Incentive Tools for Indiana Manufacturers

This article originally appeared in The Indiana Manufacturer.

It’s no secret that Indiana has a highly competitive business environment backed by a state administration that is committed to growing existing and attracting new businesses. However, the businesses themselves often don’t understand what incentive programs are available to support growth plans.

As one of the largest employment sectors in Indiana, it’s especially important for the manufacturing industry to understand what tools are at its disposal and how those tools can be leveraged. The following is a list of Indiana state and local incentive programs available to manufacturers considering expansion plans involving capital investment, job creation, employee training, or relocation.

• Indiana Economic Development for a Growing Economy (EDGE) Tax Credit
  The Indiana Economic Development Corporation (IEDC) provides a refundable tax credit through the EDGE program to eligible companies based on the level of job creation and capital investment in the state. The credit is calculated as a percentage of the expected increased tax withholdings generated from the new jobs created at the project location.
• Hoosier Business Investment Credit (HBI)
  Through the HBI program, the IEDC provides a non-refundable tax credit against corporate income tax liability for a period of up to two years. The credit is calculated as a percentage (up to 15%) of the qualified capital investment project and any unused credit may be carried forward for up to nine years.
• Skills Enhancement Fund (SEF)
  Also administered by the IEDC, the SEF program provides a cash grant to businesses to support training and upgrading skills of employees. The grant may be used to reimburse a portion (typically 50%) of eligible training costs over a period of two full calendar years.
• NextLevel Jobs
  NextLevel Jobs provides employers with a cash grant to support training and upgrading occupational skills of employees. The grant will reimburse an employer up to $5,000 per employee and $50,000 per employer over a one-year period.
• Property Tax Abatement
  The property tax abatement is a local agreement between the company and a taxing unit that exempts all or part of the increase in the value of the real property and/or tangible personal property from taxation for a period not to exceed 10 years.

How our clients are utilizing these programs (case studies):

Example 1: A mid-size manufacturer is expanding its business in Southern Indiana to keep up with increasing customer demand. As part of the expansion, the company is adding 100,000 square feet of new manufacturing and distribution space and creating 45 new, full-time positions. To support the Indiana company, the state and local community offered the following incentives:

• Indiana EDGE tax credits equal to $315,000
• NextLevel Jobs grant of $50,000
• Real and personal property tax savings estimated at $600,000

Example 2: A regional manufacturer located in Central Indiana is implementing new technology to optimize current manufacturing and distribution operations. In addition to the upfront cost of the hardware and software, the company will incur additional cost to retrain its existing workforce. To support the business, the company received the following incentives:

• HBI tax credit equal to $120,000
• SEF grant of $25,000

Example 3: A foreign company without operations in the United States is considering Indiana or Michigan for its first manufacturing operation. The new facility will cost $10 million and result in 20 new, full-time employees. To encourage the expansion in Indiana, the state and local community offered the following incentives:

• Indiana EDGE tax credits equal to $225,000
• SEF grant equal to $25,000
• Real and personal property tax savings estimated at $700,000

As is often the case with legal and financial matters, hiring a professional to guide you through the state incentives process could make a big difference in the amounts you secure and dramatically increase your growth trajectory. It is always better to seek help as early in the process as possible as some incentives are time-sensitive, and the rules governing them are strictly enforced.