LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7625 NOTE PREPARED: Feb 14, 2025
BILL NUMBER: HB 1601 BILL AMENDED: Feb 13, 2025
SUBJECT: Quantum Research Tax Incentives.
FIRST AUTHOR: Rep. Soliday BILL STATUS: CR Adopted - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: (Amended) The bill amends the state Sales and Use Tax exemption for data
centers to include 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: (Amended) July 1, 2025; January 1, 2026.
Explanation of State Expenditures: (Revised) Quantum Research Sales Tax Exemption: The bill requires
the Indiana Economic Development Corporation (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. 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: (Revised) Quantum Research Sales Tax Exemption: The bill would reduce
Sales Tax revenue by an indeterminable amount 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, or 25
years if the investment is less than $50 M.
The net revenue impact of exempting sales of computing research equipment depends on the extent to which
HB 1601 1 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%).
(Revised) Data Center Sales Tax Exemption: The bill amends the investment threshold related to the
expiration of a specific transaction award certificate. Under current law, the exemption certificate for data
centers is valid for 50 years if the investment is $750 M or more or 25 years if it is less than $750 M. The
bill lowers the threshold to $50 M, potentially enabling more projects to receive exemptions for a longer
period of time.
(Revised) Additional Information - Quantum Research Sales Tax Exemption: Based on McKinsey &
Company's 2024 report, U.S. public investments in quantum technology announced before 2023 were $3.8
B. A 2024 report by Boston Consulting Group projects that the quantum technology is expected to be in
noisy intermediate-scale quantum era (i.e. an early stage in quantum computing technology) until 2030. The
actual sales tax exempt amount for quantum research investment would depend on the technology
development, the number of qualified businesses, and the scale of investment that would be launched.
Explanation of Local Expenditures:
Explanation of Local Revenues: (Revised) Property Tax Exemption: Under this bill, a county or municipal
fiscal body may enter into an agreement with an eligible business to exempt qualified property from property
taxes. To qualify, a taxpayer and its lessees must invest a total of at least $100 M in real and personal
property at facilities with quantum safe fiber network equipment in Indiana, and the average wage of
employees at the facility must be at least 125% of the county average wage.
The exemption applies to quantum safe fiber network equipment purchased after June 30, 2022, and any
additions or replacements to such property. If currently owned property is exempted, then the tax base will
shrink, tax rates will increase, and revenue losses from tax caps may increase in some places.
The exemption of newly acquired property will not affect the existing tax base. If there is an increase in
development because of the exemption, then other property could be added to the tax base. If the exemption
period set locally is shorter than the life of the property, then the value of new quantum safe fiber network
equipment could eventually be added to the tax base. However, if one assumes that the investment would be
made with or without the exemption, then the granting of the exemption under this bill could, during the
exemption period, eliminate the normal shift of property taxes from all taxpayers to the owners of the new
property that would have otherwise occurred.
State Agencies Affected: Indiana Economic Development Corporation; Department of State Revenue.
Local Agencies Affected: County and municipal fiscal bodies; County auditors; Local civil taxing units and
school corporations.
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,
HB 1601 2 https://eta-publications.lbl.gov/sites/default/files/2024-12/lbnl-2024-united-states-data-center-energy-usa
ge-report.pdf;
McKinsey & Company, Steady Progress in Approaching the Quantum Advantage, April 2024,
https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/steady-progress-in-approaching-the
-quantum-advantage;
Boston Consulting Group, The Long-Term Forecast for Quantum Computing Still Looks Bright, July 2024,
https://www.bcg.com/publications/2024/long-term-forecast-for-quantum-computing-still-looks-bright.
Fiscal Analyst: Qian Li, 317-232-9671.
HB 1601 3