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River Ridge Commerce Center
6200 E. Highway 62, Suite 600
Jeffersonville, IN 47130
P: 812.285.8979
F: 812.285.8983
E: info@riverridgecc.com
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Enterprise Zone
http://www.iedc.in.gov
Description
Stated below is an explanation of the tax incentives available in the Urban Enterprise Zones (UEZ).
Employee Expense Credit
Zone employers can earn tax credits for employing zone residents. Credit is subtracted from business state tax liability based on wages paid to employees who live in the zone and work at least 50% of the time in the zone on a job related at least 90% of the time to the zone facility. In the case of an individual who is employed by a taxpayer that is a pass through entity, the zone resident employee must be first employed by the taxpayer after December 31, 1998.
The enterprise zone employer may take a tax credit which is the lesser of 10 percent (10%) of the INCREASE in wages paid to qualified employees (as defined above) or $1,500 multiplied by the number of qualified employees. This credit is calculated on Schedule EZ which is filed with the annual tax return.
If a pass-through entity is eligible for Enterprise Zone credits but does not have state tax liability against which the credits may be applied, then an individual who is a partner, shareholder, beneficiary, or member of the entity is entitled to the credit. The credit may be made in the amount of the tax credit multiplied by the percentage of pass-through entity’s distributive income to which the individuals are entitled. Zone employers would have to participate and file the EZB-R registration by June 1st for tax savings generated by this credit.
See Indiana Department of Revenue Income Tax Information Bulletin # 66 for additional information.
Employee Wage Deduction
The employee tax deduction means that a qualified employee’s wages, up to $7,500, are exempt from Indiana individual income tax. A “qualified employee” is one who lives in the enterprise zone, works at least 50% of his or her time in the enterprise zone and has at least 90% of his or her services are directly related to the company, nonprofit, state or federal government entity in the enterprise zone. This includes pass-through entities. One half of the adjusted gross income earned from a zone business, up to $7,500 may be deducted before taxes are calculated. At the current tax rate of 3.4% this could be worth up to $255 in tax savings for qualified employees.
Zone employers need to provide to its qualified employees Form IT-40 QEC. On it employers will provide information as to amount of compensation for the tax year during the period of residence in the Enterprise Zone. The qualified employees will take ½ of that amount or $7,500, whichever is less, as a deduction on their Indiana state income tax return as “Other Indiana Deduction”, Line F. The employer does NOT need to file Form EZB-R nor pay any registration or participation fee for this incentive.
Investment Deduction
The EZ Investment Deduction allows the increase in AV from “qualified investment” in real and/or personal property of an EZ business to be deducted for up to 10 years. A taxpayer must apply to the county auditor to claim the deduction for a particular year. The county auditor would determine whether the taxpayer is eligible for the deduction.
Enterprise Zone Deduction: Indiana Code 6-1.1-45
- For Certain Qualified Investments Made Within An Existing Enterprise Zone
- First Available 2006, pay 2007 - Can be claimed for up to ten (10) years
A Qualified Investment is defined as a:
- Building Purchase
- New Manufacturing/Production Equipment Purchase
- Costs Associated with Repair, Rehabilitation or the Modernization of an Existing Building & Related Improvements
- Onsite Infrastructure Improvements
- Construction of a New Building
- Costs Associated with Retooling Existing Machinery
Deduction Amount:
Total Assessed Valuation of Taxpayers Real & Personal Property within the Enterprise Zone Location on the Assessment Date Minus (-) Base Assessed Value, (defined as total AV of all real & personal property at the EZ location on the immediately preceding assessment date) Equals (=) Deduction Amount (This captures 100% of the increase in AV resulting from the qualified investment). Expressed Mathematically:
| $100,000 |
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AV on March 1, 2006 |
| +$10,000 |
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New Construction |
| $110,000 |
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Total AV on March 1, 2006 |
| -$100,000 |
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March 1, 2005 AV |
| $10,000 |
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Amount of Deduction |
Loan Interest Credit:
An individual or business that pays taxes in Indiana is entitled to a 5 percent (5%) tax credit on interest income from a loan that benefits businesses or residents of an Enterprise Zone. To qualify, the loan must directly benefit an Enterprise Zone business; increase the assessed value of real property in an Enterprise Zone; or be used to rehabilitate, repair or improve a residence in a zone.
The lender does not need to be located in the zone to claim benefits. The loan interest credit can be applied to reduce the adjusted gross income tax (excluding any county income tax), supplemental net income tax, bank tax, savings and loan association tax and/or the financial institutions tax.
To claim the loan interest credit, Schedule LIC is filed with annual tax return. This credit can be carried forward for ten (10) years.
The lender, an individual or business, must register with the State Urban Enterprise Zone Board and the local Urban Enterprise Association to claim benefits. The lender must file the Form EZB-R and pay the participation and registration fees. Contact IDOC at (317) 232-8911 or 1-800-824-2476 for more information.
For further information contact:
Michael C. Ladd
Executive Director
New Albany Urban Enterprise Association
117 E. Spring Street
New Albany, Indiana 47150
.(JavaScript must be enabled to view this email address)
Telephone: (812) 944-3454
Jim Urban
Director of the Urban Enterprise Zone
City of Jeffersonville and River Ridge Commerce Center
500 Quartermaster Court
Jeffersonville, IN 47130
.(JavaScript must be enabled to view this email address)
Telephone: (812) 280-4710
Program Manager Indiana Enterprise Zone Program Indiana Economic Development Corporation One North Capitol, Suite 600 Indianapolis, IN 46204 Telephone: (317) 232-8800
Foreign Trade Zones
Areas shaded above indicate areas designated as Foreign Trade Zones.
For more information about additional incentives, contact the Economic Development Council and Chamber of Commerce for Floyd and Clark counties:
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