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Taxes & Incentives

People say we’re business-friendlier.

Indiana is a cost-effective state in which to build a business, as the state’s total business taxes are lower than the adjoining states. This is due in part to Indiana having one of the best workers’ compensation rates and unemployment tax rates. In addition, the state’s average weekly wage is very competitive and the ease of doing business notable.

 

Business Expansion Incentives

Since every company has different needs, all business assistance programs offered by Indiana are project specific. The focus of all incentive programs is placed on the specific needs of each individual customer. There are local incentives for property tax abatements and tax increment financing, as well as cooperation with the state on infrastructure programs.

Each local governmental unit determines the extent of their programs and The Indiana Economic Development Corporation administers the state’s incentive programs. The individual project’s new job creation and value of new real property and equipment are important factors. Various other programs are available including Tax Increment Financing (TIF) and participation with the state on its infrastructure program.

State Incentive Programs

The state of Indiana offers many business tax incentives, corporate tax credits and economic development programs for companies creating new jobs and investment in our state. Indiana’s business tax structure is also very competitive. Indiana’s corporate income tax is decreasing from the current 6.5% to 4.9% by 2021. As the decrease is phased in, the tax rate will drop each year. Indiana has a flat state corporate tax rate on adjusted gross income and no gross receipts tax or inventory tax.

In addition, Indiana offers”

  • Economic Development for a Growing Economy (EDGE) Tax Credit
  • Hoosier Business Investment Tax Credit (HBITC)
  • Skills Enhancement Fund (SEF)
  • Industrial Development Grant Fund (IDGF)
  • Headquarters Relocation Tax Credit
  • Industrial Recovery Tax Credit
  • Venture Capital Investment Tax Credit
  • R&D Tax Credit
  • Patent Income Exemption
  • Community Revitalization Enhancement District Tax Credit
  • Capital Access Program

Tax Abatement & Real Estate Taxes

Tax abatement is offered by the local governmental taxing unit on real estate and equipment. Real estate can qualify for a three year, seven year or ten-year abatement on new buildings and improvements or increases in assessed value on remodeled or renovated structures. Land does not qualify. Manufacturing equipment (new to the State of Indiana) can qualify for a deduction from assessed value over a ten-year period. Equipment not used in direct production, such as office equipment, does not qualify.

Business Real Estate Taxes
Local governing bodies may now grant a 1 or 2-year tax abatement on a commercial or industrial building if a building has been vacant for at least one year and taxpayer is going to lease or occupy the building. The general abatement procedural rules and filing requirements apply. The taxes are abated as follows: Year 1: 100% of the assessed value of the building or portion of the building being occupied by the owner or tenant Year 2: 50% of the assessed value

Business Personal Property Taxes
Local governing body may now grant tax abatement for equipment that was previously used in Indiana. The equipment must be acquired in an arm’s length transaction with an unaffiliated party.

Tax Incremental Financing
Bonds issued by a local municipality may be used to finance infrastructure improvements and new construction areas needing growth or rehabilitation. The infrastructure pays for itself through increased tax revenues (resulting from the property valuation increases) which are pledged for repayment of the bonds.

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