Indiana Looks to Make Permanent 10% Tax Credit on R&D

The Indiana General Assembly recently passed legislation that would make permanent a 10 percent research and development (R&D) tax credit, if signed by Gov. Joe Kernan.

Indiana's Research Expense Tax Credit provides for a credit based upon a taxpayer's increased research activities conducted in Indiana. The credit is 10 percent of the increase in qualified research expenses paid or incurred in a taxable year over a taxpayer's base amount of research expenses.

Last month's action taken by the Indiana General Assembly is the latest development with the state's R&D tax credit. During the 2003 Legislative Session, the expiration date for the credit was extended from Dec. 31, 2004, to Dec. 31, 2013. The General Assembly also has doubled the credit from 5 percent to 10 percent.

Proponents of the R&D tax credit are hopeful it will lead businesses to invest in new products, ultimately creating new jobs. Such products are expected to include computers or laboratory equipment. Other supporters believe the credit will enable more high-tech firms to be spun out of Indiana's universities and large companies.

More information on Indiana's R&D tax credit is available at: http://www.in.gov/doc/compare/Research_Expense_Tax_Credit.htm