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Investments 

 

Research & Development Incentives

Research Expense Credits

A taxpayer may be eligible for a credit on qualified research expenses. The potential value of the credit is equal to the taxpayer’s qualified research expense for the taxable year, minus the base period amount up to $1 million, multiplied by 15 percent. A credit percentage of up to 10 percent is applied to any excess of qualified research expense over a base period amount greater than $1 million. Additionally, for Indiana qualified research expenses incurred after December 31, 2009, an alternative method of calculating the credit is available.

At the taxpayer’s election, the amount of the taxpayer’s research expense tax credit is equal to ten percent of the part of the taxpayer’s Indiana qualified research expense for the taxable year that exceeds fifty percent of the taxpayer’s average Indiana qualified research expense for the three taxable years preceding the taxable year for which the credit is being determined. However, if the taxpayer did not have Indiana qualified research expenses in any one of the three taxable years preceding the taxable year for which the credit is being determined, the amount of the research expense tax credit is equal to five percent of the taxpayer’s Indiana qualified research expense for the taxable year. Credits awarded pursuant to the relevant statutory provisions may be carried forward for up to ten taxable years. For more details on the calculation of the credit, please refer to IC 6-3.1-4.


Qualifying Criteria

An Indiana qualified research expense is defined as the sum of the following amounts, incurred by the taxpayer during the taxable year: wages paid to employees, supplies, services for qualified research or supervision of research activities. Qualified research expense is defined by Section 41(b) of the Internal Revenue Code as in effect on January 1, 2001. In prescribing what qualifies as a research expense, the Department of Revenue may consider the following:

  • The place where the services are performed

  • The residence or business location of the person or persons performing the services

  • The place where qualified research supplies are consumed

  • Other factors that the department deems relevant

 


For more information, please download the R&DI Facts.

 

How can we help?

Whether you're starting up or expanding...Indiana offers the perfect environment for exploration, experimentation and research. Connect with one of our business development experts and be a part of solving the globe's most important challenges in a state that works.

contact-iconBusiness Expansion Specialist

BrockHerr-opt
Brock Herr,
Senior Vice President
Business Retention, Expansion & Attraction

317.503.6631
BHerr@iedc.IN.gov