Introduced Version
SENATE BILL No. 452
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 2-5-3.2-1.
Synopsis: Tax incentive review. Amends provisions that apply to the
legislative services agency's periodic tax incentives review and
analysis.
Effective: July 1, 2025.
Holdman
January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
2025 IN 452—LS 6998/DI 120 Introduced
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE BILL No. 452
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 2-5-3.2-1, AS AMENDED BY P.L.9-2024,
2 SECTION 7, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2025]: Sec. 1. (a) As used in this section, "tax incentive"
4 means a benefit provided through a state or local tax that is intended to
5 alter, reward, or subsidize a particular action or behavior by the tax
6 incentive recipient, including a benefit intended to encourage economic
7 development. The term includes the following:
8 (1) An exemption, deduction, credit, preferential rate, or other tax
9 benefit that:
10 (A) reduces the amount of a tax that would otherwise be due
11 to the state;
12 (B) results in a tax refund in excess of any tax due; or
13 (C) reduces the amount of property taxes that would otherwise
14 be due to a political subdivision of the state.
15 (2) The dedication of revenue by a political subdivision to provide
16 improvements or to retire bonds issued to pay for improvements
17 in an economic or sports development area, a community
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1 revitalization area, an enterprise zone, a tax increment financing
2 district, or any other similar area or district.
3 (b) The general assembly intends that each tax incentive effectuate
4 the purposes for which it was enacted and that the cost of tax incentives
5 should be included more readily in the biennial budgeting process. To
6 provide the general assembly with the information it needs to make
7 informed policy choices about the efficacy of each tax incentive, the
8 legislative services agency shall conduct a regular review, analysis, and
9 evaluation of all tax incentives according to a schedule developed by
10 the legislative services agency.
11 (c) The legislative services agency shall conduct a systematic and
12 comprehensive review, analysis, and evaluation of each tax incentive
13 scheduled for review. The review, analysis, and evaluation must
14 include information about each tax incentive that is necessary to
15 achieve the goals described in subsection (b), which may include any
16 of the following:
17 (1) The basic attributes and policy goals of the tax incentive,
18 including the statutory and programmatic goals of the tax
19 incentive, the economic parameters of the tax incentive, the
20 original scope and purpose of the tax incentive, and how the
21 scope or purpose has changed over time.
22 (2) The tax incentive's equity, simplicity, competitiveness, public
23 purpose, adequacy, and extent of conformance with the original
24 purposes of the legislation enacting the tax incentive.
25 (3) The types of activities on which the tax incentive is based and
26 how effective the tax incentive has been in promoting these
27 targeted activities and in assisting recipients of the tax incentive.
28 (4) The count of the following:
29 (A) Applicants for the tax incentive.
30 (B) Applicants that qualify for the tax incentive.
31 (C) Qualified applicants that, if applicable, are approved to
32 receive the tax incentive.
33 (D) Taxpayers that actually claim the tax incentive.
34 (E) Taxpayers that actually receive the tax incentive.
35 (5) The dollar amount of the tax incentive benefits that has been
36 actually claimed by all taxpayers over time, including the
37 following:
38 (A) The dollar amount of the tax incentive, listed by the North
39 American Industrial Classification System (NAICS) Code
40 associated with the tax incentive recipients, if an NAICS Code
41 is available.
42 (B) The dollar amount of income tax credits that can be carried
2025 IN 452—LS 6998/DI 120 3
1 forward for the next five (5) state fiscal years.
2 (6) An estimate of the economic impact of the tax incentive,
3 including the following:
4 (A) A return on investment calculation for the tax incentive.
5 For purposes of this clause, "return on investment calculation"
6 means analyzing the cost to the state or political subdivision of
7 providing the tax incentive, analyzing the benefits realized by
8 the state or political subdivision from providing the tax
9 incentive.
10 (B) A cost-benefit comparison of the state and local revenue
11 foregone and property taxes shifted to other taxpayers as a
12 result of allowing the tax incentive, compared to tax revenue
13 generated by the taxpayer receiving the incentive, including
14 direct taxes applied to the taxpayer and taxes applied to the
15 taxpayer's employees.
16 (C) An estimate of the number of jobs that were the direct
17 result of the tax incentive.
18 (D) For any tax incentive that is reviewed or approved by the
19 Indiana economic development corporation, a statement by the
20 chief executive officer of the Indiana economic development
21 corporation as to whether the statutory and programmatic
22 goals of the tax incentive are being met, with obstacles to these
23 goals identified, if possible.
24 (7) The methodology and assumptions used in carrying out the
25 reviews, analyses, and evaluations required under this subsection.
26 (8) The estimated cost to the state to administer the tax incentive.
27 (9) An estimate of the extent to which benefits of the tax incentive
28 remained in Indiana or flowed outside Indiana.
29 (10) Whether the effectiveness of the tax incentive could be
30 determined more definitively if the general assembly were to
31 clarify or modify the tax incentive's goals and intended purpose.
32 (11) Whether measuring the economic impact is significantly
33 limited due to data constraints and whether any changes in statute
34 would facilitate data collection in a way that would allow for
35 better review, analysis, or evaluation.
36 (12) An estimate of the indirect economic benefit or activity
37 stimulated by the tax incentive.
38 (13) Any additional review, analysis, or evaluation that the
39 legislative services agency considers advisable, including
40 comparisons with tax incentives offered by other states if those
41 comparisons would add value to the review, analysis, and
42 evaluation.
2025 IN 452—LS 6998/DI 120 4
1 The legislative services agency may request a state or local official or
2 a state agency, a political subdivision, a body corporate and politic, or
3 a county or municipal redevelopment commission to furnish
4 information necessary to complete the tax incentive review, analysis,
5 and evaluation required by this section. An official or entity presented
6 with a request from the legislative services agency under this
7 subsection shall cooperate with the legislative services agency in
8 providing the requested information. An official or entity may require
9 that the legislative services agency adhere to the provider's rules, if any,
10 that concern the confidential nature of the information.
11 (d) The legislative services agency shall, before October 1 of each
12 year, submit a report to the legislative council, in an electronic format
13 under IC 5-14-6, and to the interim study committee on fiscal policy
14 established by IC 2-5-1.3-4 containing the results of the legislative
15 services agency's review, analysis, and evaluation. The report must
16 include at least the following:
17 (1) A detailed description of the review, analysis, and evaluation
18 for each tax incentive reviewed.
19 (2) Information to be used by the general assembly to determine
20 whether a reviewed tax incentive should be continued, modified,
21 or terminated, the basis for the recommendation, and the expected
22 impact of the recommendation on the state's economy.
23 (3) Information to be used by the general assembly to better align
24 a reviewed tax incentive with the original intent of the legislation
25 that enacted the tax incentive.
26 The report required by this subsection must not disclose any
27 proprietary or otherwise confidential taxpayer information.
28 (e) The interim study committee on fiscal policy shall do the
29 following:
30 (1) Hold at least one (1) public hearing after September 30 and
31 before November 1 of each year at which:
32 (A) the legislative services agency presents the review,
33 analysis, and evaluation of tax incentives; and
34 (B) the interim study committee receives information
35 concerning tax incentives.
36 (2) Submit to the legislative council, in an electronic format under
37 IC 5-14-6, any recommendations made by the interim study
38 committee that are related to the legislative services agency's
39 review, analysis, and evaluation of tax incentives prepared under
40 this section.
41 (f) The general assembly shall use the legislative services agency's
42 report under this section and the interim study committee on fiscal
2025 IN 452—LS 6998/DI 120 5
1 policy's recommendations under this section to determine whether a
2 particular tax incentive:
3 (1) is successful;
4 (2) is provided at a cost that can be accommodated by the state's
5 biennial budget; and
6 (3) should be continued, amended, or repealed.
7 (g) The legislative services agency shall establish and maintain a
8 system for making available to the public information about the amount
9 and effectiveness of tax incentives.
10 (h) The legislative services agency shall develop and publish on the
11 general assembly's website a multi-year schedule that lists all tax
12 incentives and indicates the year when the report will be published for
13 each tax incentive reviewed. The legislative services agency may revise
14 the schedule as long as the legislative services agency provides for a
15 systematic review, analysis, and evaluation of all tax incentives and
16 that each tax incentive is reviewed at least once. every seven (7) years.
17 (i) This section expires December 31, 2025.
2025 IN 452—LS 6998/DI 120