Indiana Economic Development Directory

Indiana State Incentives

CORPORATE TAX RATE: Indiana’s corporate tax rate was reduced from 8.5 percent to 6.5 percent. 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.

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.

PROPERTY TAX ABATEMENT: The law was changed to allow local governments the flexibility to structure the property tax abatement schedules however they wish over ten years. The previous statute defined the schedule. This will give local economic development leaders more control over the incentive packages they offer to companies.

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 two to one year. 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.

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.

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.

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.

HOOSIER ALTERNATIVE FUEL VEHICLE MANUFACTURER TAX CREDIT: Established by IC 6-3.1-31.9, it provides a credit up to 15 percent of the qualified investment for the manufacture of alternative fuel vehicles. An applicant must compensate its employees at least 150 percent of the state’s hourly minimum wage and agree to maintain operations for at least 10 years.

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.

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 ten 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.

HEADQUARTERS RELOCATION TAX CREDIT: When a business relocates its corporate headquarters (defined as the location of the principal office of the principal executives) 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 $100 million to qualify and after relocation, the corporation must have 75 employees in Indiana.

MEDIA PRODUCTION EXPENDITURE TAX CREDIT (MPETC): Established by IC 6-3.1-32, it provides individuals and companies a credit of up to 15 percent on the amount spent in Indiana for qualified production expenditures. The MPETC is refundable; therefore, if the amount of the MPETC exceeds the taxpayer’s state income tax liability for that taxable year, the taxpayer is entitled to a refund of the excess of the credit amount over their state income tax liability. The total amount of tax credits certified by the IEDC for any fiscal year may not exceed $2.5 million, but there is no cap per project.

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 percent 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 & DEVELOPMENT (R&D) SALES TAX EXEMPTION: Authorized by IC 6-2.5-5-40, it provides a refund of 50 percent 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 that occur after June 30, 2005

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 and SMALL BUSINESS TECHNOLOGY TRANSFER (STTR) programs stimulate technological innovation and provide opportunities for Indiana small businesses to participate in federally funded research and development programs.