Businesses in Indiana have many tax credits and incentives available to them that provide significant reimbursement for particular business activities and job creation efforts. One of them is the Hoosier Business Investment (HBI) Tax Credit. The HBI Tax Credit provides incentives to businesses that support job creation, capital investment, and improve the standard of living for Indiana residents.
The non-refundable corporate income tax credits are calculated as a percentage of the eligible capital investment made to support the project – up to 10% of the qualified investment. 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. It also qualifies for a carry-forward period of up to nine years on a case-by-case basis.
To be eligible for the tax credit, the project must:
- Result in net new full-time, permanent jobs that were not previously performed by employees of the applicant
- Commit to pay an average wage to its employees (excluding highly-compensated employees) of at least 150% of the hourly minimum wage or its equivalent
- Be economically sound and benefit the people of Indiana by increasing opportunities for employment and strengthening the economy of the state
- Rely on receiving the tax credit as a major factor in the decision to proceed with the project
- Have been offered significant incentives by political subdivisions or municipalities affected by the project
To qualify, a business must make a capital investment in Indiana for any of the following items by Dec. 31, 2020:
- Modernization or construction of facilities and equipment used for telecommunications, production, manufacturing, fabrication, assembly, extraction, mining, processing, refining, finishing, distribution, transportation, or logistical distribution
- Purchase of machinery, equipment, or special-purpose buildings used to make a motion picture or audio production
- Onsite infrastructure improvements or retooling existing machinery and equipment
- Construction of special-purpose buildings and foundations for use in the computer, software, biological sciences, or telecommunications industry
- Logistics investment, which means an expenditure for one or more of the following purposes:
- An improvement to real property in Indiana related to constructing a new, or modernizing an existing, transportation or logistical facility
- Improving the transportation of goods on Indiana highways or by rail, water, or air (limited to particular types of investments)
- Improving warehousing and logistical facilities, including upgrading warehousing facilities (limited to particular investments) and improving logistical distribution by purchasing new equipment, such as scanning or coding equipment, security equipment, temperature control and monitoring equipment, conveyors, scales, packaging equipment, and moving, separating, sorting, and picking equipment.
Any expenditure for maintenance or property that can be easily moved outside of Indiana are not considered qualified investments for the purpose of the Hoosier Business Investment Tax Credit and would not be eligible.
How to Apply
To obtain the credit, the business or individual taxpayer would need to apply with the Indiana Economic Development Corporation (IEDC) before making the investment to ensure that it was “qualified” per the rules outlined above.
Only one credit is allowed per project, so if you have already claimed a capital investment credit, community revitalization credit, or other types of credits available through the state for the project on your Indiana state tax return, you cannot claim the Hoosier Business Investment Tax Credit on that same project.
A taxpayer receiving the tax credit is required to maintain operations at the project location for at least 10 years during the term that the tax credit is available.
Making a sizeable capital investment is a big decision, so it’s vital to consult a qualified advisor regarding your options and eligibility for tax credits and incentives like the HBI Tax Credit. If you would like more information or want to learn how your company can qualify for the Hoosier Business Investment Tax Credit, Barnes Dennig wants to help. For additional information, please call us at (317) 572-1130 or contact us online here. We look forward to speaking with you soon!