Taxes and Incentives

Taxes

Corporate Adjusted Gross Income Tax /td>
Net Effective Rate	8.50%

Corporate Franchise Tax

None

Personal Income Tax
State Rate	3.40%
Local Option Tax
Resident	0.70%
Non-Resident	0.18%

Sales and Use Tax	6.00%
Exemptions include: manufacturing raw materials, manufacturing equipment directly used in direct production, pollution abatement equipment, and software. In addition, most services are not subject to this tax.

Unemployment Insurance
New Employer Rate	2.70%
Experienced Employer Average Rate	1.30%
Taxable Wage Base	$7,000

Workers' Compensation (per $100 of payroll)
Average Rate for Manufacturing	$2.46
Average Rate for Distribution	$3.71
Average Rate for Office	$0.27

1. 2001 payable 2002, Indiana Department of Revenue, Indiana Tax Commission.
2. Worker's Compensation Board of Indiana, Indiana Compensation Ratings Bureau, Department of Workforce Development-Unemployment Insurance Division/US Dept. of Labor.

Incentives

Local Incentives

Tax Increment Financing (TIF)

Tax Increment Financing (TIF) provides for the temporary allocation to redevelopment or economic districts of increased tax proceeds in an allocation area generated by increases in assessed value. Thus, TIF permits cities, towns or counties to use increased tax revenues stimulated by redevelopment or economic development to pay for the capital improvements needed to induce the redevelopment or economic development.

The use of TIF is initiated by the declaration of a tax allocation area by a county, city or town redevelopment commission. Property tax assessments are frozen at predevelopment levels in the allocation area. Municipal bonds are then issued to finance the public improvements. As property values in the allocation area increase as a result of new development, the increment in tax revenues is used to meet debt service on issued bonds. Once the bonds have been paid off, the taxes collected from the allocation area are distributed to the remaining taxing districts.

Bonds payable from TIF may be used to finance the cost of redevelopment and the construction of public improvements in the redevelopment area or for projects that directly serve or benefit that area. Proceeds may also be used for training.

Bond amounts are determined by the size of the project and the amount of the increment available. The 1992 General Assembly passed legislation allowing depreciable personal property (machinery and equipment) to be used in addition to real property in computing the increment.

Property Tax Abatement

Local communities may offer real and personal property tax abatement as an incentive to new and expanding businesses. Property tax abatement allows a property owner to phase in payment of property taxes over a designated period. This period may be any number of years between one and ten.

Property tax abatement in Indiana is authorized under Indiana Code 6-1.1-12.1 in the form of deductions from assessed valuation. Any property owner in a locally designated Economic Revitalization Area (ERA) who makes improvements to real property or installs new manufacturing and/or R&D equipment may apply for property tax abatement.

Indiana Incentives

The State of Indiana has an array of incentives to offer growing businesses. The Indiana Economic Development Corporation and the Indiana Department of Workforce Development are two primary agencies serving Indiana companies.