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Individuals and corporations are eligible for three state tax incentives for investing or lending capital for qualified purposes within the Urban Enterprise Zone (UEZ). Quafied investments include investments made in real estate, loans for business growth or capital improvements, and the aquisition of an ownership share in a business. To claim this credit, you must file Indiana Income Taxes but do not need to operate or reside within the UEZ.

Enterprise Zone Investment Deduction

This deduction allows taxpayers to deduct the increased value of property within an Urban Enterprise Zone following a qualified investment. The Investment Deduction webpage provides a definition of a qualified investment, sample forms and tax savings formula.

Investment Cost Credit

An individual purchasing an ownership interest in a Zone business may be eligible to receive a tax credit of up to 30% of the purchase price. Applicants for the credit must offer a legitimate purpose for the investment, prove that the business is viable and demonstrate that the investment will not be made unless the credit is issued. The Indiana Economic Development Corporation (IEDC) is responsible for determining if a credit will be issued and the size of the credit. For more information, contact IEDC at (317) 232-8800. The statute provides a description of tax credit program (Indiana Code 6-3.1-10-8) (PDF 1.62 MB)

Loan Interest Credit

A taxpayer may take a credit of 5% of the interest income received from a qualified loan made to a Zone business or resident. The loan must apply to purposes directly related to the business or increase the assessed value of real property in the Zone, including residential property. Home purchase loans and loans for repairs may not qualify and the lender does not have to be located in the Zone to qualify.

To claim this credit, taxpayers should complete a Schedule LIC and attach it to their state individual or corporate tax return. Claimants must annually file a Form EZB-R with the Indiana Economic Development Corporation and BUEA by June 1, as well as pay a participation fee to the BUEA.