Public Funding Navigator Megan Lewis provides an explainer on the new Nonprofit Theater Tax Credit.
On Valentine’s Day 2025, the Illinois Department of Commerce and Economic Opportunity (DCEO) Film Office launched the Nonprofit Theater Tax Credit Program. Modeled on the state’s popular Film/Commercial and Pre-Broadway Tax Credit Programs, this new funding tool helps the approximately 300 nonprofit theaters across Illinois recoup up to 20% of eligible expenses and fold those funds back into their work.
The League of Chicago Theatres played a key role in making this program a reality after seeing that the theater ecosystem needed additional financial support to recover from the pandemic. Executive Director Marissa Lynn Jones shared this about the effort: “In a time where funding has dramatically shifted and we are still recovering from the economic impact of the pandemic, the tax credit has brought significant relief to our stages. It allows us to continue to bring the impactful art of storytelling to our communities across Illinois.”
Arts Alliance was proud to join the Big Tent in advocating for this initiative, and our Help Desk has been working with arts groups through every step of this process to ensure as many theaters as possible can claim these dollars and reinvest them into productions that bring vital cultural experiences to communities across the state.
So how does this program work? What’s happened so far, and what’s coming next? This blog post aims to give an overview of the program and encourage nonprofit theaters who have not yet made use of this program to explore the opportunity and get ready to apply. For those that haven’t considered it, tax credits can be a valuable new revenue source.
How it Works
The Nonprofit Theater Tax Credit program is funded by an annual $2 million appropriation to the Illinois Film Office. This past year, to date, the Film Office has issued $1.57 million in credits, which have helped theater companies hire more crew, expanded their set budgets, and more.
A tax credit reduces your tax liability. It has a dollar value, and if you file taxes, you can use it to decrease the final amount of taxes that you actually pay. However, if you’re an Illinois nonprofit, you don’t have a state income tax burden. For a nonprofit, a tax credit is like getting Kohl’s cash but you don’t shop at Kohl’s–it’s worth money to someone, but not you. You need to find someone who wants the tax credit and is willing to purchase it.
The purchaser of the tax credit could be a tax credit broker, who buys the tax credit and then re-sells it. The purchaser could also be someone like a board member or part of your network, who buys it from you directly. In any event, reselling the credit turns it into cash, which you can factor in as a new revenue source for your organization and production budget.
To make sure theaters of all sizes can access the program, the legislation established a seven-tier system based on annual operating budgets with maximum credit awards per tier.
| TIER | NOT-FOR-PROFIT TIERS (annual budget) | MAXIMUM TAX CREDIT AWARDS PER TIER |
| 1 | <$25,000 | $0 |
| 2 | $25,000 to $250,000 | $225,000 |
| 3 | $250,000 to $1,000,000 | $225,000 |
| 4 | $1,000,000 to $2,500,000 | $250,000 |
| 5 | $2,500,000 to $5,000,000 | $300,000 |
| 6 | $5,000,000 to $10,000,000 | $300,000 |
| 7 | $10,000,000 or more | $700,000 |
| TOTAL ALLOCATION | $2,000,000 |
To offer more context, Deputy Director of the Illinois Film Office Peter Hawley explains, “The tiers were created to make the program as equitable as possible and help ensure a variety of theaters across the state could access it. Both top-tier theaters and smaller nonprofit theaters are critical to the overall theater ecosystem, working together to provide a high quality of life in neighborhoods and communities across Illinois.”
Program Impact
Who better to explain the impact of this tax credit program than the actual recipients? We checked in with nonprofit theatres who have benefited from this tax credit first hand, and here’s what they shared:
This tax credit allowed us to hire additional labor for the first time in years and provide additional marketing to our summer season. As a result, we are seeing record numbers of audience members attend our summer productions. – Oak Park Festival Theatre
We were able to employ more designers, technicians, staff than we could have hired otherwise… and increase the number of performances of a production which lengthens the employment of a company of actors and technicians. – Chicago Shakespeare Theatre
The assistance to offset anticipated expenses was extremely helpful. 10% of production expenses were covered thanks to the tax credit! – Special Gifts Theater
The credit helped to ensure we could provide free ticket initiatives to over 7,000 low-income students in 2026 (28% of the total audience). – Chicago Children’s Theatre
The Illinois Film Office Live Theater tax credit allowed us to offset the unusually high technical budget for our May 2025 production of Into the Woods, and to cover honoraria for our orchestra musicians. – DLO Musical Theater, Danville
While the impact of accessed funding was meaningful, not all the credits were used, with around $430,000 left on the table. Higher budget theaters have made strong use of the program. Demand from tiers 5 and 7 even exceeded the available funding, meaning some will need to wait 1-2 fiscal years to receive the credit.
On the other hand, all other eligible tiers had unclaimed credits, with Tier 2 leaving more than $200,000 on the table and Tier 6 more than $100,000. And, while applications this year that aren’t funded will roll over to a future fiscal year, the unused funds do not.
The state’s FY2027 budget provides another $2 million for the program. If you are associated with a nonprofit theater with an annual operating budget over $25,000, and you haven’t tried to access these funds, now is the time to get up to speed on this program.
Since the Nonprofit Theater Tax Credit program launched, Arts Alliance has been a key partner in promoting it and providing technical assistance to those navigating this new program. Through our Help Desk and outreach efforts, we’ve heard many questions and uncovered both real and perceived barriers to accessing these funds. If you have any lingering questions about this program, visit our FAQ resource to learn more.
Megan Lewis, AICP, is the Public Funding Navigator for Arts Alliance Illinois and brings more than 20 years of experience in project management, organizational development, strategic planning, relationship building, and project concepting. At Arts Alliance she oversees the Public Funding Navigator program, which conducts research and provides technical support to Illinois’s creative sector. A certified urban planner, Megan brings her ability to understand the important connection that the arts and culture sector brings to community health and vitality. She holds a BA in economics from Indiana University and master’s degree in regional planning from the University of Pennsylvania.
