Indiana provides a variety of special tax credit and incentive programs that make doing business in the state simpler and more affordable. In fact, companies from all over the globe choose to do business in Indiana because of the highly competitive tax structure, including its flat state corporate tax rate on adjusted gross income, no gross receipts tax, and no inventory tax.
To further attract companies to Indiana, the Indiana Economic Development Corporation (IEDC) created the Headquarters Relocation Tax Credit (HRTC). The HRTC allows corporations that relocate their headquarters to Indiana to claim a credit on their state tax return for deductions against their state tax liability.
There are specific requirements that must be met before applying for the tax credit. To be eligible, the corporation must:
- Be engaged in either interstate or intrastate commerce
- Currently maintain a corporate headquarters at a location outside Indiana
- Not have previously maintained a corporate headquarters anywhere in the state of Indiana
- Have had annual worldwide revenues of at least $50 million for the taxable year immediately preceding the business’s application for the tax credit
- Commit contractually to relocating its corporate headquarters to Indiana
- Employ at least 75 employees in Indiana after relocation
In addition, the “headquarters” of an eligible business is defined as the building or buildings where one or more of the following are located:
- The primary offices of the principal executive officers
- The principal offices of a division or similar subdivision
- A research and development center
When filing their state tax return, a corporation can claim up to 50% of the costs incurred to relocate its headquarters to Indiana per the HRTC to offset their Indiana personal and corporate adjusted gross income tax and financial institutions tax. Any unused portion of the credit can be carried forward for a period of nine years.
Eligibility is determined by the IEDC, but typically, eligible relocation costs include:
- Moving costs and related expenses
- The purchase of new or replacement equipment
- Capital investment costs
- Property assembly and development costs, including:
- The purchase, lease, or construction of buildings and land
- Infrastructure improvements
- Site development costs
Any expenses that are not the direct result of the relocation of the business to Indiana will not be eligible for the relocation tax credit.
There are a number of incentives for companies choosing to do business in Indiana. The Relocation Tax Credit is one of several that companies can benefit from! If you are considering relocating your business to the state of Indiana, Barnes Dennig wants to help! For additional information about the Indiana Headquarters Relocation Tax credit or to determine your corporation’s eligibility, please call us at (317) 572-1130 or click here to contact us. We look forward to speaking with you soon!