A corporation doing business in Indiana is subject to the corporate adjusted gross income tax. The corporate adjusted gross income tax is generally calculated using federal taxable income; however, there are numerous deductions permitted on a federal tax return that are required under Indiana law to be "added back" to the state return for the purpose of determining state taxable income.
Examples include: 1) property for which bonus depreciation is allowed on the federal tax return under Internal Revenue Code (IRC) section 168(k); 2) the amount of "section 179 property" exceeding $25,000; and 3) the amount claimed as a deduction for qualified domestic production activities under IRC 199.
2011 Corporate Tax Rate Reduction. In 2011, Sen. Brandt Hershman (R-Buck Creek) and Rep. P. Eric Turner (R-Cicero) championed legislation to reduce the state’s corporate adjusted gross income tax rate by nearly 25 percent over a four-year period. AP–"Indiana House passes bill to cut corporate tax rates" (April 21, 2011) http://www.ibj.com/indiana-house-passes-bill-to-cut-corporate-tax-rates/PARAMS/article/26742.
The net impact of the corporate tax rate reduction was projected to reduce state tax collections by $18.4 million in 2013; $37.9 million in 2014; $58.6 million in 2015; and $80 million annually when fully phased in. Legislative Services Agency, Fiscal Impact Statement #8 (May 5, 2011) http://www.in.gov/legislative/bills/2011/PDF/FISCAL/HB1004.008.pdf.
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