TAX
ISSUES
The IMA supports a tax structure that encourages investment and business growth for Hoosier business.
The Indiana Manufacturers Association is seeking to eliminate the 30% floor on depreciation of business equipment for property taxes.
Business Personal Property (BPP) Tax Basics
Property tax on business equipment.
Local governments collected $1,400,590,611 in BPP tax revenue in 2023. Industrial taxpers paid $629,635,791, which is the largest share of any business class of taxpayer.
The BPP tax burden has grown steadily. Indiana businesses are paying over $360 million more today than they were 10 years ago.
Assessment and 30% Floor
Taxpayers self-assess BPP on a set depreciation schedule set by the Department of Local Government Finance (DLGF). Indiana law prevents business equipment still in use from depreciating below 30% of acquisition cost.
*Removing the 30% floor does not allow property to depreciate to 0% - Indiana depreciation schedules have “residual value” if the equipment is in use.
Other States
20 states do not tax manufacturing equipment at all. 9 states allow assets to fully depreciate. 20 states allow more depreciation than Indiana.
Why Eliminate the 30% Floor?
Reduces the tax burden on Indiana businesses, big and small – especially capital-intensive businesses like manufacturers.
The 30% floor disproportionately impacts companies with older equipment.
Removes the worst part of our property tax system when comparing it to other states.
More cost effective for Indiana businesses to invest in technology upgrades and equipment purchases that are necessary in the modern economy.
Allows Indiana Manufacturers to make up workforce deficits through automation at a lower cost.
Better positions Indiana to compete for investment – particularly in the auto sector in the transition to electric vehicles.