Indiana Research Expense Credit

Program Overview

Indiana provides a research expense credit calculated on the increase in Indiana qualified research expenses over a base period amount, with a higher rate applied to the first $1 million of qualifying increase and a lower rate above that. Taxpayers may elect an alternative simplified method with a reduced rate and a simpler base computation. Indiana also offers a separate sales tax exemption for qualifying research and development equipment.

Eligibility

• Taxpayers with qualified research expenses incurred for research conducted in Indiana may qualify.
• Research activities must meet the applicable requirements under IRC Section 41.
• Qualified research expenses must be attributable to research conducted in Indiana.
• Additional requirements may apply depending on the method used to calculate the credit.

Benefits

• Provides a non-refundable credit against Indiana adjusted gross income tax liability.
• Provides a higher credit rate on the first $1 million of qualifying increase in research expenses.
• A lower rate applies to qualifying increases above the first $1 million.
• Indiana also provides a separate sales tax exemption for qualifying research and development equipment, subject to applicable requirements.