LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7730 NOTE PREPARED: Jan 13, 2025
BILL NUMBER: HB 1612 BILL AMENDED:
SUBJECT: Rural Business Growth.
FIRST AUTHOR: Rep. Lindauer BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: This bill establishes a state tax credit for certain capital investments made in rural
funds. It establishes procedures for a rural fund to apply to the Indiana Economic Development Corporation
(IEDC) for certification of a capital investment as eligible for a credit provided by the bill. It requires a rural
fund to pay a nonrefundable application fee of $5,000 to the IEDC.
The bill provides that the credit is an amount equal to: (1) the applicable percentage for the credit allowance
date; multiplied by (2) the purchase price paid to the rural fund for the capital investment. It sets forth the
maximum annual amount of credits that may be certified.
It provides that the credit is subject to recapture. It also requires a rural fund that has received a credit to
submit reports on an annual basis to the IEDC over the credit allowance period.
Effective Date: July 1, 2025.
Explanation of State Expenditures: IEDC: The IEDC would be required to certify rural funds and proposed
capital investments. The bill’s requirements represent an additional workload and expenditure on the agency
outside of the agency’s routine administrative functions, and existing staffing and resource levels, if currently
being used to capacity, may be insufficient for full implementation. The expenses of implementing the bill’s
provisions would be offset to some extent by the $5,000 application fee paid by rural funds. The additional
funds and resources required could be supplied through existing staff and resources currently being used in
another program or with new appropriations. Ultimately, the source of funds and resources required to satisfy
the requirements of this bill will depend on legislative and administrative actions.
Department of State Revenue (DOR): The DOR could incur expenses to revise tax forms, instructions, and
computer programs to implement the provisions in the bill. The DOR's current level of resources should be
sufficient to implement these changes.
Explanation of State Revenues: Rural Fund Capital Investment Tax Credit: The bill establishes a
nonrefundable tax credit for taxpayers that make an investment after June 30, 2025, in a rural fund that has
HB 1612 1 been certified by the IEDC. The bill could reduce state General Fund revenue by up to $15 M each year
beginning in FY 2029. The fiscal impact will depend on the amount of capital investments certified by the
IEDC and the tax liability of credit recipients.
The credit is effective beginning in tax year 2026, but the credit percentage is 0% for the first two years after
the IEDC has certified a rural fund’s capital investment. For the next four years, the credit percentage is 15%
of the purchase price paid to the rural fund for the capital investment. The IEDC may not certify more than
$15 M in credits per calendar year, excluding any amounts carried forward.
The credit may be applied to Insurance Premiums Tax and Insurance Premiums Retaliatory Tax liability. The
credit may be carried forward for five years. Credits may be recaptured if a rural fund’s investments do not
meet certain criteria.
Application Fee: The bill requires each rural fund that wishes to participate in the program to pay a
nonrefundable application fee of $5,000 to the IEDC. Total revenue from this fee will depend on the number
of applicants.
Additional Information - Five other states have established similar tax credit programs to incentivize
investment in rural businesses, at least two of which have begun approving credits. Georgia’s tax credit was
enacted in 2017 with an annual cap of $15 M. A total of $60 M in tax credits were certified for tax years
2020 through 2023. Pennsylvania’s credit was established in 2016. Under this program, the maximum
amount of credits ($30 M) has been authorized to be used beginning in 2024.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Indiana Economic Development Corporation; Department of State Revenue.
Local Agencies Affected:
Information Sources: Georgia Department of Audits & Accounts, Georgia Agribusiness and Rural Jobs
Act Economic Analysis, December 2021. Pennsylvania Independent Fiscal Office, Pennsylvania Rural Jobs
and Investment Tax Credit: An Evaluation of Program Performance, January 2023. State of Oklahoma
Incentive Evaluation Commission, Rural Jobs Act Draft Evaluation, December 2, 2024.
Fiscal Analyst: Lauren Tanselle, 317-232-9586
HB 1612 2