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 but a simpler base computation, which is often the better choice for companies with incomplete historical records. Indiana also offers a separate sales tax exemption for research and development equipment.

Eligibility

Taxpayers with qualified research expenses incurred for research conducted in Indiana that would qualify under IRC Section 41.

Benefits

Non-refundable credit against Indiana adjusted gross income tax.

Indiana IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

1. S1Confirm the research was physically performed within Indiana.
2. S2Provide the Indiana qualified research expense calculation and base amount.
3. S3Reconcile Indiana expenses to the federal Form 6765.
4. S4Show how wages and supplies were apportioned between Indiana and other locations.
5. S5Provide the Indiana return and credit schedule for each year claimed.
6. S6Show the carryforward schedule for unused Indiana credits.
7. S7Confirm the entity claiming the credit is the entity subject to Indiana tax.

Draft questions for illustration, reviewed by a specialist before any engagement.