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 adjoining states. This is due in part to Indiana having one of the lowest workers’ compensation rates and unemployment tax rates. In addition, the state’s average weekly wage is very competitive and the ease of doing business in Indiana is notable and offer businesses a competitive advantage over other locations.
Since every company has different needs, all business assistance programs offered in 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 (TIF) benefits, as well as cooperation with the state on its 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, wages and capital investment in new real property and equipment are important factors. Various other programs are available including tax abatement, benefits of Tax Increment Financing (TIF), Urban Enterprise Zones (UEZs) and participation with the state on its infrastructure program.
State Incentive Programs
The State of Indiana offers many business incentives, including corporate tax credits and economic development programs for companies creating new jobs and investment in our state. Indiana’s business tax structure is also extremely competitive. Indiana’s corporate income tax is decreasing from the current 6.5% down 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 is offered by local governmental taxing units on both real estate and equipment. Real estate can qualify for up to ten years of tax abatement. New buildings and improvements on existing structures may also receive tax abatement on resulting increases in assessed value. Land does not qualify for tax abatement in Indiana. Manufacturing equipment (new to the state of Indiana) can qualify for tax abatement. The number of years can vary but generally range from three, five, or ten years. Equipment not used in direct production, such as office equipment, does not qualify.
Enhancement to Real Property Tax Abatement
Local governing bodies may now grant a 1- or 2-year tax abatement on a commercial or industrial building if the building has been vacant for at least one year and the 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.
Enhancement to Business Personal Property Tax Abatement
Local governing bodies 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 Increment Financing (TIF)
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.