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After just passing the midway point of the year, the Indiana economy looks to be on track for a record year. At the half way point, the Indiana Economic Development Corp. (IEDC) had already secured 164 commitments totaling more than $5.4 billion in planned capital investment (already a 45 percent increase from 2016’s end of year number) along with 17,823 planned new jobs. Meaning, Indiana is winning competitive site selection decisions. Why? What is the IEDC and Indiana doing better than other states? What incentives match your project needs?

As 2017 continues to be a robust year for Indiana and the IEDC, let’s take a closer look at the numbers. Specifically, the manufacturing and technology sectors:

  1. Manufacturing: With one-fifth of all Hoosiers working at more than 8,500 manufacturing facilities throughout the state, the industry continues to strengthen Indiana’s economy. At the year’s midway point, manufacturing companies account for 46 percent of expansion and job creation commitments made to the IEDC. So far, 76 manufacturers have committed to growing in Indiana, together planning more than $4 billion in planned investment and creating up to 4,967 new jobs.
  2. Technology: So far in 2017, the IEDC has secured 39 commitments from tech and tech-enabled firms. Together, these firms plan to create 5,266 Hoosier jobs in the coming years, accounting for more than 29 percent of new jobs committed to the organization in 2017. [1]

New Gov. Eric Holcomb has kept stride with previous Indiana administrations, stating “With an unwavering focus on taking Indiana to the next level, we will continue to grow our economy by developing our workforce, investing in infrastructure and delivering great government service to ensure that Indiana is a hub for innovation and a magnet for jobs.”

So what tools are they using to accomplish these goals? One very useful tool McGuire Sponsel has seen in action is the EDGE payroll credit. While nearby states have similar programs, Indiana’s EDGE program has been one of the best incentives for companies considering where to hire next.

What is the EDGE Tax Credit?
In reality, the EDGE Tax Credit is by far the most commonly awarded and utilized state level economic incentive in Indiana. The EDGE Tax Credit provides a refundable corporate income tax credit that is calculated as a percentage of the expected increased tax withholdings generated from the new jobs.

In practice, this credit will essentially turn the jobs created from the new project into a tax savings plan for the company. The refundable corporate income tax credit is calculated as a percentage (not to exceed 100 percent) of the expected increased tax withholdings generated from new jobs creation. The credit certification is phased in annually for up to 10 years based upon the employment ramp-up outlined by the business.

Who Can Qualify for the EDGE Tax Credit?
To be eligible for the tax credit a company must have a project that will result in net new jobs that were not previously performed by employees of the applicant. As the EDGE Tax Credit is designed as a discretionary benefit, this process is a negotiation. A company must present options, challenges and the economic impact their project has on the state and local community. This process allows officials to consider their options and to weigh the total impact on the Hoosier economy.

What is the Value of the EDGE Tax Credit?
Since the EDGE Tax Credit is based on the state withholding tax collected from net new employees, both the number of jobs and wages of new employees will affect potential value. Additionally, the IEDC has discretionary authority to provide a calculated percentage of the expected increase in tax withholdings of net new jobs. Awards have been known to range from 30 percent up to 80 percent depending on the value of the project and its competitiveness.

The IEDC may consider investment, total economic impact, industry, location and other factors in determining if and to what extent they will provide EDGE Tax Credit support. Depending on the situation, the EDGE Tax Credit may provide somewhere between $4,000 and $10,000 per job. Importantly, unlike some other economic development credits, EDGE Tax Credits are refundable, meaning any certified amounts can not only offset tax liability, but will be paid out even in excess of tax liability in a given year.

How Can You Take Advantage of the EDGE Tax Credit?
While EDGE Tax Credits can be extremely valuable, receiving an offer and ultimately receiving value from the EDGE Tax Credit can be a challenge for many businesses. From identifying opportunity, to managing interactions with the IEDC, to meeting compliance requirements, the roadmap to EDGE Tax Credit value is winding.

Having a site selection and economic incentive advisor that has experience with the IEDC is a great first step. From there, you’ll need to know how to identify a qualifying project. At McGuire Sponsel, we believe that rapidly growing companies, especially multi-state companies, need to have a strategic location and incentive plan. Our planning services focus on multi-state incentive program education, collaborative planning and ongoing opportunity assessment. If your company is investing and adding jobs, incentives like the EDGE Tax Credit could bring you hundreds of thousands of dollars or even more. To schedule your incentive planning session, call McGuire Sponsel at 317-564-5000 or email sbrunson@mcguiresponsel.com or ddalton@mcguiresponsel.com

 

[1] http://www.batesvilleheraldtribune.com/business/thousands-of-jobs-coming-to-indiana/article_eb2992ec-c238-56f0-b7f9-cae6878d2dce.html

 

Stephen Brunson

Stephen Brunson

As a Principal at McGuire Sponsel, Steve Brunson helps growing businesses across the country through location decisions while negotiating valuable economic incentives. He works closely with advisors to coordinate strategies that bring the greatest benefit to each client he serves. View Steve's bio.

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