Indiana Incentive Programs
To attract and retain growing businesses, state and local governments often provide valuable economicincentives. McGuire Sponsel’s Location Advisory team brings deep knowledge of local incentives to achieve maximum value togrowing businesses in Indiana and beyond.
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State Incentives
- Employment
- Investment
- Training
Economic Development for a Growing Economy Tax Credits (EDGE)
EDGE credits are offered on a discretionary basis by the Indiana Economic Development Corporation (IEDC). EDGE credits provide refundable tax credits to companies which commit to adding net new jobs and making capital investments in the State. EDGE credits are calculated as a percentage (up to 100%) of the projected tax withholdings that will be generated by the newly created jobs for up to ten years. Credits can be claimed at the corporate, flow-through or individual level and offset Indiana income tax. In the event that credits exceed Indiana income tax for a given year, remaining credits may be “refunded” to the company or individual. EDGE credits should be secured in advance of any project related commitments to hiring or investment in the State.
Hoosier Business Investment Tax Credit (HBI)
HBI credits are non-refundable income tax credits which may be offered on a discretionary basis by the IEDC to companies which commit to capital investment and job creation in Indiana. HBI credits provide up to 10% of qualifying capital investment (15% for digital manufacturing equipment; 25% for logistics investments). HBI credits can be claimed at the corporate, flow-through or individual level. HBI credits can be carried forward for up to nine years.
Skills Enhancement Fund (SEF)
SEF grants may be offered on a discretionary basis by the IEDC in support of companies seeking to locate or expand in Indiana. These grants reimburse 50% of eligible training costs over a 2-year period up to a maximum grant value determined by the IEDC. SEF grants are provided to competitive projects considering the State of Indiana.
Other State Incentive Programs
Headquarters Relocation Tax Credit (HQRTC)
The HQRTC is an income tax credit provided on a discretionary basis to companies that relocate their headquarters to Indiana. Companies must have at least $50 million in revenue and create at least 75 jobs to qualify for the credit. HQRTC credits must be secured in advance of public decisions relocate operations. HQRTC credit amounts are set by the IEDC and may offset up to 50% of relocation costs.
Small Headquarters Relocation Tax Credit (S-HQRTC)
The S-HQRTC may be provided on a discretionary basis to small companies considering the relocation of headquarters to Indiana. To qualify for an S-HQRTC, a company must have received a venture capital investment of greater than $4M within six months of submitting an application for the S-HQRTC. Companies that receive S-HQRTC are eligible for refundable tax credits for up to 50% of qualifying relocation costs. To qualify for SHQRTC, companies must either relocate their headquarters or 80% of their payroll to Indiana.
Redevelopment Tax Credit (RTC)
The RTC provides an incentive for investment in qualified redevelopment sites which may include vacant land, brownfield sites over 50 acres or qualifying industrial facilities requiring redevelopment. Credits may be provided up to 30% of qualifying expenses. RTC credits may be monetized via assignment to other taxpayers.
Credits amounts above $7M must be repaid. The State provides for a maximum of $50M in tax credit awards annually and awards credits on a competitive basis.
Venture Capital Investment Tax Credit (VCI)
The VCI tax credit is available to investors making qualifying debt or equity capital investments in Indiana based technology companies. A company must be qualified as a Qualified Indiana Business (QIB) prior to any qualifying investments. The tax credit is equivalent to 20% of the qualifying investment up to a maximum credit of $1 million. The tax credit may be carried forward for up to five years or transferred to another taxpayer.
Research & Development Tax Credit (R&D)
The Indiana R&D tax credit provides an income tax credit equal to 15% of incremental qualified research expenses on the first $1 million of qualified investment and 10% for qualified expenses exceeding $1 million. The Indiana R&D credit generally follows federal definitions and guidelines for qualifying research. Qualifying research must take place within the State of Indiana. The credit is non-refundable credit may be carried forward for up to 10 years.
Data Center Exemption
Indiana provides for a sales tax exemption on data processing equipment and electricity used at a qualifying data center. A facility investing at least $150 million over a five-year period can qualify for the exemptions. The sales tax exemption is awarded for 25 years and can be extended to 50 years for projects investing at least $750 million. A negotiated economic revitalization area exemption on personal property tax for up to 20 years may be provided at the discretion of local municipalities.
Local Incentives
To attract and retain growing businesses, state and local governments often provide valuable economic incentives, including tax abatements, payroll tax credits, infrastructure grants, low- or no-interest loans, training grants, tax increment financing, and more.
When you are considering relocating, expanding, making capital investments, or adding new jobs, McGuire Sponsel can help you take advantage of these economic incentives and guide you through our strategic growth planning process.
Property Tax Incentives
Indiana municipalities tax both real and personal property, including manufacturing equipment. Municipalities have several available options to mitigate these taxes. Property tax abatement tools include enterprise zones, economic revitalization areas, economic development target areas and tax increment financing.
Real Property Tax Abatement
Indiana municipalities may provide real property tax abatement by providing an authorizing resolution within a duly established economic revitalization area (ERA) or economic development target area (EDTA). Real property abatements may not exceed 10 years. Deductions from assessed value provided by these abatements can range from 0% to 100% and are established by the local municipality.
Personal Property Tax Abatement
Indiana municipalities may provide personal property tax abatement for manufacturing equipment, warehousing and distribution equipment and IT equipment by providing an authorizing resolution within a duly established economic revitalization area (ERA). Personal property abatements may not exceed 20 years. Deductions from assessed value provided by these abatements can range from 0% to 100% and are established by the authorizing resolution.
Tax Increment Financing
Indiana municipalities may utilize tax increment financing (TIF) to capture taxes derived from incremental increases in real and personal property within an established TIF district. TIF can be utilized for public infrastructure or for payment of debt related to public or private expenditures. TIF is most often utilized for development projects, redevelopment projects and infrastructure projects.
Economic Development Riders
Indiana utility providers may provide reductions in rates via Economic Development Riders for qualifying economic development projects.