Growing Business > Incentives
Grow Your Business in the KIRAG region
Economic development is very competitive. Companies can locate anywhere in the world. Incentives are offered to encourage new business investment, which increases local and state tax bases, reduces tax burden, reduces property taxes lost due to tax caps, encourages job creation or retention, and helps to diversify the tax base.
PROPERTY TAX ABATEMENT
Tax abatement is one of the most common financial incentives in Indiana used by local governments to attract new private investment and encourage job creation. Tax abatement may be granted on either real or personal property, but not on land.
Tax abatement is a phasing-in of real and personal property taxes on projects that increase the tax base and the employment base of a community. All or a portion of the new or increased assessed value is exempted from the property tax roll.
Real property tax abatement may be granted for up to ten (10) years to all commercial and industrial companies for new construction and expansions. Standard personal property tax abatement may be granted for up to ten (10) years, as long as the eligibility criteria are met.
Personal property tax abatements may be granted for any manufacturing equipment (new or used) that has not previously been taxed in Indiana. Laboratory equipment and computers used in experimental research and development laboratories are also eligible for tax abatement.
Tax abatements are allowable only within areas designated as “Economic Revitalization Areas.” The governing body determines the area within its jurisdiction to be designated as an ERA.
Projects seeking tax abatement must conform to any applicable ordinances, regulations, and design standards currently in place in the area where the project will be located. Each tax abatement request will be considered on a case-by-case basis in accordance with the procedures outlined by the governing body.
TAX INCREMENT FINANCING
Tax Increment Financing (TIF) is a tool used to facilitate economic development in a community, so that, during and especially after the TIF Area is ended, the overall tax base grows. TIF is a mechanism for capturing future tax benefits of real estate improvements to pay for present costs related to those improvements. TIF uses the increased property taxes generated from new development to finance costs related to development, such infrastructure and public services.
The geographic boundaries of a TIF Area are first established and the base value of the TIF Area is determined before any new development occurs. The future increase in value above the base is captured and may be used on a pay-as-you-go basis to fund improvements in the TIF Area or to repay bonds issued to fund the improvements or provide incentives to the project.
The tax increment of a TIF Area is created without raising taxes, and, conceptually, without dipping into the base tax revenues.
In some cases, not all the new real estate assessed value is captured, and, in many cases, the depreciable personal property value is not captured, so that some new taxes may immediately flow to the tax base. Additionally, new jobs and wages will provide additional benefits through increased income, buying power, and increased local income taxes.
When a TIF Area expires, the incremental assessed value is added to the tax base.
STATE INCENTIVES
Indiana offers many business tax incentives, corporate tax credits, and economic development programs for companies creating new jobs and investment in Indiana. Indiana has a flat state corporate tax rate on adjusted gross income and no gross receipts tax or inventory tax.
For an overview of Indiana’s incentives, visit the Indiana Economic Development Corporation’s State Incentives page.