SB 281 changesIncome tax credits.

What changed

+1256 / −909 words · LargeConfidence: high

SB 281 fundamentally restructures Indiana's income tax credit programs by imposing new aggregate annual caps ($250 million through FY2025, then $300 million with $15 million earmarked for community projects), establishing a December 31, 2032 sunset date, and creating budget committee oversight for credits exceeding statutory maximums. The bill eliminates governance provisions for regional development advisory councils (removing compensation prohibitions, meeting requirements, and officer positions) while creating an extensive new regulatory framework for FAA-designated unmanned aircraft systems (UAS) test sites, including operational requirements, funding mechanisms, and state procurement authority. The legislation also adds business eligibility restrictions excluding real estate, insurance, and professional services from certain credits while creating exceptions for e-commerce and patented retail products, and establishes new certification, fee, and reporting requirements administered by the Indiana Economic Development Corporation.

Change log

• SECTION 5 > (e)

  removedhigh confidence

  Elimination of prohibition on compensation for regional development advisory council members

  This section previously stated that members of regional development advisory councils could not receive compensation for their service. The entire subsection has been removed from the statute. This removal eliminates the explicit prohibition, though it does not affirmatively authorize compensation.

• SECTION 5 > (f)

  removedhigh confidence

  Annual organizational meeting requirement for regional development advisory council eliminated

  The requirement for the regional development advisory council to hold an organizational meeting by October 1st each year has been removed. This meeting was previously used to elect officers from among the council members. The removal eliminates both the timing requirement and the prescribed purpose for the annual meeting.

• SECTION 5 > (1)

  removedlow confidence

  Technical/conforming change

  A single-word provision referencing 'A chair' has been removed. Without surrounding context, this appears to be a structural or organizational element being deleted, likely as part of broader reorganization of the section's numbering or formatting.

• SECTION 5 > (2)

  removedhigh confidence

  Vice chair position eliminated

  The provision establishing a vice chair position has been removed. This represents a structural change to the organizational hierarchy described in this section. No additional context about the broader governing body is provided in this isolated change.

• SECTION 5 > (3)

  removedhigh confidence

  Secretary-treasurer officer position and election procedures eliminated from regional development advisory council

  This section removes provisions that allowed regional development advisory councils to elect a secretary-treasurer officer. The deleted text specified that a majority vote of appointed members was required to elect this officer, and that officers served from their election date until their successor was elected and qualified. No replacement language is provided.

• SECTION 5 > (g)

  removedhigh confidence

  Regional development advisory council meeting provision removed

  The provision establishing that the regional development advisory council shall meet at the call of the chair has been deleted. No replacement language is provided. This removal eliminates the explicit meeting-convening mechanism for the council.

• PREAMBLE >cont.

  addedhigh confidence

  New preamble section added describing Level 3 tech park upgrades and $250,000 deposit limits

  This is a newly added preamble section that describes the bill's purpose. It explains that Level 2 certified technology parks meeting certain criteria may become Level 3 parks. These upgraded parks would be eligible for additional annual incremental income tax deposits of up to $250,000 until July 1, 2029, provided they have reached deposit limits, maintain certification, and are located in qualified military base enhancement areas.

• SECTION 1 > (1)

  addedhigh confidence

  Annual tax credit cap of $250 million established for fiscal years through June 30, 2025

  This provision creates a new aggregate cap on tax credits for all taxpayers combined. The cap is set at $250 million per state fiscal year, applying to each fiscal year ending on or before June 30, 2025. This appears to be establishing a cumulative limit across all eligible taxpayers rather than a per-taxpayer limit.

• SECTION 1 > (2)

  addedhigh confidence

  New $300 million annual cap on tax credits established starting July 1, 2025, with $15 million earmarked for community projects

  This section creates a new annual limit of $300 million on income tax credits for all taxpayers for state fiscal years ending on or after July 1, 2025. Of this total, $15 million must be specifically allocated to fund qualified community projects within local government units under IC 6-3.1-34-24. Each certification under this provision requires budget committee review.

• SECTION 1 > (1)

  addedhigh confidence

  New definition establishing when tax credits are considered 'awarded' for state fiscal year purposes

  This new provision defines the timing of when a tax credit is considered 'awarded' by the state. A credit is deemed awarded in the fiscal year when the taxpayer becomes eligible to first claim it, regardless of whether the taxpayer carries the credit forward to future years or back to prior years. This timing rule clarifies the state's fiscal accounting for tax credit programs.

• SECTION 1 > (2)

  addedhigh confidence

  Tax credits awarded before July 1, 2022 now count toward aggregate credit limitation

  This new provision clarifies that any applicable tax credits awarded by the corporation before July 1, 2022, will be included when calculating the total aggregate credit limitation. This appears to impose a retroactive counting requirement, bringing previously awarded credits under the statutory cap. The change affects how the overall credit limitation is measured and enforced.

• SECTION 1 > (3)

  addedhigh confidence

  New provision clarifies how accelerated credits count toward aggregate credit limitations

  This new subsection establishes that when an accelerated credit is awarded under IC 6-3.1-26-15, the amount applied to the aggregate credit limitation in a state fiscal year is the pre-discount credit amount for the taxable year described in subdivision (1). This means the full credit amount, before any discount is applied, counts toward the state's overall credit cap.

• SECTION 1 > (c)

  addedlow confidence

  New subsection (c) added establishing corporation determination authority

  A new subsection (c) is added that begins with 'Notwithstanding subsection (a)', indicating it will create an exception or override to subsection (a) when the corporation makes certain determinations. The subsection appears incomplete in the provided text, cutting off after establishing the conditional framework. Without the complete text, the substantive conditions and effects cannot be determined.

• SECTION 1 > (1)

  addedmedium confidence

  New subsection (1) added establishing certification requirement for tax credits

  This newly added subsection establishes that an applicable tax credit should be certified in a state fiscal year. The provision appears to be part of a larger structure defining when tax credits should be certified, though the full context is not visible in this isolated addition.

• SECTION 1 > (2)

  addedhigh confidence

  New provision allows corporation to certify tax credits exceeding annual maximum after budget committee review

  This addition establishes a new subsection (2) that permits the corporation to certify applicable tax credits even when doing so would cause the total certified credits for a state fiscal year to exceed the maximum amount set in subsection (a). This certification authority is contingent upon review by the budget committee. The provision creates an exception or override mechanism for the annual cap referenced in subsection (a).

• SECTION 1 > (d)

  addedhigh confidence

  Income tax credit provision set to expire December 31, 2032

  A new subsection establishes a sunset date for this income tax credit section. The provision will expire on December 31, 2032, after which the credit will no longer be available unless the legislature extends or reinstates it.

• SECTION 2 > (1)

  addedhigh confidence

  New provision: FAA designated Indiana as UAS test site on January 8, 2026

  This section adds a new statement establishing that the Federal Aviation Administration announced Indiana's designation as a test site for unmanned aircraft systems (UAS) on January 8, 2026. This appears to be a factual finding or legislative declaration being added to the bill. No prior text existed for this provision.

• SECTION 2 > (2)

  addedhigh confidence

  New subsection added describing FAA's stated purposes for UAS test sites

  This section adds new language noting the FAA's characterization of UAS (unmanned aircraft system) test sites. The text states these sites help assess emerging technologies for cargo delivery and Beyond Visual Line of Sight operations, inform safety and security considerations, and support commercialization and integration of UAS into the national airspace system. This appears to be legislative findings or background rather than operative law.

• SECTION 2 > (3)

  addedhigh confidence

  New subsection added describing Indiana's competitive designation as test site through joint corporation-operating partner application

  This new provision documents that Indiana was selected as a test site through a competitive process involving multiple states. It specifies that the designation resulted from a joint application submitted by "the corporation" and "the operating partner" under a contract between them to pursue similar federal programs. The language establishes the procedural history of how the test site designation was obtained.

• SECTION 2 > (4)

  addedhigh confidence

  New definitions and federal preemption framework established for FAA UAS test site operations

  This new subsection creates definitions for FAA, operating partner, test site, and UAS (unmanned aircraft system) in relation to Indiana's FAA-designated UAS test site. It establishes that the corporation and its operating partner are exempt from certain unspecified state laws while operating the test site under the federal UAS Test Site Program. The provision emphasizes avoiding duplication between federal and state regulatory schemes for activities requiring substantial federal compliance and reporting.

• SECTION 2 > (1)

  addedmedium confidence

  New subsection added for state procurement requirements

  A new subsection titled 'State procurement requirements' has been added to the bill. No additional text beyond the heading is provided in this section, suggesting this may be a structural placeholder or that substantive language appears elsewhere in the bill.

• SECTION 2 > (2)

  addedhigh confidence

  New subsection heading 'State contracting requirements' added

  This change adds a new subsection heading titled 'State contracting requirements' to the bill. The addition is structural only, introducing a new organizational element without accompanying substantive text in this excerpt. The actual requirements or provisions under this heading are not shown in the provided text.

• SECTION 2 > (3)

  addedhigh confidence

  New requirement: Operating partner must maintain separate bank account for test site funds

  This section creates a new requirement for operating partners to establish and maintain a dedicated bank account for test site funds. The account must be completely separate and segregated from all other accounts controlled by the operating partner. All test site funds must be administered through this designated account.

• SECTION 2 > (c)

  addedhigh confidence

  New subsection authorizes operating partner expenditures and revenue transfers from bank account

  This new subsection establishes how an operating partner may use funds from a bank account. The operating partner is authorized to spend money on test site operations, including administration, staffing, equipment, test site activities, communications, and marketing. Additionally, the operating partner may transfer revenue from the account to the corporation or other state agencies for specified purposes (though those purposes are not detailed in the provided text excerpt).

• SECTION 2 > (1)

  addedhigh confidence

  New authorization to procure UAS technology for state use

  This section is entirely new, adding language that authorizes procurement of UAS (Unmanned Aircraft Systems) technology for use by the state. No prior language existed in this location. The provision establishes a new category or purpose related to UAS technology acquisition.

• SECTION 2 > (2)

  addedhigh confidence

  New provision authorizes pursuit of federal funding for UAS activities

  This section adds language authorizing the pursuit of federal funding for activities related to unmanned aircraft systems (UAS) that benefit the state. This is a new provision with no prior equivalent in the before text.

• SECTION 2 > (3)

  addedhigh confidence

  New provision added to support UAS research or manufacturing economic development

  This section adds a new subsection (3) that creates support for economic development activities related to unmanned aircraft systems (UAS) research or manufacturing. The provision appears to be part of a broader framework, though the specific mechanism of support (whether tax credits, grants, or other incentives) is not detailed in this isolated section.

• SECTION 2 > (d)

  addedhigh confidence

  New recordkeeping, audit, and reporting requirements established for operating partner

  This section creates new requirements for an operating partner to maintain complete records of received and disbursed funds. The records must be submitted to the corporation board annually by July 1 or more frequently if required, and are subject to audit. The state examiner or designated examiners are authorized to conduct full audits of the test site's records and receipts.

• SECTION 2 > (1)

  addedhigh confidence

  New provision requires responding to economic development requests for UAS sector assistance

  This section adds a new requirement to respond to requests from local, regional, or state economic development organizations seeking assistance with economic activities. The activities must be aimed at attracting companies or developing clusters of activity specifically within the UAS (Unmanned Aircraft Systems) sector.

• SECTION 3 > (ii)

  addedhigh confidence

  New retail sales exception added for businesses selling patented or uniquely developed products

  This section adds a new provision (ii) that creates an exception allowing businesses engaged in retail sales under specific circumstances. The exception applies when the business is selling a unique product that it developed itself, holds patents for, or otherwise owns. This appears to be part of a broader definition or eligibility criteria, with the provision ending with a reference to oil and gas exploration.

• SECTION 2 > (2)

  addedhigh confidence

  New duty added to respond to state agency requests for UAS technology procurement expertise

  This section adds a new requirement to respond to requests from state agencies seeking expertise on procuring UAS (unmanned aircraft systems) technology. The provision establishes a specific responsibility to provide technical assistance in the acquisition process for drone-related equipment and systems. This creates a formal consultative role for UAS procurement matters across state government.

• SECTION 2 > (3)

  addedhigh confidence

  New duty for entity to assist state agencies with UAS test activity development

  This section creates a new responsibility for an unspecified entity to respond to requests from state agencies seeking help developing unmanned aircraft system (UAS) test activities in specific economic sectors. The added language also defines roles for an "operating partner" who manages day-to-day test site operations under a "corporation's" supervision, including carrying out FAA safety requirements. The corporation is authorized to enter agreements with the operating partner to fulfill chapter requirements and federal agency obligations.

• SECTION 2 > (b)

  addedhigh confidence

  Corporation authorized to dedicate resources for test site implementation and operation

  This new subsection grants the corporation authority to allocate resources deemed necessary for supporting a test site's implementation and ongoing operation. The permitted support includes staff support, administrative support, and direct financial support. The corporation has discretion to determine what resources are necessary and appropriate.

• SECTION 3 > (5)

  addedhigh confidence

  New business exclusions added for credits: real estate, insurance, professional services, and retail sales (with exceptions)

  This section introduces new restrictions on which businesses qualify for an unspecified tax credit program. Businesses engaged in real estate, real estate development, insurance, professional services provided by accountants, lawyers, or physicians, and retail sales (subject to exceptions) are now explicitly excluded. The provision appears incomplete, as subsection (E) regarding retail sales ends mid-sentence with 'except when,' suggesting additional qualifying conditions follow.

• SECTION 3 > (i)

  addedhigh confidence

  New criterion added: businesses engaged in Internet-based electronic commerce development or support

  This section adds a new qualifying criterion for an income tax credit program. Businesses whose primary purpose is the development or support of electronic commerce using the Internet now meet the eligibility requirements. This expands the types of businesses that can claim the credit beyond whatever criteria existed previously.

• SECTION 3 > (c)

  addedhigh confidence

  Indiana Economic Development Corporation must provide certification copies to investors for tax filings

  This new subsection creates a requirement for the Indiana Economic Development Corporation to provide certification documentation to investors when a business is certified as a qualified Indiana business. The provision specifies that these certifications are intended for investors to include in their tax filings. This appears to be an administrative process requirement that did not previously exist in statute.

• SECTION 3 > (d)

  addedhigh confidence

  New $200 maximum application fee authorized for Indiana economic development corporation

  This provision newly authorizes the Indiana economic development corporation to impose an application fee of up to $200. The fee authority is subject to an exception referenced in subsection (e). No prior text existed for this subsection.

• SECTION 3 > (e)

  addedhigh confidence

  Application fee waiver established for July 1, 2011 through June 30, 2013 period

  This new subsection prohibits the Indiana economic development corporation from imposing the application fee referenced in subsection (d) for a specific two-year window. The fee waiver applies only to applications submitted between July 1, 2011 and June 30, 2013. This represents a temporary exemption from what appears to be a standard application fee requirement.

• SECTION 4 > (b)

  addedhigh confidence

  New subsection establishes IEDC authority to certify qualified investment funds based on investment policy

  This new subsection grants the Indiana Economic Development Corporation authority to certify qualified Indiana investment funds, contingent on the fund following a specified investment policy. The provision creates a gating mechanism where IEDC certification depends on policy compliance. Without the corresponding policy requirements (likely in a following subsection), the full scope of restrictions cannot be determined from this text alone.

• SECTION 4 > (1)

  addedhigh confidence

  New requirement added for eligible companies to focus on commercialization of research, technology transfer, or new technology application

  This section adds a new requirement that eligible companies must be primarily focused on the commercialization of research and development, technology transfer, or application of new technology. This is a newly inserted provision with no prior corresponding text, establishing eligibility criteria that did not previously exist in this location.