Innovation Development Districts (IDD): Beginning July 1, 2022, newly enacted legislation allows for the Indiana Economic Development Corporation (IEDC), in partnership with local governments, to designate parcels of land as “Innovation Development Districts” which provides for a dedicated state and local funding source for making grants, loans, and other investments for spurring economic development activity within a district for up to 30 years. Designated IDDs act similar to tax increment financing districts (TIF or tax allocation areas) dedicating both state and local incremental taxes generated within the IDD including personal income taxes, sales taxes, and property taxes. As part of the IDD designation, local governments can negotiate a property tax sharing of at least 12% of the total tax increment within the IDD. At the discretion of the IEDC and the local tax agreement, real and personal property improvements may be exempted from local property taxation. Through the Indiana Finance Authority, bonds can be issued payable from the projected tax increment of the IDD to pay for eligible expenses.
Economic Development for a Growing Economy Program (EDGE): A refundable tax credit is available to companies that create and/or retain jobs and make capital investments in the state. The EDGE credit is calculated as a percentage (up to 100%) of the projected tax withholdings that will be generated by the newly created and/or retained jobs. Local government support is required for projects to be approved for state EDGE credits. New for FY2023, awardees of EDGE awards can have their benefits accelerated at the discretion of the IEDC through awarding of direct payments from the state, rather than income tax refunds. Recent legislation also extended EDGE award terms for up to twenty years from the previous ten years.
Hoosier Business Investment Tax Credit Program (HBI): Companies that create new jobs and make capital improvements to a business facility may qualify for this non-refundable tax credit. The maximum credit is equal to 10% of qualified capital investment. The credit may be certified annually, based on the phase-in of eligible capital investment, over a period of two full calendar years from the commencement of the project. Unused credits may be carried forward for up to 9 years. Local government support is required for projects to be approved for state HBI credits. HBI has been expanded to include refurbished machinery, technology-integrated equipment, 3D and other digital printing used in manufacturing to be considered a qualified investment. For taxable years beginning after December 31, 2018, and before January 1, 2030, digital manufacturing equipment can qualify for a 15% credit as opposed to the standard 10% or 25% in the case of logistics investment.
Headquarters Relocation Tax Credit: Businesses that relocate a corporate headquarters operation to Indiana are eligible to receive a tax credit of up to 50% of business relocation costs including capital investment. The credit is non-refundable and non-transferable; however unused credits can be carried forward for up to 9 years. Principal offices of divisions and research and centers are also eligible for the credit. The HQRTC is expanded to allow companies who have received at least $4M in venture capital within 6 months of submitting an application to the IEDC for a Small HQRTC. The company must commit to relocating either its corporate headquarters or the number of jobs that equal 80% of the total payroll to Indiana for at least 5 consecutive years after first incurring relocation expenses. This new subset of companies is subject to a $5M cap for each state fiscal year, but the credit is refundable for these companies.
Redevelopment Tax Credit: Provides tax credits for eligible redevelopment investments made in the state. The tax credit is equal to up to 30% of qualified investment made by the taxpayer during the taxable year. The first $20 million of a redevelopment tax credit award is transferable with amounts above $20 million required to be repaid by the awardee after a period of ten years from the initial award. For projects with over $100 million in qualifying investment, the repayment provision can be waived at the discretion of the IEDC.
Research and Development Tax Credit: Provides a tax credit equal to 15% of qualified research expenses on the first $1 million of investment and 10% for the expenses exceeding $1 million. This non-refundable credit may be carried forward for up to 10 years.
Venture Capital Investment Tax Credit (VCI): A transferable tax credit is available to investors making qualifying debt or equity capital investments in Indiana start-ups. The tax credit is equivalent to 20% of the qualifying investment up to $1 million. The tax credit may be carried forward for up to five years.
Industrial Development Grant Fund (IDGF): This program provides grant assistance to municipalities and other eligible entities. The grant may be provided to reimburse up to 50 percent, of eligible off-site public infrastructure costs to support a project site over a period of two full calendar years from the commencement date of the project.
Skills Enhancement Fund (SEF): This program provides reimbursable grants to businesses for costs associated with training and upgrading the skills of employees. Grants are typically valued at up to 50% of eligible training costs over a 2-year period.
Sales & Use Tax Exemptions: Manufacturing and research & development equipment (including computers, computer software, software-as-a-service, and testing equipment) are exempt from sales and use tax.
Data Center Tax Exemptions: A sales tax exemption on data processing equipment and electricity used at the facility is available to data center projects investing at least $150 million over a five-year period. 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 exemption on personal property tax is also available at the discretion of the local government(s).
Last updated: March 2022