Indiana’s business tax incentives are designed to alleviate a variety of constraints faced by many businesses.
Taxpayers are exempt from certain income derived from qualified utility and plant patents. Qualified taxpayers are eligible for an exemption of 50 percent of patent income for each of the first five years. The exemption percentage decreases over the next five years to 10 percent in the tenth year.
The total amount of exemptions claimed by a taxpayer may not exceed $5 million per year. The Patent Income Exemption is available only to companies with 500 or fewer employees.
The patent-derived income that is exempt under this bill includes:
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Licensing fees and other income received from the use of a patent
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Royalties received from the infringement of a patent
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Receipts from the sale of a patent
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Certain income from the taxpayer’s own use of the qualified patent to produce the claimed invention
Claiming the Exemption
A taxpayer may claim the exemption for 10 years with respect to a particular patent. The total amount of exemptions for patent-derived income that a taxpayer may claim in a taxable year is $5 million.
Fact Sheet
Patent Income Exemption