Tax Issues

Indiana Manufacturers Association

2024 Legislative Priorities

TAX ISSUES

The Indiana Manufacturers Association supports a simple tax structure that encourages investment and business growth.

The Indiana Manufacturers Association is seeking to eliminate the 30% floor on depreciation of business equipment for property taxes.

Business Personal Property (BPP) Tax Basics

• Property tax on tangible personal property owned by businesses.

• Local governments collected $1,422,196,402 in BPP tax revenue in 2022. This is the 3rd largest property tax.

• BPP was the second highest increase in taxes from 2013 -2022. Indiana businesses paid $382.9 million more in equipment tax in 2022 than they did 10 years ago in 2013.

Assessment and 30% Floor

Taxpayers self-assess BPP on a set depreciation schedule set by the Department of Local Government Finance (DLGF). Indiana law prevents business equipment still in use from depreciating below 30% of acquisition cost.

*Removing the 30% floor does not allow property to depreciate to 0% - Indiana depreciation schedules have “residual value” if the equipment is in use.

Other States

20 states do not tax manufacturing equipment at all. 9 states allow assets to fully depreciate. 20 states allow more depreciation than Indiana.

Why Eliminate the 30% Floor?

• Reduces the tax burden on Indiana businesses, big and small – especially capital-intensive businesses like manufacturers.

• The 30% floor disproportionately impacts companies with older equipment.

• Removes the worst part of our property tax system when comparing it to other states.

• More cost effective for Indiana businesses to invest in technology upgrades and equipment purchases that are necessary in the modern economy.

• Allows Indiana Manufacturers to make up workforce deficits through automation at a lower cost.

• Better positions Indiana to compete for investment – particularly in the auto sector in the transition to electric vehicles.