Home > Uncategorized > What is property tax phase-in (abatement)?

What is property tax phase-in (abatement)?

By Joy Sessing
A Morgan County voice

Property tax phase-in (abatement) is a tool used in Morgan County and in counties throughout Indiana to provide incentives for private investment and job creation by phasing in the new or increased assessed value resulting from new investment on the property tax rolls. It can be used by existing companies that expand or for the attraction of new firms.

 Property tax phase-in (abatement) can be granted on either real or personal property. Real property abatements can be granted for both new construction and rehabilitation, with the abatement limited to the increase in assessed value attributable to the new construction or rehabilitation. In other words, tax phase-in (abatement) does not take away any existing property taxes being paid. Land cannot be abated.

Personal property tax abatements can be granted to any manufacturing equipment (new or used) that has not previously been taxed in Indiana.

Personal property, such as new laboratory equipment and computers used for research and development and new logistical distribution equipment, are also eligible for tax abatement.

Additionally, Morgan County has enacted the relatively new property tax phase-in for new information technology equipment (data centers).

Tax abatement can be granted for between one to 10 years. Only in year one is the total amount of new assessed value exempt from paying property tax. In each succeeding year, the share of the previously exempted assessed value that is taxable increases. For example, the schedule for 10-year abatement (the maximum) is as follows:


Year 1: 100 percent exemp – Year 1: 100 percent exempt

Year 2: 95 percent exempt  – Year 2: 90 percent exempt

Year 3 : 80 percent exempt  – Year 3: 80 percent exempt

Year 4: 65 percent exempt  – Year 4: 70 percent exempt

Year 5: 50 percent exempt  – Year 5: 60 percent exempt

Year 6: 40 percent exempt  – Year 6: 50 percent exempt

Year 7: 30 percent exempt  – Year 7: 40 percent exempt

Year 8: 20 percent exempt  – Year 8: 30 percent exempt

Year 9: 10 percent exempt – Year 9: 20 percent exempt

Year 10: 5 percent exempt – Year 10: 10 percent exempt

Year 11: first year of full property tax payment

Tax phase-in (abatement) of some form is available in most states and is generally expected by companies since it is so prevalent.

Joy Sessing is Morgan County’s economic development director. Next week’s column will be from former Crane commander Steve Howard.


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