The City of Fort Wayne’s "Enterprise Zone" designation is a 3.99 square mile area located in the central part of the City. Enterprise Zone (EZ) designation provides tax benefits to businesses and individuals located within the zone.
This is a property tax deduction for the increased value of an Enterprise Zone business property due to real and personal property investment by the businesses. The added valuation may be deducted for up to 10 years. Qualified investments are defined as follows:
An Enterprise Zone Investment Deduction Application (Form EZ-2) needs to be filed with the Allen County Auditors Office between March 1 and May 15 of the assessment year. Businesses must refile Form EZ-2 each of the ten years to continue to receive the deduction. A taxpayer will receive a tax credit in the year following the assessment year.
An incentive exists to hire employees living within the Enterprise Zone since their wages result in a tax credit to the employer, as well as an Indiana income tax benefit to the employee. The Employment Expense Credit is a credit for incremental wages paid by a zone business to an employee who is a resident of the Enterprise Zone. The credit is equal to 10% of the additional wages paid to a qualified employee during the year, up to a maximum of $1,500. A qualified employee is one who lives in the Enterprise Zone, works at least 50% of the time within the Enterprise Zone, and at least 90% of the employee's services are directly related to the company's facilities located in the Enteprise Zone.
The credit is nonrefundable, but unused credits may be carried back for up to 3 years or carried forward for up to 10 years. The credit may be applied against Individual or Adjusted Gross Income Tax, Financial Institutions Tax, or Insurance Premiums Tax liabilities. In order to receive the credit, a business needs to file Schedule EZ with the State of Indiana.
A qualified employee may deduct half of the adjusted gross income earned as a qualified employee during the year, up to a maximum deduction of $7,500. A qualified employee is one who lives in the Enterprise Zone, works at least 50% of the time within the Enterprise Zone, and at least 90% of the employee's services are directly related to the company's facilities located in the Enterprise Zone. This could result in an annual tax savings of $255 to the qualified employees. A qualified employee’s earnings within the Enterprise Zone must equal or exceed $15,000 to receive the maximum tax savings. Form IT-40QEC should be filled out by the employer and given to the employee with their W-2.
This is a state tax credit for interest income earned by a taxpayer from a loan that directly benefits an Enterprise Zone business, increases Enterprise Zone property values, or is used to rehabilitate, repair, or improve an Enterprise Zone residence. The credit is equal to 5% of the loan interest received during the year. The credit is nonrefundable, but unused credits may be carried forward. Unused credits may not be carried back. This credit may be applied against the individual or corporate Adjusted Gross Income Tax, the Financial Institutions Tax, and the Insurance Premiums Tax. Schedule LIC must be completed by the taxpayer with the annual state tax liability return.
Individuals or trusts purchasing an ownership interest in a business located in the enterprise zone may be eligible for an investment credit (up to 30% of the purchase price) against their state tax liability. The allowable credit percentage up to 30% varies depending upon the type of investment, the type of business, and the number of jobs created by the investment. The credit is nonrefundable, but unused credits may be carried forward. Unused credits may not be carried back. This credit may be applied against individual or corporate Adjusted Gross Income tax liability.
To qualify for the credit, a taxpayer must request the IEDC to determine whether a purchase of an ownership in a business located in an Enterprise Zone is a qualified investment and the credit percentage to be allowed. The request must be made before a purchase is made.