Northeast Indiana has a strong track record of attracting and supporting new business investment and economic development through the use of competitive incentives.
In Northeast Indiana, we are here for your business. Serving as a single point of contact, we collaborate closely the with state, regional, and local entities to secure a competitive incentive package for to help your business succeed.
The Tax Cuts and Jobs Act of 2017 (P.L. 115-97) allowed governors to nominate certain census tracts as Opportunity Zones, subject to approval from the U.S. Department of Treasury. Up to 25 percent of a state’s low-income census tracts were eligible for designation, which permitted Indiana to nominate up to 156 census tracts as Opportunity Zones. States were required to submit their lists of Opportunity Zones to the U.S. Department of Treasury no later than April 20.
Opportunity Zones provide federal capital gains tax advantages for investments made in these areas. This designation is intended to attract capital investment into areas that are economically distressed.
To be eligible as an Opportunity Zone, census tracts had to qualify as “low-income”. To do so, the census tract must have met one of the following requirements:
- The tract has a poverty rate of at least 20%; OR
- (A) For a census tract in a metropolitan area, the tract’s median family income does not exceed 80% of the greater of: the metropolitan area median family income or the statewide median family income; or (B) For a census tract in a non-metropolitan area, the tract does not exceed 80% of the statewide median family income.
Investing in a qualified business within an Opportunity Zone, in exchange for stock.
Taking a partnership interest in a Qualified Opportunity Zone partnership.
Property within Opportunity Zones, meeting thresholds for substantial improvement.
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Property Tax Abatements
Property tax abatements can be offered on a 10-year basis for new personal and real property tax investments. These abatements are typically phased over a 10-year period (e.g. Year 1: 100 percent, Year 2: 90 percent, Year 3: 80 percent...) but recent legislative changes allow the community to abate up to 100 percent over a 10-year period.
Tax Increment Financing (TIF)
TIF allows a community to collect the property tax revenues resulting from the increased assessed value resulting from new investments within a new or established TIF district. The additional revenues can be used to support site infrastructure improvements but can also be used on a cash basis to support new business investment. Unlike many states, Indiana legislation allows for creative use of TIF to support new business projects.
Grants are available to support new business investments on a discretionary basis. Through the use of the local option Community Economic Development Income Tax (CEDIT), Tax Increment Financing (TIF), and various other pools of money, our communities have offered cash grants to support new business development.
Economic Development Revenue Bond
These bonds provide financing for economic development projects. The proceeds from the bonds, which can be issued by a local government, are loaned to businesses to pay for buildings or other capital investment projects. The bonds must be paid back by the company. As the issuer of the bonds, the local government’s participation typically results in favorable interest rates and longer terms. Most often, these bonds are tax exempt.
Land at No or Reduced Cost
Many communities in our region have acquired property for industrial development purposes. In some cases, this land can be made available at a reduced cost or no cost to support new business development projects that are accompanied by the creation of quality jobs.
Skills Enhancement Fund
The Skills Enhancement Fund (SEF) provides assistance to businesses to support training and upgrading skills of employees required to support new capital investment. The grant may be provided to reimburse a portion (typically 50%) of eligible training costs over a period of two full calendar years from the commencement of the project.
Patent Income Tax Exemption
Certain income derived from qualified patents and earned by a taxpayer are exempt from taxation. The Tax Exemption for Patent-derived Income defines qualified patents to include only utility patents and plant patents. The total amount of exemptions claimed by a taxpayer in a taxable year may not exceed $5 million.
Venture Capital Investment Tax Credit (VCI)
The Venture Capital Investment Tax Credit program improves access to capital for fast growing Indiana companies by providing individual and corporate investors an additional incentive to invest in early stage firms. Investors who provide qualified debt or equity capital to Indiana companies receive a credit against their Indiana tax liability.
Indiana state incentives are administered by the Indiana Economic Development Corporation (IEDC). The best mix of incentives is determined on a project basis while the amounts of each incentive are based on a number of factors, including the number of new jobs, capital investment, and average wages. The most commonly used incentives are summarized below.
Economic Development for a Growing Economy (EDGE) Tax Credit
The refundable corporate income tax credit is calculated as a percentage (not to exceed 100 percent) of the expected increased tax withholdings generated from new jobs creation. The credit certification is phased in annually for up to 10 years based upon the employment ramp-up outlined by the business.
Hoosier Business Investment Tax Credit (HBITC)
The non-refundable corporate income tax credits are calculated as a percentage of the eligible capital investment to support the project. 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.
Industrial Development Grant Fund (IDGF)
This grant provides money to local governments for off-site infrastructure projects associated with an expansion of an existing Indiana company or the location of a new facility in Indiana. State funding through the IDGF program must be matched by a combination of local government and company financial support.
Projects which may qualify include:
- extension and completion of sanitary sewer lines;
- storm sewers, and other related drainage facilities;
- roads and streets;
- rail spurs and sidings;
- information and high technology infrastructure;
- preparation of surveys, plans, and specifications for the construction of publicly owned and operated facilities, utilities and services.
R&D Tax Credit
The Research and Development (R&D) Tax Credit provides an incentive for business investment in Indiana by providing a credit against state tax liability for qualified company research expenses. The R&D tax credit (also known as the Research Expense Tax Credit) is based on the increase in Indiana R&D over the prior three-year base.
Headquarters Relocation Tax Credit
When a business relocates its corporate headquarters (defined as the location of the principal office of the principal executives) to Indiana, it is entitled to a credit against its state tax liability equal to half of the costs incurred in relocating the headquarters. A company must have worldwide annual revenue of at least $100 million to qualify.
The credit equals 50 percent of a corporation’s costs of relocating its headquarters to Indiana. An eligible corporation may use the credit to offset the corporation’s Indiana personal and corporate adjusted gross income tax and financial institutions tax. A nine-year carry forward applies to any unused part of the credit.
In Northeast Indiana, we’re strengthening our local economy by building an environment that’s good for business—your business. Contact us today to learn more about how we can help you start or expand your business.Email us