Indiana Incentives and Workforce Development Guide
For a list of Indiana economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.
In 2012, Indiana became the 23rd state in the nation to enact a right-to-work bill into law. Right-to-work gives Hoosier workers the freedom to decide individually if they will financially support a union and it gives companies the flexibility to respond more effectively to the needs of the marketplace.
- Industrial Development Grant Fund :
- Provides money to local governments for off-site infrastructure projects associated with an expansion of an existing Indiana company or the location of a new facility in Indiana. State funding through the IDGF program must be matched by a combination of local government and company financial support.
- Corporate Tax Rate :
- Indiana’s corporate tax rate was reduced from 8.5% to 6.5%. This will be phased in from July 1, 2012 to July 1, 2015. The legislature reduced this tax in order to improve upon Indiana’s existing business climate and bring it more in line with rates in other states.
- Economic Development For A Growing Economy (EDGE) :
- Created to reward companies creating new jobs and contributing to the growth of Hoosier income. Credits are calculated as a percentage of payroll tax withholding for net new Indiana jobs and may be awarded for a term of up to 10 years. EDGE is a refundable tax credit that can be offered in situations where Indiana is competing against another state or country for a company’s site location investment. The company must commit to maintaining operations in Indiana for at least two years beyond the term of its EDGE award.
- Venture Capital Investment (VCI) Tax Credit :
- The $200 filing fee was eliminated for two years until June 30, 2013. The VCI tax credit cap per qualifying business was raised from $500,000 to $1 million. This change provides greater opportunities for young companies to attract capital and grow in Indiana.
- Industrial Recovery Tax Credit :
- The General Assembly reduced the statutory thresholds in order to allow more vacant buildings in the state to be eligible for this program. The minimum in-service period for building was reduced from 20 to 15 years. The minimum vacancy period was reduced from one year to zero. The minimum square footage for building requirement was reduced from 250,000 square feet (50,000 square feet from 2011 to 2014 and 100,000 square feet starting in 2015). These changes may help bring more vacant facilities back into service by providing an incentive to companies for rehabilitation expenses.
- Hoosier Business Investment Tax Credit (HBITC) :
- Established to encourage capital investment in Indiana by providing a credit against a company’s Indiana tax liability. The credit amount is based on a company’s qualified capital investment with the final credit amount determined by the IEDC based on an analysis of the economic benefits of the proposed investment.
- Hoosier Alternative Fuel Vehicle Manufacturer Tax Credit :
- Established by IC 6-3.1-31.9, it provides a credit up to 15% of the qualified investment for the manufacture of alternative fuel vehicles. An applicant must compensate its employees at least 150% of the state’s hourly minimum wage and agree to maintain operations for at least 10 years.
- Headquarters Relocation Tax Credit :
- When a business relocates its corporate headquarters, divisional headquarters or R&D facility to Indiana, it is entitled to a credit against its state tax liability equal to half of the costs incurred in relocating the headquarters. A company must have a worldwide annual revenue of at least $50 million to qualify and after relocation, the corporation must have 75 employees in Indiana.
- Research and Development (R&D) Tax Credit :
- Authorized by IC 6-3.1-4-1 and administered by the Indiana Department of Revenue, it provides a credit against state tax liability for qualified company research expenses and is based on the increase in Indiana R&D over the prior three-year base. In the base year, research expenses must have been at least half of the research expenses in the current year. The credit equals 15% of qualified research expenses on the first $1 million of investment. The tax credit is applied against income tax liability and may be carried forward 10 years. There is no carry back, and the credit is nonrefundable.
- Research and Development (R&D) Sales Tax Exemption :
- Authorized by IC 6-2.5-5-40, it provides a refund of 50% of the Indiana sales taxes paid on purchases of eligible R&D equipment purchased after June 30, 2007. Taxpayers may also file a claim for the refund for tax paid on retail transactions.
- Property Tax Abatement :
- The law was changed to allow local governments the flexibility to structure the property tax abatement schedules however they wish over 10 years. The previous statute defined the schedule. This will give local economic development leaders more control over the incentive packages they offer to companies.
- Skills Enhancement Fund (SEF) :
- A tool to encourage companies to invest in their existing workforce and train new employees. It provides reimbursement for eligible training expenses over a two-year term. Companies may reapply for additional SEF Funds after their initial two-year term.
Other Incentives and Business Initiatives
- Certified Technology Park Program :
- Created as a tool to support the attraction and growth of high-technology business in Indiana. Designation as a Certified Tech Park allows for the local recapture of certain state and local tax revenue which can be invested in the development of the park.
- Indiana Shovel Ready Program :
- Reduces potential costs of site development for businesses and enhances the marketability of certified sites. The goals of the program are to:
- Certify sites and existing buildings to expedite the location and permitting processes for business development
- Help local communities identify and prepare sites and existing buildings for economic development
- Identify and fast track the state and local permits necessary for a specific site (dependent on the end user)
- Small Business Innovation Research Initiative & Small Business Technology Transfer (STTR) :
- Programs that stimulate technological innovation and provide opportunities for Indiana small businesses to participate in federally funded research and development programs.