Southern Indiana Local Business Incentives
Local fiscal bodies have the option to allow a business to phase in property tax increases from a rise in assessed value from capital improvements in both real property (typically building and building improvements) and personal property (typically equipment).
Municipalities in Indiana now have the option to determine both the percentage abated and length of the abatement (maximum of 10 years) on a project-by-project basis.
Urban Enterprise Zone
AP Business Park and America Place at River Ridge are located within Urban Enterprise — or UEZs. In addition to offering property tax incentives similar to tax abatement, other benefits exist for businesses and employees. Both UEZs are managed by the Jeffersonville Urban Enterprise Association, and more info can be found here: http://www.jeffersonvilleuez.com/about-us/.
The UEZ Investment Deduction allows the increase in AV from “qualified investment” in real and/or personal property of an EZ business to be deducted for up to 10 years. A taxpayer must apply to the county auditor to claim the deduction for a particular year. The county auditor would determine whether the taxpayer is eligible for the deduction. A Qualified Investment is defined as a: Building Purchase, New Manufacturing/Production Equipment Purchase, Costs Associated with Repair, Rehabilitation or the Modernization of an Existing Building & Related Improvements, Onsite Infrastructure Improvements, Construction of a New Building, Costs Associated with Retooling Existing Machinery.
Enterprise Zone Employment Expense Credit
The Employment Expense Credit is a credit for incremental wages paid by a zone business to an employee who is a resident of the Enterprise Zone. The credit is equal to 10% of the additional wages paid to a qualified employee during the year, up to a maximum of $1,500. A qualified employee is one who lives in the Enterprise Zone, works at least 50% of the time within the Enterprise Zone, and at least 90% of the employee's services are directly related to the company's facilities located in the Enterprise Zone. The credit is nonrefundable, but unused credits may be carried back for up to 3 years or carried forward for up to 10 years. The credit may be applied against Individual or Adjusted Gross Income Tax, Financial Institutions Tax, or Insurance Premiums Tax liabilities.
Enterprise Zone Employee Income Tax Deduction
A qualified employee may deduct half of the adjusted gross income earned as a qualified employee during the year, up to a maximum deduction of $7,500. A qualified employee is one who lives in the Enterprise Zone, works at least 50% of the time within the Enterprise Zone, and at least 90% of the employee's services are directly related to the company's facilities located in the Enterprise Zone. This could result in an annual tax savings of $255 to the qualified employees. A qualified employee’s earnings within the Enterprise Zone must equal or exceed $15,000 to receive the maximum tax savings.
Loan Interest Income Tax Credit
This is a state tax credit for interest income earned by a taxpayer from a loan that directly benefits an Enterprise Zone business, increases Enterprise Zone property values, or is used to rehabilitate, repair, or improve an Enterprise Zone residence. The credit is equal to 5% of the loan interest received during the year. The credit is nonrefundable, but unused credits may be carried forward. Unused credits may not be carried back. This credit may be applied against the individual or corporate Adjusted Gross Income Tax, the Financial Institutions Tax, and the Insurance Premiums Tax.
Investment Cost Credit
Individuals or trusts purchasing an ownership interest in a business located in the enterprise zone may be eligible for an investment credit (up to 30% of the purchase price) against their state tax liability. The allowable credit percentage up to 30% varies depending upon the type of investment, the type of business, and the number of jobs created by the investment. The credit is nonrefundable, but unused credits may be carried forward. Unused credits may not be carried back. This credit may be applied against individual or corporate Adjusted Gross Income tax liability. To qualify for the credit, a taxpayer must request the IEDC to determine whether a purchase of an ownership in a business located in an Enterprise Zone is a qualified investment and the credit percentage to be allowed. The request must be made before a purchase is made.
Tax Increment Financing (TIF)
TIF is an economic development tool for local government units directed toward financing public investments in infrastructure to spur economic development in areas requiring redevelopment. Typically municipalities issue bonds to pay for these improvements while capturing the increases in assessed value in the area to pay back the bonds.