Indiana Tax Incentives
Alternative Fuel Vehicle (AFV) Manufacturer Tax Credit
The Indiana Economic Development Corporation (IEDC) may award tax credits under the Hoosier AFV Manufacturer Tax Credit to foster job creation, reduce dependency on imported energy sources, and reduce air pollution resulting from the manufacture or assembly of AFVs in Indiana. AFV manufacturers are eligible for tax credits of up to 15% of the qualified investment for which the credit is claimed. Qualified investments include expenditures in the state that are reasonable and necessary for the manufacture or assembly of AFVs. For the purpose of this incentive, AFVs are defined as vehicles designed to operate on E85, natural gas, liquefied petroleum gas, hydrogen, coal-derived liquid fuels, non-alcohol fuels derived from biological material, P-Series fuels, or electricity. Applications for this incentive must be reviewed and approved by the IEDC. The credit applies to taxable years beginning after December 31, 2006, and before December 31, 2012. Unused credits may be carried forward for up to nine consecutive taxable years. (Reference Indiana Code 6-3.1-31.9)
Ethanol Production Tax Credit
An ethanol producer located in Indiana is entitled to a credit of $0.125 per gallon of ethanol produced, including cellulosic ethanol. Applications for this incentive must be reviewed and approved by the Indiana Economic Development Corporation. The amount of credits granted to a single taxpayer may not exceed the following amounts for all taxable years:
| Tax Credit | Annual Production |
|---|---|
| $2 million | More than 40 million and less than 60 million gallons of grain ethanol |
| $3 million | At least 60 million gallons of grain ethanol | $20 million | At least 20 million gallons of cellulosic ethanol |
(Reference Indiana Code 6-3.1-28)
E85 Fuel Retailer Tax Credit
An E85 retailer is allowed to deduct $0.18 from the required state gross retail tax for every gallon of E85 sold during reporting periods ending before July 1, 2020. The Indiana Department of Revenue will publish an annual notice in the Indiana Register to indicate the total amount of funding available for reimbursement. (Reference Indiana Code 6-2.5-7-5 and 6-2.5-7-5.5)
E85 Fuel Use Tax Credit
A political subdivision, defined as a municipal corporation or special taxing district, is entitled to a monthly E85 incentive payment if at least 75% of the fuel purchased in the preceding calendar month by the political subdivision was E85 for use in flexible fuel vehicles (FFVs). The amount of the monthly payment is equal to $33.33 for each FFV owned by the political subdivision and only applies for FFVs that have been owned by the political subdivision for less than five calendar years. This credit expires January 1, 2015. (Reference Indiana Code 8-14-2-8)
Biodiesel Production Tax Credit
A biodiesel producer located in Indiana is entitled to a credit of $1.00 per gallon of biodiesel produced. Applications for this incentive must be reviewed and approved by the Indiana Economic Development Corporation (IEDC). The total amount of credits granted to single taxpayer may not exceed $3 million for all taxable years, but may be increased to $5 million with prior approval from the IEDC. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-8)
Biodiesel Blending Tax Credit
A biodiesel blender located in Indiana is entitled to a credit of $0.02 per gallon of blended biodiesel produced at a facility located in Indiana. Applications for this incentive must be reviewed and approved by the Indiana Economic Development Corporation, and the total amount of credits granted to single taxpayer may not exceed $3 million for all taxable years. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-9)
Biodiesel Retailer Tax Credit
Through December 31, 2010, a taxpayer that is a fuel retailer and distributes blended biodiesel for retail purposes is entitled to a credit of $0.01 per gallon of blended biodiesel distributed. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-10)
Biodiesel Blend Fuel Tax Exemption
Biodiesel blends of at least 20% that are used for personal, noncommercial use by the individual that produced the biodiesel content of the fuel are exempt from the $0.16 per gallon license tax. The number of gallons of fuel for which the exemption may be claimed is based on the percentage volume of biodiesel in each gallon used. ((Reference Indiana Code 6-6-2.5-30.5)
