LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7625 NOTE PREPARED: Jan 18, 2025
BILL NUMBER: HB 1601 BILL AMENDED:
SUBJECT: Quantum Research Tax Incentives and READI Grants.
FIRST AUTHOR: Rep. Soliday BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
XDEDICATED
FEDERAL
Summary of Legislation: READI Grants: The bill specifies that funds may not be expended from the
Regional Economic Acceleration and Development Initiative (READI) 2.0 until all funds available under
READI 1.0 have been expended.
Quantum Research Tax Incentives: The bill amends the state Sales and Use Tax exemption for data centers
to instead provide the exemption projects for investments in a quantum computing research, advanced
computing, and defense infrastructure network that result in a minimum qualified investment within five
years of at least $50 M.
Effective Date: July 1, 2025.
Explanation of State Expenditures: READI Grants: Ensuring that READI 1.0 funds are fully expended
before expending READI 2.0 funds could increase the Indiana Economic Development Corporation (IEDC)
workload in administering and providing grants or loans to eligible projects. The task can be accomplished
within existing resource and funding levels.
The General Assembly has appropriated $500 M to READI 1.0 and 2.0, respectively. As of December 31,
2024, there is $89.4 M available for READI 1.0 and $218.9 M for READI 2.0.
Quantum Research Tax Incentives: The bill amends the state Sales and Use Tax exemption for data centers
to instead provide the exemption for investments in quantum computing research, advanced computing, and
defense infrastructure network. The bill requires the IEDC to review requests for specific transaction award
certificates, and it requires a qualified quantum research operator to enter into an agreement with the IEDC
as a condition of receiving an award certificate. The IEDC may need to modify forms or other documentation
to implement the bill’s requirements. In addition, the IEDC will need to coordinate with and notify the
Department of State Revenue (DOR) regarding new Sales and Use Tax exemptions for quantum computing
research equipment.
HB 1601 1 The provision of quantum research tax incentives would increase the IEDC and DOR workload, while the
amendment to data center tax incentives could reduce their workload. Overall, the agencies' workload would
increase due to the new quantum research investments and the carrying over of the executed contracts for
data center investments. The IEDC and the DOR should be able to implement the bill’s requirements with
no additional appropriations, assuming near customary agency staffing and resource levels.
Explanation of State Revenues: Quantum Research Tax Incentives: The bill amends the Sales Tax
exemption for data centers to instead provide it to quantum research operators. The bill would have an
indeterminable impact on Sales Tax revenue beginning in FY 2026. The total amount of exemptions that may
be claimed under this bill depends on the number of businesses certified by the IEDC and the size of their
qualified investments.
For purposes of the exemption, the sale of computing research equipment must be approved by the IEDC.
The exemption covers the purchase or lease of optical gear, transmission equipment, computer equipment,
software, electricity, and other items listed in the bill. An exemption certificate is valid for 50 years if the
investment is $50 M or greater within three years of the issuance of the transaction award certificate.
The net revenue impact of exempting sales of computing research equipment depends on the extent to which
revenue from other taxes attributable to the investment is impacted. However, if the investment had occurred
in the absence of the exemption, the state would have incurred a revenue loss equal to the Sales Tax
collections forgone due to the exemption.
Sales Tax revenue is deposited primarily in the state General Fund (99.838%), and a small amount is
deposited in the Commuter Rail Service Fund (0.131%) and the Industrial Rail Service Fund (0.031%).
Additional Information - Based on data from the IEDC as reported in the 2024 Indiana Tax Incentive Review,
the total qualified investment amount for Indiana data centers may be between $14.0 B and $20.8 B.
However, the amount of Sales Tax exemptions claimed by the data centers is unknown. The actual exempt
amount for quantum research investment would depend on the number of qualified businesses and scale of
investment that would be launched.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Indiana Economic Development Corporation; Department of State Revenue.
Local Agencies Affected:
Information Sources: Legislative Services Agency, 2024 Indiana Tax Incentive Review,
https://iga.in.gov/publications/tax_incentive_review/2024%20Tax%20Incentive%20Evaluation_FINAL.pdf;
Department of Energy, 2024 United States Data Center Energy Usage Report,
https://eta-publications.lbl.gov/sites/default/files/2024-12/lbnl-2024-united-states-data-center-energy-usa
ge-report.pdf.
Fiscal Analyst: Qian Li, 317-232-9671.
HB 1601 2