Indiana Research and Development Tax Credit Summary

The Indiana R&D Tax Credit provides a tax credit for increasing qualifying research activities in the state of Indiana. Indiana leverages off of the federal section 41 rules regarding the calculation and qualification of qualified research activities with some modifications.

  • Applicable Indiana code section is Ind. Code Sec. 6-3.1-4-1.
  • Research must be conducted within the state of Indiana.
  • The Indiana R&D tax credit is 15% of the increase in Indiana qualified research expenditures paid or incurred over the base amount up to $1 million. The credit is 10% of any excess of qualified research expenditures over $1 million.
  • For expenses incurred after December 31, 2009, Indiana allows an alternative method of calculating the R&D tax credit. The credit amount is 10% of the excess of the current year's qualified research expenses that is in excess of 50% of the average of the previous three years' qualified research expenses. Should an Indiana taxpayer not have expenses in all three prior years, the credit amount is 5%.
  • Indiana allows a 10-year carry forward period for any unused R&D tax credits.

Indiana R&D Tax Credit Case Study

An Indiana life sciences company with fewer than 100 employees had never before claimed the R&D Tax Credit. This project involved a multi-year study covering the tax years 2012 - 2014. The Company qualified for the federal R&D Tax Credit of $312,666 and an additional $81,250 in Indiana state R&D Tax Credit.

  
FEDERAL
 
INDIANA
Year
Total QREs
Credit
Total QREs
Credit
2014
$1,012,550
$101,255
$1,012,550
$75,941
2013
955,200
95,520
955,200
71,640
2012
905,800
90,580
905,800
67,935
2011
895,700
89,570
895,700
67,178
     
Total $3,769,250$376,925 $3,769,250$282,694