Indiana 2025 Regular Session

Indiana House Bill HB1612 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	Introduced Version
3	3	HOUSE BILL No. 1612
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3.1-33.5.
7	7	Synopsis: Rural business growth. Establishes a state tax credit (credit)
8	8	for certain capital investments made in rural funds. Establishes
9	9	procedures for a rural fund to apply to the Indiana economic
10	10	development corporation (IEDC) for certification of a capital
11	11	investment as eligible for a credit provided by the bill. Requires a rural
12	12	fund to pay a nonrefundable application fee of $5,000 to the IEDC.
13	13	Provides that the credit is an amount equal to: (1) the applicable
14	14	percentage for the credit allowance date; multiplied by (2) the purchase
15	15	price paid to the rural fund for the capital investment. Sets forth the
16	16	maximum annual amount of credits that may be certified. Provides that
17	17	the credit is subject to recapture. Requires a rural fund that has
18	18	received a credit to submit reports on an annual basis to the IEDC over
19	19	the credit allowance period.
20	20	Effective: July 1, 2025.
21	21	Lindauer
22	22	January 21, 2025, read first time and referred to Committee on Ways and Means.
23	23	2025 IN 1612—LS 7730/DI 129 Introduced
24	24	First Regular Session of the 124th General Assembly (2025)
25	25	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
26	26	Constitution) is being amended, the text of the existing provision will appear in this style type,
27	27	additions will appear in this style type, and deletions will appear in this style type.
28	28	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
29	29	provision adopted), the text of the new provision will appear in this style type. Also, the
30	30	word NEW will appear in that style type in the introductory clause of each SECTION that adds
31	31	a new provision to the Indiana Code or the Indiana Constitution.
32	32	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
33	33	between statutes enacted by the 2024 Regular Session of the General Assembly.
34	34	HOUSE BILL No. 1612
35	35	A BILL FOR AN ACT to amend the Indiana Code concerning
36	36	taxation.
37	37	Be it enacted by the General Assembly of the State of Indiana:
38	38	1 SECTION 1. IC 6-3.1-33.5 IS ADDED TO THE INDIANA CODE
39	39	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
40	40	3 JULY 1, 2025]:
41	41	4 Chapter 33.5. Rural Fund Capital Investment Tax Credit
42	42	5 Sec. 1. The state tax credit provided by this chapter applies to
43	43	6 taxable years beginning after December 31, 2025. However,
44	44	7 beginning with the period set forth in section 3(a) of this chapter,
45	45	8 the corporation may begin to receive applications for the credit
46	46	9 provided by this chapter.
47	47	10 Sec. 2. The following definitions apply throughout this chapter:
48	48	11 (1) "Affiliate" means an entity that directly, or indirectly
49	49	12 through one (1) or more intermediaries, controls, or is
50	50	13 controlled by, or is under the common control with, another
51	51	14 entity. An entity is controlled by another entity if the
52	52	15 controlling entity holds, directly or indirectly, the majority of
53	53	16 voting or ownership interest in the controlled entity or has
54	54	17 control over day-to-day operations of the controlled entity by
55	55	2025 IN 1612—LS 7730/DI 129 2
56	56	1 contract or by law.
57	57	2 (2) "Applicable percentage" means zero percent (0%) for the
58	58	3 first two (2) credit allowance dates, and fifteen percent (15%)
59	59	4 for the next four (4) credit allowance dates.
60	60	5 (3) "Capital investment" means any equity investment in a
61	61	6 rural fund by a rural investor that:
62	62	7 (A) is acquired after June 30, 2025, at its original issuance
63	63	8 solely in exchange for cash;
64	64	9 (B) has one hundred percent (100%) of its cash purchase
65	65	10 price used by the rural fund to make qualified investments
66	66	11 in eligible businesses located in Indiana by the third
67	67	12 anniversary of the initial credit allowance date; and
68	68	13 (C) is designated by the rural fund as a capital investment
69	69	14 that is certified by the corporation under sections 3
70	70	15 through 5 of this chapter, including any capital investment
71	71	16 that does not satisfy section 3(b)(1) of this chapter if the
72	72	17 investment was a capital investment in the hands of a prior
73	73	18 holder.
74	74	19 (4) "Corporation " means the Indiana economic development
75	75	20 corporation established by IC 5-28-3-1.
76	76	21 (5) "Credit allowance date" means the date on which the
77	77	22 corporation provides the certification set forth in section 5(a)
78	78	23 of this chapter and each of the five (5) anniversary dates of
79	79	24 that date thereafter.
80	80	25 (6) "Department" refers to the department of state revenue.
81	81	26 (7) "Eligible business" means a business that, at the time of
82	82	27 the initial qualified investment in the business:
83	83	28 (A) has fewer than two hundred fifty (250) employees; and
84	84	29 (B) has its principal business operations in a rural area of
85	85	30 Indiana.
86	86	31 Any business classified as an eligible business at the time of
87	87	32 the initial investment in the business by a rural fund shall
88	88	33 remain classified as an eligible business and may receive
89	89	34 follow-on investments from any rural fund. The follow-on
90	90	35 investments shall be qualified investments even though the
91	91	36 business may not meet the definition of an "eligible business"
92	92	37 at the time of the follow-on investment.
93	93	38 (8) "Principal business operations" means the location where
94	94	39 at least sixty percent (60%) of a business's employees work or
95	95	40 where employees who are paid at least sixty percent (60%) of
96	96	41 the business's payroll work. A business that has agreed to
97	97	42 relocate employees using the proceeds of a qualified
98	98	2025 IN 1612—LS 7730/DI 129 3
99	99	1 investment to establish its principal business operations in a
100	100	2 new location shall be deemed to have its principal business
101	101	3 operations in the new location if it satisfied the requirements
102	102	4 of this subdivision not later than one hundred eighty (180)
103	103	5 days after receiving a qualified investment.
104	104	6 (9) "Purchase price" means the amount paid to the rural fund
105	105	7 that issues a capital investment, which shall not exceed the
106	106	8 amount of capital investment authority certified under
107	107	9 sections 3 through 5 of this chapter.
108	108	10 (10) "Qualified investment" means any investment in an
109	109	11 eligible business or any loan to an eligible business with a
110	110	12 stated maturity date of at least one (1) year after the date of
111	111	13 issuance, excluding revolving lines of credit and
112	112	14 senior-secured debt unless the chief executive or similar
113	113	15 officer of the eligible business certifies that the eligible
114	114	16 business sought and was denied similar financing from a
115	115	17 depository institution or by a rural fund unless, with respect
116	116	18 to any one (1) eligible business, the maximum amount of
117	117	19 investments made in the business by one (1) or more rural
118	118	20 funds, on a collective basis with all of the businesses' affiliates,
119	119	21 with the proceeds of the capital investments, are an amount
120	120	22 equal to the greater of twenty percent (20%) of the rural
121	121	23 fund's capital investment authority or six million five hundred
122	122	24 thousand dollars ($6,500,000), exclusive of investments made
123	123	25 with repaid or redeemed investments or interest or profits
124	124	26 realized on those investments.
125	125	27 (11) "Rural area" means:
126	126	28 (A) an area other than a municipality with a population of
127	127	29 more than fifty thousand (50,000) or an urban area
128	128	30 contiguous and adjacent to the municipality;
129	129	31 (B) an area determined to be rural in character by the
130	130	32 United States Department of Agriculture; or
131	131	33 (C) an urban area contiguous or adjacent to a municipality
132	132	34 with a population of more than fifty thousand (50,000) if
133	133	35 the corporation determines the eligible business is rural in
134	134	36 nature, employs employees from rural areas, or is
135	135	37 otherwise beneficial to residents of rural areas.
136	136	38 (12) "Rural fund" means an entity certified by the
137	137	39 corporation under sections 3 through 5 of this chapter.
138	138	40 (13) "Rural investor" means an entity that makes a capital
139	139	41 investment in a rural fund.
140	140	42 (14) "Senior-secured debt" means any loan that is secured by
141	141	2025 IN 1612—LS 7730/DI 129 4
142	142	1 a first mortgage on real estate with a loan-to-value ratio of
143	143	2 less than eighty percent (80%).
144	144	3 (15) "State tax liability" means a person's total tax liability
145	145	4 that is incurred under:
146	146	5 (A) IC 27-1-18-2 (the insurance premiums tax); and
147	147	6 (B) IC 27-1-20-12 (the insurance premiums retaliatory
148	148	7 tax);
149	149	8 as computed after the application of the credits that under
150	150	9 IC 6-3.1-1-2 are to be applied before the credit provided by
151	151	10 this chapter. An insurance company claiming a credit against
152	152	11 the taxes listed in this subdivision is not required to pay any
153	153	12 additional retaliatory tax in Indiana as a result of claiming the
154	154	13 credit.
155	155	14 (16) "Taxpayer" means an entity that has state tax liability.
156	156	15 Sec. 3. (a) A rural fund that seeks to have an equity investment
157	157	16 certified as a capital investment eligible for a credit allowed under
158	158	17 this chapter must apply to the corporation. The corporation shall
159	159	18 begin accepting applications within ninety (90) days after July 1,
160	160	19 2025.
161	161	20 (b) The application must include each of the following:
162	162	21 (1) The amount of capital investment requested.
163	163	22 (2) A copy of the applicant's or an affiliate of the applicant's
164	164	23 license as a rural business investment company under 7 U.S.C.
165	165	24 2009cc or as a small business investment company under 15
166	166	25 U.S.C. 681 and a certificate executed by an executive officer
167	167	26 of the applicant attesting that the license remains in effect and
168	168	27 has not been revoked.
169	169	28 (3) Evidence that, as of the date the application is submitted,
170	170	29 the applicant or affiliates of the applicant have invested at
171	171	30 least one hundred million dollars ($100,000,000) in nonpublic
172	172	31 companies located in counties within the United States with a
173	173	32 population of less than seventy-five thousand (75,000)
174	174	33 according to the 2020 federal decennial census. The evidence
175	175	34 may be in the form of a list containing the names of the
176	176	35 companies, the location of the companies, and the amounts
177	177	36 invested by the applicant or affiliates of the applicant.
178	178	37 However, an officer of the applicant must certify the list.
179	179	38 (4) A business plan that includes a revenue impact assessment
180	180	39 projecting state and local tax revenue to be generated by the
181	181	40 applicant's proposed qualified investments, prepared by a
182	182	41 nationally recognized, third party, independent economic
183	183	42 forecasting firm using a dynamic economic forecasting model
184	184	2025 IN 1612—LS 7730/DI 129 5
185	185	1 that analyzes the applicant's business plan over the ten (10)
186	186	2 years following the date the application is submitted to the
187	187	3 corporation. The plan must include an estimate of the number
188	188	4 of jobs created and jobs retained in Indiana as a result of the
189	189	5 applicant's qualified investments.
190	190	6 (5) A nonrefundable application fee of five thousand dollars
191	191	7 ($5,000) payable to the corporation.
192	192	8 Sec. 4. (a) Within thirty (30) days after the receipt of a
193	193	9 completed application, the corporation shall grant or deny the
194	194	10 application in full or in part. The corporation shall deny the
195	195	11 application if any of the following apply:
196	196	12 (1) The applicant does not satisfy all the criteria set forth in
197	197	13 section 3 of this chapter.
198	198	14 (2) The revenue impact assessment submitted with the
199	199	15 application does not demonstrate that the applicant's business
200	200	16 plan will result in a positive fiscal impact on Indiana over a
201	201	17 ten (10) year period that exceeds the cumulative amount of
202	202	18 credits that would be issued to the applicant if the application
203	203	19 were approved.
204	204	20 (3) The corporation has already approved the maximum
205	205	21 amount of capital investment authority allowed under section
206	206	22 6 of this chapter.
207	207	23 (b) If the corporation denies any part of the application, it shall
208	208	24 inform the applicant of the grounds for the denial. If the applicant
209	209	25 provides any additional information required by the corporation
210	210	26 or otherwise completes its application within fifteen (15) days of
211	211	27 the notice of denial, the application shall be considered complete as
212	212	28 of the original date of submission. If the applicant fails to provide
213	213	29 the information or fails to complete its application within the
214	214	30 fifteen (15) day period, the application shall remain denied and
215	215	31 must be resubmitted with a new submission date and a new
216	216	32 application fee.
217	217	33 Sec. 5. (a) Upon approval of an application, the corporation
218	218	34 shall provide a certification of the proposed equity investment as
219	219	35 a capital investment eligible for credits under this chapter, subject
220	220	36 to the limitations set forth in section 6 of this chapter. The
221	221	37 corporation shall provide written notice of the certification to the
222	222	38 applicant, which must include the amount of the applicant's capital
223	223	39 investment authority and a schedule of credits by year and amount
224	224	40 related to the capital investment authority.
225	225	41 (b) The corporation shall certify proposed capital investments
226	226	42 in the order that the applications are received by the corporation.
227	227	2025 IN 1612—LS 7730/DI 129 6
228	228	1 Applications received on the same day shall be deemed to have
229	229	2 been received simultaneously. For applications that are complete
230	230	3 and received on the same day, the corporation shall certify
231	231	4 applications in proportionate percentages based upon the ratio of
232	232	5 the amount of capital investment authority requested in all
233	233	6 applications.
234	234	7 Sec. 6. (a) The corporation may not certify capital investment
235	235	8 authority under this chapter in an amount that exceeds fifteen
236	236	9 million dollars ($15,000,000) in credits to be claimed against state
237	237	10 tax liability in any calendar year, excluding any credit amounts
238	238	11 carried forward under section 7 of this chapter.
239	239	12 (b) Within ninety (90) days of the applicant receiving notice of
240	240	13 certification, the rural fund shall issue the capital investment to
241	241	14 and receive cash in the amount of the certified amount from a
242	242	15 rural investor. At least ten percent (10%) of the rural investor's
243	243	16 capital investment shall be composed of capital raised by the rural
244	244	17 investor directly or indirectly from sources including directors,
245	245	18 members, employees, officers, and affiliates of the rural investor,
246	246	19 other than the amount invested by the allocatee claiming the
247	247	20 credits in exchange for the allocation of credits. The rural fund
248	248	21 shall provide the corporation with evidence of the receipt of the
249	249	22 cash investment within ninety-five (95) days of the applicant
250	250	23 receiving notice of certification.
251	251	24 (c) If the rural fund does not receive the cash investment and
252	252	25 issue the capital investment within the time period following
253	253	26 receipt of the certification set forth in section 5(a) of this chapter,
254	254	27 the certification shall lapse and the rural fund shall not issue the
255	255	28 capital investment without reapplying to the corporation for
256	256	29 certification. Lapsed certifications shall revert to the corporation
257	257	30 and shall be reissued on a pro rata basis to applicants whose
258	258	31 capital investment allocations were reduced in accordance with the
259	259	32 application process set forth in section 5 of this chapter.
260	260	33 Sec. 7. (a) Upon making a capital investment in a rural fund, a
261	261	34 rural investor is entitled to a vested credit against the taxpayer's
262	262	35 state tax liability that may be used on each credit allowance date of
263	263	36 the capital investment in an amount equal to:
264	264	37 (1) the applicable percentage for the credit allowance date;
265	265	38 multiplied by
266	266	39 (2) the purchase price paid to the rural fund for the capital
267	267	40 investment.
268	268	41 (b) The amount of the credit claimed by a taxpayer shall not
269	269	42 exceed the amount of the taxpayer's state tax liability for the tax
270	270	2025 IN 1612—LS 7730/DI 129 7
271	271	1 year for which the credit is claimed. Any amount of credit that a
272	272	2 taxpayer is prohibited from claiming in a tax year as a result of this
273	273	3 section may be carried forward for use in any of the five (5)
274	274	4 subsequent tax years.
275	275	5 (c) The credit shall not be carried back and is not refundable.
276	276	6 Sec. 8. No credit claimed under this chapter shall be refundable
277	277	7 or saleable on the open market. Credits may be transferred to
278	278	8 affiliates of a taxpayer. Credits earned by or allocated to a
279	279	9 partnership, limited liability company, or S corporation may be
280	280	10 allocated to the partners, members, or shareholders of such an
281	281	11 entity for their use in accordance with the provisions of any
282	282	12 agreement among such partners, members or shareholders, and a
283	283	13 rural fund shall notify the department of taxpayers that are eligible
284	284	14 to utilize credits and transfers upon such allocation, change, or
285	285	15 transfer. Such allocations shall not be considered a sale for the
286	286	16 purpose of this section.
287	287	17 Sec. 9. To apply a credit under this chapter against the
288	288	18 taxpayer's state tax liability, a taxpayer must claim the credit on
289	289	19 the taxpayer's annual state tax return or returns in the manner
290	290	20 prescribed by the department. The taxpayer must attach the
291	291	21 certification provided by the corporation in accordance with
292	292	22 section 5(a) of this chapter and any additional information that the
293	293	23 department determines is necessary for the department to
294	294	24 determine whether the taxpayer is eligible for the credit.
295	295	25 Sec. 10. (a) A credit is subject to recapture if any of the
296	296	26 following circumstances apply:
297	297	27 (1) The rural fund does not invest:
298	298	28 (A) at least sixty percent (60%) of its capital investment
299	299	29 authority in qualified investments in Indiana within two (2)
300	300	30 years of the credit allowance date; and
301	301	31 (B) one hundred percent (100%) of its capital investment
302	302	32 authority in qualified investments in Indiana within three
303	303	33 (3) years of the credit allowance date.
304	304	34 (2) The rural fund fails to maintain qualified investments
305	305	35 equal to one hundred percent (100%) of its capital investment
306	306	36 authority from the third anniversary until the sixth
307	307	37 anniversary of the credit allowance date. For purposes of this
308	308	38 subdivision, a qualified investment is considered maintained
309	309	39 even if the qualified investment was sold or repaid as long as
310	310	40 the rural fund reinvests an amount equal to the capital
311	311	41 returned or recovered or repaid by the rural fund from the
312	312	42 original investment, exclusive of any profits realized, in other
313	313	2025 IN 1612—LS 7730/DI 129 8
314	314	1 qualified investments in Indiana within twelve (12) months of
315	315	2 receipt of the capital. Amounts received periodically by a
316	316	3 rural fund shall be treated as maintained in qualified
317	317	4 investments if the amounts are reinvested in one (1) or more
318	318	5 qualified investments by the end of the following calendar
319	319	6 year. A rural fund is not required to reinvest capital returned
320	320	7 from qualified investments after the fifth anniversary of the
321	321	8 credit allowance date, and the qualified investments shall be
322	322	9 considered maintained by the rural fund through the sixth
323	323	10 anniversary of the credit allowance date.
324	324	11 (3) Before the earlier of:
325	325	12 (A) exiting the program in accordance with this chapter;
326	326	13 or
327	327	14 (B) thirty (30) days after the sixth anniversary of the credit
328	328	15 allowance date;
329	329	16 the rural fund makes a distribution or payment that results in
330	330	17 the rural fund having less than one hundred percent (100%)
331	331	18 of its capital investment authority invested in qualified
332	332	19 investments in Indiana or held in cash or other marketable
333	333	20 securities.
334	334	21 (4) The rural fund violates section 11 of this chapter, in which
335	335	22 case the corporation may recapture an amount equal to the
336	336	23 amount of the rural fund's capital investment authority found
337	337	24 to be in violation of those provisions.
338	338	25 (b) Recaptured credits and related capital investment authority
339	339	26 shall revert to the corporation and shall be reissued on a pro rata
340	340	27 basis to applicants whose capital investment allocations were
341	341	28 reduced in accordance with sections 3 through 5 of this chapter.
342	342	29 (c) No recapture shall occur until the rural fund has been given
343	343	30 notice of noncompliance and afforded six (6) months from the date
344	344	31 of the notice to cure the noncompliance.
345	345	32 (d) A rural fund, before making a qualified investment, may
346	346	33 request from the corporation a written opinion as to whether the
347	347	34 business in which it proposes to invest is an eligible business. The
348	348	35 corporation, not later than fifteen (15) business days after the date
349	349	36 of receipt of the request, shall notify the rural fund of its
350	350	37 determination. If the corporation fails to notify the rural fund of its
351	351	38 determination by the twentieth business day, the business in which
352	352	39 the rural fund proposes to invest shall be deemed an eligible
353	353	40 business.
354	354	41 Sec. 11. No eligible business that receives a qualified investment
355	355	42 under this chapter or any affiliates of the eligible business shall
356	356	2025 IN 1612—LS 7730/DI 129 9
357	357	1 directly or indirectly:
358	358	2 (1) own or have the right to acquire an ownership interest in
359	359	3 a rural fund or in a member or affiliate of a rural fund
360	360	4 including, but not limited to, a holder of a capital investment
361	361	5 issued by a rural fund; or
362	362	6 (2) lend to or invest in a rural fund or any member or affiliate
363	363	7 of a rural fund including, but not limited to, a holder of
364	364	8 capital investment issued by a rural fund, where the proceeds
365	365	9 of the loan or investment are directly or indirectly used to
366	366	10 fund or refinance the purchase of capital investments under
367	367	11 this chapter.
368	368	12 Sec. 12. (a) A rural fund shall submit a report to the corporation
369	369	13 by June 30 of each calendar year during the credit allowance
370	370	14 period.
371	371	15 (b) The report following the second anniversary of the initial
372	372	16 credit allowance date shall provide documentation as to the
373	373	17 investment of at least sixty percent (60%) of the purchase price of
374	374	18 such capital investment in qualified investments.
375	375	19 (c) The report following the third anniversary of the initial
376	376	20 credit allowance date shall provide documentation as to the
377	377	21 investment of one hundred percent (100%) of the purchase price
378	378	22 of such capital investment in qualified investments. Unless
379	379	23 previously reported under this section, the report must also include
380	380	24 the following information:
381	381	25 (1) The name and location of each eligible business receiving
382	382	26 a qualified investment.
383	383	27 (2) Bank statements of the rural fund evidencing each
384	384	28 qualified investment.
385	385	29 (3) A copy of the written opinion of the corporation, as
386	386	30 provided in section 10(d) of this chapter, or evidence that the
387	387	31 business was an eligible business at the time of the qualified
388	388	32 investment, as applicable.
389	389	33 (4) The number of jobs created and jobs retained as a result
390	390	34 of each qualified investment.
391	391	35 (5) The average salary of the jobs described in subdivision (4).
392	392	36 (6) Any other information required by the corporation.
393	393	37 (d) For all subsequent years, a rural fund shall submit an annual
394	394	38 report to the corporation by June 30 of each calendar year during
395	395	39 the credit allowance period, which must include the following
396	396	40 information:
397	397	41 (1) The number of jobs created and jobs retained as a result
398	398	42 of qualified investments.
399	399	2025 IN 1612—LS 7730/DI 129 10
400	400	1 (2) The average annual salary of jobs described in subdivision
401	401	2 (1).
402	402	3 (3) Any other information required by the corporation.
403	403	4 Sec. 13. On or after the sixth anniversary of the credit allowance
404	404	5 date, a rural fund may apply to the corporation to exit the program
405	405	6 and no longer be subject to the requirements established under this
406	406	7 chapter. The corporation shall respond to the exit application
407	407	8 within fifteen (15) days of receipt. In evaluating the exit
408	408	9 application, the fact that no credits have been recaptured and that
409	409	10 the rural fund has not received a notice of recapture that has not
410	410	11 been cured as allowed under section 10(c) of this chapter shall be
411	411	12 sufficient evidence to prove that the rural fund is eligible for exit.
412	412	13 The corporation shall not unreasonably deny an exit application
413	413	14 submitted under this section. If an exit application is denied, the
414	414	15 notice shall include the reasons for the determination.
415	415	2025 IN 1612—LS 7730/DI 129