Costs & Incentives
No amount of incentives will make a bad location a good choice.
With our affordable costs, local incentives are designed to be the icing on the cake...a really good cake!
Cost of Doing Business
Indiana is nationally recognized as a low tax state for business, ranking consistently in the Top 10 and 1st in the Midwest in the Tax Foundation’s Annual Business Tax Climate Index. Our total state and local business tax burden as a percentage of Gross State Product is recognized as one of the lowest in the country. We have no gross receipts tax and no inventory tax. More information below.
Corporate Income Tax
Indiana’s corporate income tax is 4.9%. Adjusted gross income is a company’s federal adjusted gross income with certain adjustments. This method of determination simplifies tax calculations for corporations and does not apply to S corporations and not-for-profit organizations.
Single Sales Factor
To determine Indiana’s share of an interstate or international corporation’s taxable income, a company’s adjusted gross income is apportioned based upon a single-sales factor with Indiana’s portion based solely on the portion of the company’s sales in Indiana. Adjusted gross income is a company’s federal adjusted gross income with certain adjustments. This method of determination simplifies tax calculations for corporations and does not apply to S Corporations and not-for-profit organizations.
Sales and Use Tax Exemptions
Indiana’s Sales and Use Tax is tax is calculated at a rate of 7 percent. There is no local sales tax. In manufacturing, the following are exempt from the sales tax: raw materials, equipment, power, electricity, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. In addition, the purchase of research and development equipment is exempt from the tax.
Property Tax
Real and personal property tax is assessed based on market value after depreciation, with certain deductions and/or exemptions available. Personal Property (Machinery & Equipment) Tax has a 30% floor. Property tax rates in Indiana vary among local jurisdictions and are capped at 3.0% for business property pursuant to state law. Rates within Bartholomew County range from approximately 1.6% for unincorporated areas, 2.5% for the City of Columbus, and 3.0% (capped) in Edinburgh.
Personal Income Tax
Indiana’s personal income tax is 3.23 percent of federal adjusted gross income (with certain exemptions and deductions). Local counties can also adopt county option and/or county economic development income taxes, up to a combined rate of 1.25%.
Cost Comparison
We understand that it can be difficult to make an “apples to apples” comparison when it comes to evaluating costs of doing business between different states. If you would like a state-by-state comparison, please contact us, and we’ll be glad to assist you.
Incentives
Local Incentives
Tax Abatement – allows a phase-in of net new property taxes on real and personal property for up to 10 years, producing savings of approximately 50% or more. Contact us for more information and for assistance with completing your no-cost application.
Tax Increment Finance (TIF) – TIF in Indiana permits a local redevelopment commission to designate targeted “allocation areas” for economic development purposes. Columbus, Bartholomew County and the Town of Edinburgh each have one or more TIF areas. Within a TIF area, property taxes generated from new commercial or industrial construction can be set aside and invested back in the area to promote further development. Captured property tax revenues can also be leveraged by the issuance of TIF bonds to finance public infrastructure, land acquisition, site improvements, and other types of investments. In some cases, taxes on depreciable personal property used in industrial, manufacturing, warehousing, research and development, processing, distribution, or transportation related projects, can also qualify for the use of the TIF mechanism.
Economic Development Income Tax (EDIT) Fund – Residents of Bartholomew County pay an individual 0.25% economic development income tax on wages. Collected EDIT dollars are shared by the local units of government within the county, and those funds can be utilized for any lawful purpose. A portion of the City of Columbus and Bartholomew County EDIT funds can sometimes be set aside as an incentive pool to support exceptional economic development projects within the City and/or County. Contact us for more information.
State Incentives
Various State of Indiana incentive programs and exemptions are available, and our team is well-prepared to assist existing and prospective companies in pursuit of qualifying incentive programs. Some of the more popular incentive tools are highlighted below:
Economic Development for a Growing Economy (EDGE) Tax Credit – a refundable, performance-based credit against a company’s Indiana corporate tax liability, based upon meeting certain pledged hiring and payroll commitments
Hoosier Business Investment (HBI) Tax Credit – a non-refundable tax credit that can be carried forward up to ten years, to offset a company’s Indiana corporate tax liability, based upon qualifying capital expenditures
Skills Enhancement Fund (SEF) Grants – SEF grants, when approved in advance, can be utilized by companies to offset up to 50% of eligible training expenses associated with the hiring or re-training needs of the company.
Headquarters Relocation Tax Credit (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.
Other State Incentives & Programs of Interest
• Hoosier Alternative Fuel Vehicle Manufacturer Tax Credit
• Industrial Recovery Tax Credit
• R&D Tax Credit
• Venture Capital Investment Tax Credit
• Patent Income Exemption
• R&D Sales Tax Exemption
• Industrial Development Grant Fund
• Regulatory Ombudsman
• Small Business Innovation
Research Initiative
• Tax-exempt Bond Program – Indiana Finance Authority
• Capital Access Program
