Key insights
- Indiana has revised some of its economic development programs in order to better compete in a changing economy.
- Companies without a physical location in Indiana are now eligible for EDGE tax credits.
- Programs have also been created or modified to better compete for mega or very large projects.
- Manufacturing innovation grants are available and timing is key.
Understand state and local incentives before deciding to invest.
The 2022 legislative session was productive in Indiana, particularly in regard to economic development. The state has made moves to bolster and expand existing economic development programs, and created new programs to encourage investment and expand workforce development efforts.
Qualifications eased to expand eligibility
One of Indiana’s flagship economic development programs, the Economic Development for a Growing Economy program (EDGE), received a boost from the legislature this past year. The changes help broaden the applicability of the program and increase its effectiveness. Now a recipient of an Indiana EDGE award can receive a refundable tax credit, making it far more valuable as an attraction tool.
To be eligible for EDGE, a business must commit to creating at least 50 net new jobs that pay 150% of the state’s average wage. Additionally, the credit can now be awarded for a period of up to 20 years, increased from 10 years. This may allow for EDGE to be used on very large economic development projects, though final policies have not been completed.
Other changes to existing programs include:
- Headquarters Relocation Credit — expands the application of the program by removing the requirement for a minimum number of employees to be in Indiana.
- Redevelopment Tax Credit — redefines that a qualified site includes those that are “vacant or underutilized property in Indiana as determined by IEDC.” This expands the potential for additional sites to qualify for the credit.
- Overall, the programs removed individual funding caps and created an overarching $300 million cap for the Hoosier Business Investment Tax Credit, EDGE, Headquarters Relocation Credit, Redevelopment Tax Credit, and the Venture Capital Credit combined.
New programs designed to attract business
In addition to expanding the Indiana EDGE to better accommodate potentially large projects, Indiana created Innovation Development Districts (IDD) that can provide grants, loans, or investments from the fund to be used on:
- Acquisition, improvement, or redevelopment of land or other property
- Innovation development district setup cost
- Establishment of public-private partnerships between state/local governmental entities, industry, higher education institutions focused on development, expansions, or retention in the state
- Targeted investments in innovative, high-growth companies
- Workforce training assistance
The IDD is funded by capturing the incremental taxes generated by the businesses that locate within the geographic boundary of the district. There is a limitation on the number of districts that can be established (until June 30, 2025) in the state and can remain in place for up to 30 years.
Indiana now offers a film and media production tax credit to encourage those activities within the state. The credit is discretionary and can be for up to 30% of eligible expenses incurred while making a film, television show, music, or digital media production. The credit is nonrefundable and can be carried forward for nine years.
Manufacturers may find additional incentives
Indiana has one of the largest grant programs in the country specifically aimed at assisting Indiana manufacturers with making innovative capital investments in smart manufacturing. The Manufacturing Readiness Grant program can provide a reimbursement grant of up to $200,000 (on a dollar-to-dollar basis) to support capital investment in manufacturing equipment that will be transformative to their manufacturing process (i.e., advanced automation, technologically intensive, additive manufacturing, etc.).
There are no size restrictions for applicants; however, the program is targeted at manufacturers with less than 500 employees. The Manufacturing Readiness Grant program operates on a first-come first-served basis, so it is important to apply early.
How we can help
Our team assists businesses throughout the lifecycle of the incentives process. We can evaluate your current operations, future plans, and strategic goals to identify qualifying activities and help you leverage federal, state, and local credits and incentives to help potentially lower your tax burden and enhance the return on your capital expenditures.