TAX
ISSUES
The IMA supports a tax structure that encourages investment and business growth for Hoosier business.
The Indiana Manufacturers Association is seeking to conform state tax code to the most pro-manufacturing tax provisions in the One Bill Beautiful Bill Act.
One Big Beautiful Bill Basics
Massive federal tax reform passed in the summer of 2025.
Expanded business tax breaks on interest expensing, bonus depreciation, and calculation of net operating losses.
Expanded the deduction for small businesses.
Fixed the R&D deduction to allow immediate expensing.
Created a new deduction for Qualified Production Property
Qualified Production Property
Qualified Production Property (QPP) is a newly defined class of real property that bridges the gap between manufacturing incentives and real estate investment. This provision in the OBBBA incentivizes manufacturers to increase their production capacity in the US.
To qualify, the property must be nonresidential real property, located in the US and used for production activity and is constructed between Jan. 20, 2025, and Dec. 31, 2028 and placed in service before Jan. 1, 2031.
The IMA support fully-coupling with QPP for state income taxes.
Sec. 179 Small Business Deduction
The OBBBA raised the federal threshold for claiming income under this provision from $1.25 million to $2.5 million. Indiana law currently limits taxpayers to only $25,000. The IMA supports an increase in the state cap to at least $50,000.
Sec. 174 R&D Deduction
Indiana is currently decoupled from the IRC and state law has a similar corresponding deduction. Indiana’s statute is more taxpayer friendly than even the improved federal law under the OBBBA. The IMA supports remaining with the state (de-coupled) law on deducting R&D expenses.