Indiana prides itself on common-sense approaches to business tax incentives. By assisting in strengthening the knowledge base of companies, state officials ensure that Indiana remains a competitive player in the global marketplace.
The Research and Development (R&D) Tax Credit provides an incentive for business investment in Indiana by providing a credit against state tax liability for qualified company research expenses. The R&D tax credit (also known as the Research Expense tax credit) is based on the increase in Indiana R&D over the prior three-year base.
The R&D tax credit is authorized by IC 6-3.1-4-1 and is administered by the Indiana Department of Revenue.
In the base year, research expenses must have been at least half of the research expenses in the current year. The credit equals 15 percent of qualified research expenses on the first $1 million of investment. The tax credit is applied against income tax liability and may be carried forward 10 years. There is no carry back, and the credit is nonrefundable.
This program operates under the Indiana Department of Revenue and uses the definition of “qualified research expense” from the Internal Revenue Code (which includes the costs of wages and supplies).