Greene County Economic Development Corporation

Attractive business environment, including HUBZone status

Indiana and Greene County offer superb business-friendly incentives for companies, and Indiana’s state tax environment holds up numerous advantages for businesses operating in the Hoosier state. Scroll through the following list of opportunities see what special opportunities – including Greene County’s HUBZone status (which offers major advantages for companies relocating to the county) – are in place to grow your business.

Indiana - Island of Growth

July 31,2008

I'm pleased to provide to you the first of a series of videos touting Indiana's positive economic environment for business growth and success.

Indiana is maintaining its enviable position as an "island of growth" in the Midwest. We have the lowest business costs in the Midwest and fourth lowest in the United States.

Our tax climate ranks first in the Midwest and 12th nationally, and Indiana ranks as the best place to do business north of the Sun Belt. And, for the first time in the state's history, Indiana's credit rating has been raised to AAA, the highest rating assigned by the independent credit rating agency Standard & Poor's Ratings Service (S&P).

To view the "island of growth" video, click here.

For more information about Indiana's business advantages, visit www.AccelerateIndiana.com.

Nathan J. Feltman
Secretary of Commerce

Incentives Taxes

Local and State Taxes

Corporate Income Taxes

The Business Gross Income Tax (Gross Receipts Tax) has been eliminated. The Corporate Adjusted Gross Income (CAGI) Tax now allows corporations to compute their tax liability at a flat rate of 8.5 % of CAGI. This method of calculation does not apply to S Corporations and not-for-profit organizations. Because of legislation passed in 2006, Indiana is phasing in the single-sales factor for apportioning corporate income tax.

Single-Sales Factor

Indiana is phasing in the single-sales factor for apportioning corporate income tax. Indiana had determined its share of an interstate or international corporation’s taxable income by weighing the Indiana portion of a company’s property and the proportion of its employees in Indiana. The single-sales factor will calculate the Indiana portion of a corporation’s tax based solely on the portion of a company’s sales in Indiana. This change in the Indiana tax code is being phased in and will be complete by 2011.

Single Sale Tax Apportionment

Indiana will transition from a "property, payroll and sales" apportionment formula to a "sales" only apportionment system by January 1, 2011. This will eliminate the tax penalty on companies with substantial Indiana property and payroll.

Inventory Taxes

Taxes are no longer paid on inventory in Indiana.

Investment Deduction

The investment deduction provides Indiana business taxpayers with a 3-year deduction from the assessed valuation of new investments in real and personal property. Investments made between March 2, 2005, and March 1, 2009 to redevelop or rehabilitate real property that resulted in the creation or retention of employment are eligible for the deduction. Personal property never before used by its owner in the state that creates or retains jobs is also eligible for the deduction. The deduction is available to businesses of all sizes. However, the investment deduction cannot be used with other deductions and it is not available to businesses operating in an allocation area, such as a tax increment financing (TIF) district. The amount of the deduction is the lesser of two million dollars (per county) for real and personal property or the increase in assessed valuation resulting from the investment multiplied by 75% the first year, 50% the second year and 25% the third year.

Research and Development Tax Credit

This credit, (also known as the Research Expense Tax Credit) is based on the increase in Indiana R&D over the prior three-year base. In the base year, research expenses must have been at least half of the research expenses in the current year. The credit amounts to 10 percent of qualified research expenses on the first $1 million of investment. Beginning in 2008, the credit increases to 15 percent. The credit is applied against income tax liability and may be carried forward for fifteen years before 2008 and ten years beginning in 2008. There is no carry back, and the credit is nonrefundable. This program operates under the Department of Revenue and uses the definition of “qualified research expense” from the Internal Revenue Code (which includes the costs of wages and supplies).

Sales and use Tax

Indiana’s Sales and Use Tax is one of the lowest in the Midwest. The tax is calculated at a rate of 6 percent. In manufacturing, the following are exempt from the sales tax: raw materials, equipment, power, electricity, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. In addition, the purchase of research and development equipment is exempt from the tax.

Sources: Indiana Economic Development Corporation<<HYPERLINK TO http://www.in.gov/iedc>> & Indiana Department of Local Government Finance <<HYPERLINK TO http://www.in.gov/dlgf>>

Real and Personal Property Tax Calculations Buildings

Real estate assessments for buildings and improvements are determined by using the rules of the Department of Local Government Finance. Assessments are based on fair market value in use; usually somewhat less than market value on new construction. However, cost as well as market comparisons can be used to make a reasonable estimate of value.

• Tax Formula: Cost x net tax rate per $100 of assessed value Land The assessed value of land is the cost or value of the land, as it is currently used.

• Tax Formula: Cost x net tax rate per $100 of assessed value Personal Property Tax Calculation Depreciable Personal Property The assessed value for depreciable personal property (machinery, equipment and office furniture) is multiplied by a percentage based on the life of the asset. Straight line depreciation procedures are used.

• Tax Formula: Cost x true tax value % x net tax rate per $100 of assessed value Special Tools Special tools are property such as tools, dies, molds, jigs and patterns used for the production of specific products or product models. The usefulness of special tools ceases with the modification or discontinuation of the product or product model. The assessed value of special tools purchased in the previous twelve months is 30% of cost, while all other special tools on hand are valued at 3% of cost.

• Tax Formula: Cost x true tax value % (1st yr. 30%, 2nd yr. more 3%) x net tax rate per $100 of assessed value Personal Property Not Placed in Service Personal property not placed in service as of the assessment date (such as construction in progress) qualifies as a special valuation item. The assessed value of personal property not placed in service is 10% of cost.

• Tax Formula: Cost x .10 x net tax rate per $100 of assessed value Source: Indiana Department of Local Government Finance <<HYPERLINK TO http://www.in.gov/dlgf>>

Incentives

Local Incentives Here in Greene County We know that business is the lifeblood of any economy, which is why we make it easier for businesses to succeed, with lower business costs, a skilled workforce, available land and economic development initiatives designed to stimulate growth, innovation and profits. We know that businesses want to keep their costs low. That’s why Greene County has a tax structure that’s extremely competitive. Indiana also boasts the lowest workers compensation rates in the Midwest and among the very lowest in the country. And our costs for industrial electricity are the second lowest in the nation.

On top of that, Greene County has great economic incentives to help your business grow. Town, City and County governments in Greene County recognize the important role incentives may play in procuring quality economic development. We consider tax abatement projects on a case-by-case basis, but share a commitment to the creation of good paying jobs and capital investment that increases the tax base. Contact us to find out more about our incentives and low costs of doing business.

Tax Increment Financing (TIF) Tax Increment Financing (TIF) provides for the temporary allocation to redevelopment or economic districts of increased tax proceeds in an allocation area generated by increases in assessed value. Thus, TIF permits cities, towns or counties to use increased tax revenues stimulated by redevelopment or economic development to pay for the capital improvements needed to induce the redevelopment or economic development. The use of TIF is initiated by the declaration of a tax allocation area by a county, city or town redevelopment commission. Property tax assessments are frozen at predevelopment levels in the allocation area. Municipal bonds are then issued to finance the public improvements. As property values in the allocation area increase as a result of new development, the increment in tax revenues is used to meet debt service on issued bonds. Once the bonds have been paid off, the taxes collected from the allocation area are distributed to the remaining taxing districts. Bonds payable from TIF may be used to finance the cost of redevelopment and the construction of public improvements in the redevelopment area or for projects that directly serve or benefit that area. Proceeds may also be used for training. Bond amounts are determined by the size of the project and the amount of the increment available. The 1992 General Assembly passed legislation allowing depreciable personal property (machinery and equipment) to be used in addition to real property in computing the increment.

Property Tax Abatement Local communities may offer real and personal property tax abatement as an incentive to new and expanding businesses. Property tax abatement allows a property owner to phase in payment of property taxes over a designated period. This period may be any number of years between one and ten. Property tax abatement in Indiana is authorized under Indiana Code 6-1.1-12.1 in the form of deductions from assessed valuation. Any property owner in a locally designated Economic Revitalization Area (ERA) who makes improvements to real property or installs new manufacturing and/or R&D equipment may apply for property tax abatement. Real Property Tax Abatement New buildings constructed are eligible for real property tax abatement. Substantial improvements to existing buildings may be eligible, but it is important to note that only the value of the improvement to the existing building qualifies. It is not permissible to abate property that is already being taxed in Indiana. By State law land does not qualify for abatement.

Personal Property Tax Abatement Manufacturing or research & development equipment that is new to Indiana is eligible for personal property tax abatement. It is not permissible to abate property that is already being taxed in Indiana. Source: Indiana Department of Revenue<<HYPERLINK TO http://www.in.gov/dor>>

State Incentives The State of Indiana offers competitive incentives to growing businesses. The Indiana Economic Development Corporation and the Indiana Department of Workforce Development are two primary agencies serving Indiana companies.

Hoosier Business Investment Tax Credits Description: The Hoosier Business Investment Tax Credit (HBITC) program encourages capital investment in Indiana by providing a credit against a company’s Indiana tax liability. The credit amount is based on a company’s qualified capital investment with the final credit amount determined by the Indiana Economic Development Corporation (IEDC), based on an analysis of the economic benefits of the proposed investment. The IEDC certifies the amount of the qualified investment that is eligible for credit and the amount directly related to expanding the workforce in Indiana. A company’s credit award may be up to 10 percent of the qualified capital investment and may be carried forward for nine years. The IEDC determines the applicable credit percentage and carry forward term on a case-by-case basis. Eligibility: Hoosier Business Investment Tax Credits recipients must raise the total earnings of employees of the applicant in Indiana, benefit the people of Indiana by increasing opportunities for employment and strengthening the economy of Indiana, pay an average wage to its employees (excluding highly-compensated employees) at the location after the credit is given at least equal to 150 percent of the hourly minimum wage or its equivalent and maintain operations at the project location for at least 10 years during the term that the tax credit is available. IEDC may enter into an agreement with an applicant if 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 raising the total earnings of employees in Indiana or awarding the tax credit will result in an overall positive fiscal impact to the state, as certified by the budget agency using the best available data.

EDGE Tax Credits Description: The Economic Development for a Growing Economy (EDGE) is a refundable tax credit program that rewards companies creating jobs and contributing to the growth of Indiana’s economy. EDGE credits are calculated as a percentage of payroll tax withholding for net new Indiana jobs. EDGE credits may be awarded for up to 10 years. Each year, a limited amount of EDGE credits are available for the retention of jobs in highly competitive situations. Eligibility: Significant new Hoosier job creation, significant local participation and average wage must be at or above the county average wage. Calculation of Credits: EDGE may be awarded for up to 100 percent of the projected withholdings attributable to the company’s Indiana project and may be awarded for up to 10 years. The company must commit to maintaining operations in Indiana for at least two years beyond the term of the company’s EDGE award.

Industrial Recovery Tax Credit Description The Industrial Recovery tax credit provides an incentive for companies to invest in facilities requiring significant rehabilitation or remodeling expense. After a building has been designated as an industrial recovery site, companies may be eligible for a tax credit calculated as a percentage of qualified rehabilitation expense. Eligibility This credit is applicable to investments made in certified vacant industrial facilities, which contain at least two hundred fifty thousand (250,000) square feet of floor space placed in service at least twenty (20) years ago, and has been vacant for at least two (2) years.

Skills Enhancement Fund (SEF) Description The SEF Fund of the IEDC is a tool to encourage companies to invest in their existing workforce and train new employees. SEF provides reimbursement for eligible training expenses over a two year term to trainees who are Indiana residents. Companies may reapply for additional SEF Funds after their initial two year term. Eligibility Companies may claim reimbursement for training expenses that result in improved basic, transferable skills. Company specific and quality assurance training expenses are also eligible. IEDC typically does not provide reimbursement for training that is required by law.

Technology Enhancement Certification for Hoosiers (TECH) Description The Technology Enhancement Certification for Hoosiers (TECH) Fund is a reimbursement grant program designed to help Indiana companies meet the demands of the new information economy by rapidly increasing the number of certified information technology workers in Indiana. This program provides financial assistance to existing companies that are committed to training their workers in the latest information technology skills. Indiana companies receiving TECH funds must be in good standing with state regulatory agencies. Eligibility Indiana companies that have been in operation for at least one year prior to the application date and are in good standing with the state of Indiana and that employ Indiana residents in advanced information technology occupations are eligible to for this fund. The maximum grant award for any one company or nonprofit organization is $50,000, $2,500 per employee, or 50 percent of training costs, whichever is less. Training activities eligible for reimbursement under the guidelines are those offered by industry-certified training providers, which result in a full-time employee receiving a portable certification in systems administration, systems engineering, software development, professional certifications or other certifications in advanced e-business-enabling applications.

Eligible Training Activities: Instructor-led, computer-based training and self-study costs are eligible for reimbursement provided the employee obtains the appropriate vendor certification upon completion of the coursework. Certification training eligible for reimbursement from the TECH Fund is based on the individual needs of the company.

Venture Capital Investment Tax Credit Description The Venture Capital Investment Tax Credit was established to improve access to capital to fast growing Indiana companies by providing individual and corporate investors an additional incentive to invest in early stage firms. Investors who provide qualified debt or equity capital to Indiana companies receive a credit against their Indiana income tax liability. Eligibility This credit is available to any taxpayer who is an individual or entity that has any state tax liability. Pass through entities whose shareholders have Indiana income tax liabilities are also eligible for the credit. A taxpayer wishing to obtain a credit for investing in a qualified Indiana business must apply to the IEDC for a certification that the proposed investment plan would qualify for a credit. The total amount of tax credits certified by the IEDC for any calendar year may not exceed twelve and a half million dollars ($12,500,000). Upon certification, the taxpayer must provide qualified investment capital to a qualified Indiana business according to the taxpayer's certified investment plan within two (2) years after the date on which the IEDC certifies the investment plan. After a taxpayer makes the investment, the taxpayer must submit proof of investment to the IEDC from which the IEDC shall issue the taxpayer a letter indicating that the taxpayer is entitled to a tax credit

Office of the OmbudsmanThe Indiana Economic Development Corporation's regulatory ombudsman assists in the process of obtaining the permits and approvals necessary for a business operation. The ombudsman serves as a liaison between companies, communities, local economic development organizations and regulatory agencies. The ombudsman assists both current and potential Indiana businesses with a variety of topics, including agency contacts and communication facilitation; license and permit requirements and applications; permit tracking; and regulatory compliance. In addition, the ombudsman serves as a liaison between businesses and various state agencies, such as the Indiana departments of Environmental Management, Natural Resources, Transportation, Revenue and Workforce Development, and the offices of the Secretary of State and the Attorney General. The ombudsman also serves on a variety of workgroups and task forces dealing with issues of importance to economic development in Indiana. The ombudsman is the secretary of commerce's proxy on three environmental rulemaking boards: The Air Pollution Control Board, The Water Pollution Control Board and the Solid Waste Management Board. Source: Indiana Economic Development Corporation <<HYPERLINK TO http://www.in.gov/iedc>>

HUBZone Greene County, Indiana is a federally designated Historically Underutilized Business Zone. The HUBZone Program stimulates economic development and creates jobs in urban and rural communities by providing Federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone (Historically Underutilized Business Zone) certification in part by employing staff who live in a HUBZone. The company must also maintain a "principal office" in one of these specially designated areas. [A principal office can be different from a company headquarters, as explained later in this document.] The program resulted from provisions contained in the Small Business Reauthorization Act of 1997. The HUBZone program was enacted into law as part of the Small Business Reauthorization Act of 1997. The SBA regulates and implements the program, determines which businesses are eligible to receive HUBZone contracts, maintains a listing of qualified HUBZone small businesses federal agencies can use to locate vendors, and adjudicates protests of eligibility to receive HUBZone contracts. To qualify for the program, a business (except tribally-owned concerns) must meet the following criteria: • It must be a small business by SBA standards; • It must owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, or an agricultural cooperative or an Indian tribe; • Its principal office must be located within a 'Historically Underutilized Business Zone and • At least 35% of its employees must reside in a HUBZone. Existing businesses that choose to move to qualified areas are eligible. To fulfill the requirement that 35% of a HUBZone firms employees reside in the HUBZone, employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.

For additional information:

U.S. Small Business Administration HUBZone Program
409 Third Street, SW, 8th Floor
Washington, D.C. 20416

Phone: 202-205-8885 - Fax: 202-205-7167

Website: www.sba.gov/hubzone
E-Mail: HUBZone@sba.gov

Source: Small Business Administration

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