Indiana Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Indiana, and their state economic development professionals gave us some details (Indiana EDC site click here).
Indiana offers a decent collection of credits and incentives for new and existing businesses.  CNBC ranked Indiana #13 in their 2015 America’s Top States for Business survey (Georgia was #5 in the same survey).    
Incentives and Credits include:

Economic Development for a Growing Economy Tax Credit (EDGE):

Based on employment, the credit is calculated as a percentage of the expected increased tax withholdings generated from new jobs created by a company.  This credit can be claimed regardless of whether the company has a state income tax liability or not.

Skills Enhancement Fund (SEF):

Designed to help tailor a workforce that meets a company’s needs. The grant reimburses a portion (typically 50%) of eligible training costs over a period of two full calendar years from the commencement of the project. Eligible expenses include everything except: Orientation Related To New Hires and Federally Mandated Safety Training (OSHA).

Hoosier Business Investment Tax Credit (HBI):

Corporate income tax credit calculated as a percentage of the eligible capital investment needed to support the project. Eligible capital investment includes new machinery and building costs associated with the project. In order to claim this credit, a company must have a state corporate income tax liability.

Headquarters Relocation Tax Credit (HRTC):

HRTC provides a tax credit to corporations that relocate their headquarters to Indiana. The credit equals half the moving costs and is assessed against the corporation’s state tax liability.

Industrial Recovery Tax Credit:

Provides an incentive for companies to invest in facilities requiring significant rehabilitation or remodeling expense. The tax credit amount depends on the age of the facility being rehabilitated. Eligible sites must have been in service at least 15 years, with at least 5,000 interior square meters of space that has been at least 75% percent vacant for one year or more.

Research & Development Incentives:

Two tax incentives targeted at encouraging investments in research and development. Taxpayers may receive a credit against their Indiana state income tax liability calculated as a percentage of qualified research expenses. In addition, taxpayers may be refunded sales tax paid on purchases of qualified research and development equipment.
Compared to Georgia, Indiana has:
  • Slightly higher corporate but far lower personal income tax rates.
  • Higher combined state and local tax burden
  • A narrower range of incentives.
  • Pre-approval required for all incentives
To summarize, Indiana is about average for business tax incentives in a central Midwest location.

DaleSig