Enterprise Zone Tax Incentives

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.

Property Tax Investment Deduction

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 deduction is equal to the total assessed value minus the base year assessed value for the qualified investment.  The added valuation may be deducted for up to 10 years.  Qualified investments are defined as follows:

    1. Costs associated with the repair/rehabilitation/modernization of an existing building
    2. Construction of a new building
    3. Onsite infrastructure improvements
    4. Purchase of new manufacturing or production equipment
    5. Costs associated with retooling of existing machinery
    6. Purchase of a building

Eligibility is determined by the Allen County Auditor on August 15 of the year in which the application is made.  Determinations may be appealed.  To claim the deduction, an Enterprise Zone Investment Deduction Application (Form EZ-2) needs to be filed with the Allen County Auditor 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.

Tax Credit for Employers

Enterprise zone businesses can reduce their state tax liability by employing zone residents.  State tax credits up to $1,500 are earned based on wages paid to employees who live and work in the zone.   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.

Tax Deduction for Zone Residents

Residents of Fort Wayne's Enterprise Zone who also work in the zone may be entitled to deduct from their Indiana income tax up to one half (1/2) of their income earned or $7,500, whichever is less.  Zone resident employees of any business, government agency, or not-for-profit organizations located in the zone are eligible to take this deduction. 

Claim this deduction by sending a Form IT-40QEC, filled out by the employer and given to the employee with their W-2, with the employee's Indiana state tax return and entering the amount as "OTHER" in deductions.

Loan Interest Income Tax Credit

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.

Investment Cost Credit

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.