Indiana · research and development · IN-RD-001
Research Expense Tax Credit
Publication revised September 24, 2026. Sourcebook page 109.
Credit amount / calculation
Regular method: 15% of the first $1 million of qualified research expenses above the base; 10% of the excess above $1 million.
Business fit and eligible activity
Qualified Indiana research can generate a state credit for manufacturers. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
For forest products, research credits usually live on the mill floor rather than in a laboratory. Scanner settings, drying schedules, process-control changes, product testing, and equipment modifications can matter when the work is experimental rather than routine. A logging company has a narrower path, but equipment-control, software, or process-development work can sometimes qualify if it satisfies the same technical tests.
Illustrative business benefit
Assume a mill has $1.5 million of qualified research expenditures above its properly calculated base. The regular-method credit is $1 million x 15% + $500,000 x 10% = $200,000.
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit.
Official sources
Related programs
Community Revitalization Enhancement District Credit
Credit based on qualified investment under district rules
Qualifying fixed-site investment in a designated district can generate a credit.
EDGE Credit
Credit based on incremental Indiana payroll withholding
Growing employers can negotiate a payroll-based credit tied to new Indiana employment.
Hoosier Business Investment Credit
Discretionary credit based on eligible capital investment
Manufacturing expansions can receive a negotiated credit for qualified capital investment.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.