Incentives
An incentive is “a payment or concession to stimulate greater output or investment.” –Oxford Languages
In other words, these are programs of encouragement that the state offers in order to increase the rate of small business startups and investment in Indiana small businesses.
This includes but is not limited to Tax Credits and Innovation Vouchers, which you will learn about in the following topic.
EDGE Tax Credit
A look at the tax credit offered to businesses to support job creation and capital investment
Overview:
- The Economic Development for a Growing Economy (EDGE) Tax Credit provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents. The refundable corporate income tax credit is calculated as a percentage (not to exceed 100%) of the expected increased tax withholdings generated from new jobs creation. The credit certification is phased in annually for up to 10 years based upon the employment ramp-up outlined by the business.
Eligibility:
- To be eligible for the tax credit:
- Project will result in net new jobs that were not previously performed by employees of the applicant
- Project is economically sound and will benefit the people of Indiana by increasing opportunities for employment and strengthening the economy of Indiana
- Receiving the tax credit is a major factor in the applicant’s decision to go forward with the project and not receiving the tax credit will result in the applicant not creating new jobs in Indiana
- Political subdivisions/municipalities affected by the project have offered significant incentives to the business
For more information, visit the IEDC’s EDGE Tax Credit landing page
Venture Capital Investor Tax Credit (VCI)
A look at the incentive being offered to inspire more investment in early-stage Hoosier startups.
Eligibility
Individual or corporate investors, including pass through entities. A business or fund must first be certified by the IEDC as a Qualified Indiana Business or a Qualified Indiana Investment Fund. Next, the investor must submit a capital investment application for approval by the IEDC prior to making an investment. After the investment application is approved, the investor may make a qualifying investment and submit supporting documentation to the IEDC for the investment to be certified. The investment must be made within two years after the date on which the IEDC approves the investment plan.
Calculation of Credits
The maximum amount of tax credits available for qualified investment capital to a particular qualified Indiana business equals the lesser of: The total amount of qualified investment capital provided to the qualified Indiana business in the calendar year, multiplied by 25 percent subject to a maximum lifetime allocation of up to $1,000,000. The maximum amount of tax credits available for qualified investment capital to a particular W/MBE qualified Indiana business equals the lesser of: The total amount of qualified investment capital provided to the W/MBE qualified Indiana business in the calendar year, multiplied by 30 percent subject to a maximum lifetime allocation of up to $1,500,000. The maximum amount of tax credits available for qualified investment capital to a particular qualified Indiana investment fund equals the lesser of: The total amount of qualified investment capital provided to the qualified Indiana investment fund in the calendar year, multiplied by 20 percent or $5,000,000 per calendar year. The maximum annual amount of tax credits that may be awarded for all qualified investment capital to all qualified Indiana investment funds is $7,500,000. If the amount of credit exceeds the taxpayer’s state tax liability for that taxable year, the taxpayer may carry over the excess credit for a period not to exceed the taxpayer’s following five taxable years. A taxpayer is not entitled to a carryback or a refund of any unused credit amount. An investor may assign certified credits
Annual Amount of Credits
The maximum amount of tax credits available each fiscal year is $20 million, of which $12.5 million is reserved for investments made in qualified Indiana businesses and up to $7.5 million may be allocated to investments made in qualified Indiana investment funds. Tax credits not allocated to investments made in qualified Indiana investment funds may be allocated to investments made in qualified Indiana businesses. .
To learn more about the program and the certification process visit our website.
Indiana Innovation Voucher
Funding and resources for high-potential startups and entrepreneurs in Indiana
Our partners at the Applied Research Institute (ARI) are offering Innovation Vouchers. Innovation Vouchers are used to leverage Indiana’s research and higher education institutions, as well as approved non-profit research organizations to provide small businesses access to industry experts and research leaders.
This grant will match your company’s funding for up to $50,000 and can be utilized for product development, simulations, studies, and more – all to help entrepreneurs in the State of Indiana develop innovative products and services.
These grants are evaluated three times a year. This year’s application deadlines are January 20, May 19, and September 22.
Are you a small business looking to do business in Indiana? Follow this link to apply!
