Unpacking the HBI Tax Credit and What It Means for Indiana Businesses
Published on by Cheryl Ganim in Consulting, Tax Services
Indiana businesses can benefit substantially from investment and job creation through the many tax credits and incentives the State of Indiana offers. One of the more significant ones is the Hoosier Business Investment (HBI) Tax Credit – a non-refundable corporate income tax credit calculated as a percentage of the qualified investment.
How much is the HBI tax credit worth to my business?
The total maximum credit is equal to 10% of a qualifying investment unrelated to logistics, and 25% for a qualified investment that is logistics-related. HBI qualified investments include:
- Purchase or construction of new:
- Telecommunications
- Production
- Manufacturing
- Fabrication
- Assembly
- Extraction
- Mining
- Processing
- Refining
- Finishing
- Distribution
- Transportation
- Modernization of existing telecommunications
- Onsite infrastructure improvements or retooling existing machinery and equipment
- New pollution control and abatement, energy conservation, or renewable energy generation
- Logistics and warehousing investment, which means an expenditure for one or more of the following purposes:
- Making an improvement to real property located in Indiana that is related to constructing a new, or modernizing an existing, transportation or logistical distribution facility
- Improving the transportation of goods on Indiana highways, rails, water, or air
What are the HBI requirements and evaluation criteria?
Each project needs to meet these requirements to qualify for the HBI tax credit:
- Raise the total earnings of employees of the applicant in Indiana
- Enhance the logistics industry by creating new jobs, preserving existing jobs, increasing wages in Indiana, or improving the overall Indiana economy
- Awarding the tax credit will result in a positive fiscal impact
How to apply for the HBI tax credit
To obtain the credit, the business or individual taxpayer must apply with the Indiana Economic Development Corporation (IEDC) before making the qualified investment. If awarded a credit, the applicant must enter into an agreement with the IEDC that includes:
- A detailed description of the project
- A maximum tax credit amount allowable for each taxable year
- Maintaining operations at the project location for at least 10 years during the term the tax credit is available
- Annually report to the IEDC the number of new employees performing jobs not previously performed, along with the average wage of new employees
Contact Us
Have a question about the HBI tax credit or other Indiana tax credits and incentives your business may qualify for? Or, want to talk about state taxes, state tax deductions, sales tax compliance, or other state and local tax matters? Contact a member of our Indiana tax pro team through our website or by calling 317.572.1130 for a free consultation. We’re here to help.
