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The state of Indiana offers two tax incentives targeted at qualified research expense over a base period amount
encouraging investments in research and development. greater than $1 million. Credits awarded under this program
Taxpayers may receive a credit against their Indiana state may be carried forward for 10 taxable years. Refer to IC
income tax liability calculated as a percentage of quali- 6-3.1-4 for more details on the calculation of this credit.
fied research expenses. In addition, taxpayers may be
refunded sales tax paid on purchases of qualified research Application Process–A taxpayer who qualifies for the ex-
and development equipment. The Indiana Department emption must claim the exemption in a manner prescribed
of Revenue oversees these incentive programs. by the Indiana Department of Revenue. The form used to
claim the exemptions is available www.in.gov/dor
RESEARCH EXPENSE CREDITS
A taxpayer may be eligible for a credit on qualified RESEARCH AND DEVELOPMENT SALES TAX EXEMPTION
research expenses. There are two separate formulas for There is a 50 percent sales tax exemption for qualified re-
calculating the credit. One applies to expenses incurred search and development equipment bought after June 30,
before January 1, 2008. The other applies to expenses 2005. The sales tax exemption is 100 percent if the purchase
incurred after that date. Potential Value of Incentive: of such equipment is on or after July 1, 2007. Taxpayers may
Before January 1, 2008, the credit is equal to the taxpayer’s file a claim for the refund for tax paid on retail transactions
qualified research expense for the taxable year minus the that occur on or after July 1, 2005.
DB05-10 Indiana Economic Development Corporation | One North Capitol, Suite 700 | Indianapolis, Indiana 46204
800.463.8081 | tel 317.232.8800 | fax 317.232.4146 | iedc.in.gov