in place.[6]

What to Watch

  • Aurora zoning standards: Monitor whether the 180-day moratorium is extended or replaced by permanent data center zoning ordinances in 2026.
  • Illinois General Assembly amendments: Watch for any 2026 legislative proposals to amend Data Center Investment Program thresholds, carbon-neutral rules, or credit structure.
  • Additional municipal moratoria: Track whether other Illinois cities follow Aurora’s lead with temporary restrictions while developing data center zoning standards.

Sources

[1] Illinois Department of Commerce and Economic Opportunity, “Data Center Investment Tax Exemptions and Credits,” https://dceo.illinois.gov/expandrelocate/incentives/datacenters.html (accessed January 8, 2026).

[2] Illinois Administrative Code, Title 14, Part 521, §521.10 “Purpose,” https://ilrules.elaws.us/iac/t14_pt521_sec.521.10 (accessed January 8, 2026).

[3] Illinois Administrative Code, Title 14, Part 521, §521.20 “Definitions,” https://ilrules.elaws.us/iac/t14_pt521_sec.521.20 (accessed January 8, 2026).

[4] Illinois Administrative Code, Title 14, Part 521, §521.80 “Determination of Term of Exemptions and Amount of Credit,” https://ilrules.elaws.us/iac/t14_pt521_sec.521.80 (accessed January 8, 2026).

[5] Commonwealth Edison Company, “Supplemental Statement: Revised General Terms and Conditions (Large Load Deposits and TSA),” filed with the Illinois Commerce Commission, June 23, 2025, https://www.comed.com/cdn/assets/v3/assets/blt3ebb3fed6084be2a/bltba111a4e95c5ea00/68596f1662bf7985046bf9ff/SS_-1_Large_Load_Deposits_and_TSA_Suppl_Stmnt_20250622_-_Unsigned.pdf (accessed January 8, 2026).

[6] City of Aurora, Illinois, “Data Center and Warehouse Moratorium,” September 25, 2025, https://www.aurora.il.us/Property-and-Business/Zoning-and-Planning/Data-Center-and-Warehouse-Moratorium (accessed January 8, 2026).