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Indiana Expands R&D Sales Tax Exemptions

Posted 6:27 PM by

Indiana Expands R&D Sales Tax ExemptionsOn May 11, 2013, Indiana Governor Mike Pence signed into law House Enrolled Act 1545, which expands sales tax exemptions for research and development (R&D) equipment.

The new provision clarifies the purchase of tangible personal property used for R&D is tax-exempt for both the manufacturer and the seller of the product that is the subject of the R&D. The language spells out that prototypes, expensed R&D equipment, hand tools, and beakers and test tubes used in research and development qualify for the exemption.  The law also exempts contract R&D companies, even though they typically are not involved in the selling or manufacturing of the final products for which the R&D occurred.

Indiana businesses also receive a percentage of qualified research expenses as a credit against their state income tax liability. For more information regarding the expanded sales tax exemptions, or R&D tax credits, please consult your KSM tax advisor.

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