Indiana offers a handful of tax incentive programs for small and large businesses alike. Whether you own an operation in Indiana, want to start a business, or plan to relocate to the Hoosier state, take some time to brush up on the tax credits and exemptions you’re qualified for.
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Indiana tax incentives for businesses
Community Revitalization Enhancement District Tax Credit
Indiana’s Community Revitalization Enhancement District Tax Credit rewards businesses for investing in rehabilitating or redeveloping a property within a designated revitalization district. The credit amount is equal to the investment amount multiplied by 25%.
Eligible qualified investment costs include acquisition costs, architectural and engineering fees, construction management and demolition costs, environmental remediation costs, and permitting costs. You need to get your investment approved first before you make the contribution.
Learn more about the credit here.
Film and Media Tax Credit
Like many other states, Indiana has a Film and Media Tax Credit that incentivizes qualified production companies to set their projects in Indiana. Eligible production projects—including feature-length films, TV series, music productions, and digital media productions—can get a credit of up to 30% to offset production expenses incurred within Indiana.
The credit breakdown is a 20% base incentive on qualified expenditures, a 5% additional incentive for hiring local workers, and another 5% incentive when you incorporate Indiana branding in your final project.
Find out how to apply for the credit here.
Research Expense Credits
Indiana offers a research expense tax credit to companies that conduct qualified research.
The credit amount is equal to a business’s qualified research expense for the taxable year, minus the base period amount up to $1 million, then multiplied by 15%. A credit of up to 10% is applied to additional research expenses over a base period amount greater than $1 million.
Qualified research expenses are the sum of the following:
- Wages paid to employees;
- Supplies for conducting the qualified research; and
- Services for qualified research or supervision of research activities.
Get more information on the research expense credit here.
Plus, learn exactly what the federal research and development credit is—and how to qualify for it.
Headquarters Relocation Tax Credit
Indiana’s Headquarters Relocation Tax Credit gives a corporate tax credit to companies that relocate their headquarters to Indiana. The credit amount is equal to up to 50% of a company’s qualified relocation costs, including the cost of moving, purchasing new equipment, and purchasing new buildings.
To qualify for the credit, a business must meet the following criteria:
- Be engaged in interstate commerce
- Maintain a corporate headquarters at a location outside Indiana
- Have not previously maintained a corporate headquarters in Indiana
- Have annual worldwide revenues of at least $50 million during the taxable year immediately preceding the business’ application for a tax credit
- Employ at least 75 employees in Indiana after relocating headquarters
Indiana also offers a Small Headquarters Relocation Tax Credit (S-HRTC) to small, high-growth companies willing to move their headquarters to Indiana. Qualified small companies can also get up to 50% of their relocation costs covered with the credit, as long as they meet the below criteria:
- Be engaged in interstate commerce
- Maintain a corporate headquarters at a location outside Indiana
- Have not previously maintained a corporate headquarters in Indiana
- Have closed on or will close on at least $4 million in venture capital within six months of the business application for a tax credit
- Relocate one of the following:
- Corporate headquarters, or
- The number of jobs equal to 80% of the company’s total payroll
- Employ at least ten employees in Indiana after relocating a corporate headquarters to Indiana
Apply for the credit and get more information here.
Economic Development for a Growing Economy Tax Credit
The Economic Development for a Growing Economy (EDGE) Tax Credit incentivizes businesses to create new jobs, invest capital in Indiana’s economy, and raise the standard of living for Indiana residents.
To qualify for the EDGE corporate tax credit, a company must undertake a project that meets the following criteria:
- Will result in net new jobs that were not previously performed by employees
- Will increase opportunities for employment and strengthen the state’s economy
- Receives support from the political subdivisions or municipalities affected by the project
The credit amount is a percentage (up to 100%) of the expected incremental tax withholdings generated by the new jobs the business creates during the project.
Learn more about EDGE here.
Related: How to manage payroll for your business.
Hoosier Business Investment Tax Credit
The Hoosier Business Investment Tax Credit rewards Indiana businesses for creating new full-time jobs in the state and investing in business renovation or redevelopment projects.
To qualify for the corporate income credit, a business must:
- Undertake a project that benefits the people of Indiana and helps strengthen the state’s economy
- Invest significant capital in that project (eligible costs include new machinery and modern manufacturing and building costs associated with the project)
- Commit to creating new full-time, permanent jobs in Indiana at the project location
Get more information on the credit here.
Considering a new growth project? Find out how to develop a growth plan that works.
Redevelopment Tax Credit
The Redevelopment Tax Credit (RTC) gives eligible developers and companies an income tax credit for redeveloping vacant or underutilized land or buildings within Indiana. The credit amount is equal to the qualified investment the company makes, multiplied by a percentage set by the Indiana Economic Development Corporation (IEDC), not to exceed 30%.
Eligible qualified investment costs include acquisition costs, architectural and engineering fees, construction management and demolition costs, environmental remediation costs, and permitting costs.
You need to get your investment approved by the IEDC first to obtain the credit. Learn how it works here.
Venture Capital Investment Tax Credit
Indiana’s Venture Capital Investment (VCI) Tax Credit incentivizes individuals and corporations to invest in early-stage firms and qualified investment funds that support high-growth companies in Indiana.
To qualify for the credit, you need to be certified by the IEDC as a Qualified Indiana Business and submit a capital investment application to the IEDC for approval before investing. The maximum amount of tax credits available depends on the Indiana business or fund you invest in; the credit amount is equal to your total investment multiplied by anywhere from 20-30%, up to a maximum lifetime allocation.
For a full breakdown of the credit calculation, visit this page.
Indiana business tax exemptions
Data Center Sales Tax Exemption
The Data Center Sales Tax Exemption gives qualifying data center operators in Indiana a sales and use tax exemption on data center equipment and energy purchases of less than $750 million.
Some local Indiana governments also offer a personal property tax exemption on qualified enterprise information technology equipment to data center operators who invest at least $25 million in the facility.
Learn more here.
Patent Income Tax Exemption
The Patent Income Tax Exemption gives qualifying companies a tax exemption on income derived from patents. That includes:
- Licensing fees or other income received from the use of a patent
- Royalties received from the infringement of a patent
- Receipts from the sale of a patent
- Certain income from the company’s own use of the qualified patent to produce the claimed invention
Companies can get a 50% tax exemption for the first five years with the credit; after that, the percentage decreases by 10% every year or other year until it’s at 10% in year 10. The maximum tax exemption a company can take in one year is $5 million.
Learn more about the exemption here.
Research and Development Sales Tax Exemption
Businesses can get a 100% sales tax exemption on qualified R&D equipment and property they purchase. Qualifying equipment and property must meet the following conditions:
- Not have been previously used in Indiana for any purpose, and
- Acquired for the purpose of activities related to experimental or laboratory R&D for new products, new uses of existing products, or improving or testing existing products.
See details on the exemption here.
Related: See which activities and expenses qualify for the federal R&D tax credit.
Indiana city and county tax credits
Many cities and counties in Indiana have their own business tax incentives. Search for your city website here, then check out their economic development office to see which programs they offer.
Business financing in Indiana
If you need capital for your Indiana operation, you’re not just limited to banks and alternative lenders—you have access to a variety of state-specific funding opportunities, too. Read through Gusto’s guide to grants and loans in Indiana to get started.
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