TAX ABATEMENT

  • Tax abatement is a phasing-in of real and personal property taxes on projects that increase the tax base and the employment base of a community.
  • The Portage City Council may offer real and personal property tax abatement as an incentive to new and expanding businesses.
  • Each tax abatement request will be considered on a case-by-case basis in accordance with the procedures and criteria outlined in this document and approved by the Portage City Council.
  • Property tax abatement in Indiana is authorized under Indiana Code 6-1.1-12.1 in the form of deductions from assessed valuation. Land does not qualify for abatement. Only the increase in assessed value that occurs as a result of the investment is eligible for abatement. It is not permissible to abate property that is already taxed in Indiana.
  • Property tax abatement is controlled by the Portage City Council.
  • The period of tax phase-in may be any number of years between one and ten. An applicant may request an abatement period in their request. The Portage City Council ultimately determines the period of time for which abatement is granted.
  • The Portage City Council may offer tax abatement for projects that are industrial or certain commercial projects located within the designated Economic Revitalization Area (ERA). The property from US 20 north to Lake Michigan is included in the Economic Revitalization Area (ERA).
  • Projects seeking tax abatement must conform to any applicable ordinances, regulations and design standards currently in place for the City of Portage.
  • To be eligible, requests for real property tax abatement consideration must be filed and approved before the issuance of an improvement location permit or before any filings toward a building permit. Any applicable fees must accompany the request. Requests for personal property tax abatement should be filed with the real property request, although there is a procedure by which late filings of personal property tax abatement requests may be considered.
  • The following types of projects are NOT eligible for tax abatement per Indiana Code:
    • Private or commercial golf course
    • Country club
    • Massage parlor
    • Tennis club
    • Skating facility (including roller skating, skateboarding or ice skating)
    • Racquet sport facility (including any handball or racquetball court)
    • Hot tub facility
    • Suntan facility
    • Racetrack
    • Package Liquor Store that holds a liquor dealer’s permit under IC 7.1-3-10 or any other entity required to operate under a license issued under IC 7.1 et al.
    • Any facility the primary purpose of which is retail food and beverage service, automobile sales or service or other retail
    • Residential, except for certain exceptions
  • In the event the successful applicant awarded a tax abatement defaults on the signed agreement, the applicant will be notified by mail that their tax abatement is in default. The letter will include a date, time and place of a public hearing before the Portage City Council to discuss the removal of the abatement. The purpose of the hearing will be to allow the tax abatement recipient to explain the reason for the default. After the hearing, the Portage City Council will have the option of removing the deduction, removing the deduction and requiring payment of taxes abated, or invoking any other action the Council deems appropriate

To begin the process, the statement of Benefits Form(s) SB -1/RP for Real Property, SB-1/PP for Personal Property, and the City of Portage Tax Abatement Supplemental Form must be completed and electronically submitted to the Portage Economic Development Corporation, info@portagein.org, or the Portage Clerk- Treasurer.[/p][p]An original signed copy of the SB-1 form(s) and all required attachments must also be sent via U.S. Mail to the Portage Economic Development Corporation, 2642 Eleanor St., Portage, IN 46368.

There are two types of tax abatement, real property tax abatement and personal property tax abatement.

Real Property Tax Abatement

New buildings constructed are eligible for real property tax abatement. Substantial improvements to existing buildings may be eligible, but it is important to note that only the value of the improvement to the existing building qualifies. It is not permissible to abate property that is already being taxed in Indiana. By State law, land does not qualify for abatement.

How To Calculate:

Real property tax abatement is a declining percentage of the increase in assessed value of the improvement based on the following schedule.
10-Year Schedule 

  • Year 1- 100% exempt
  • Year 2- 95% exempt
  • Year 3- 80% exempt
  • Year 4- 65% exempt
  • Year 5- 50% exempt
  • Year 6- 40% exempt
  • Year 7- 30% exempt
  • Year 8-  20% exempt
  • Year 9- 10% exempt
  • Year 10- 5% exempt
  • Year 11- First year of full property tax payment
  • Manufacturing equipment, research and development equipment, logistical distribution equipment, or information technology equipment that is new to Indiana is eligible for personal property tax abatement. It is not permissible to abate property that is already being taxed in Indiana.

How To Calculate:

  • Personal property tax abatement is a declining percentage of the assessed value of the newly installed manufacturing equipment, research and development equipment, logistical distribution equipment, and/or information technology equipment. Taxes are phased in as described below.
    5-Year Schedule
  • Year 1- 100% exempt
  • Year 2- 80% exempt
  • Year 3- 60% exempt
  • Year 4- 40% exempt
  • Year 5- 20% exempt
  • To be eligible for industrial / commercial tax abatement, the project must be located within a designated Economic Revitalization Area (ERA). Tax abatement within a TIF District will require special consideration by the Redevelopment Commission.
  • Tax abatement may be granted for a maximum of ten (10) years to all commercial and industrial companies for new construction, expansions and personal property as long as the eligibility criteria outlined in this document are met.
  • Portage City Council may also, at their discretion, use the employee wage and benefits levels when considering the approval of tax abatement for commercial and industrial companies.
  • To be eligible for industrial / commercial tax abatement, the project must be located within a designated Economic Revitalization Area (ERA). Tax abatement within a TIF District will require special consideration by the Redevelopment Commission.
  • Tax abatement may be granted for a maximum of ten (10) years to all commercial and industrial companies for new construction, expansions and personal property as long as the eligibility criteria outlined in this document are met.
  • Minimal design standards as defined by the City of Portage must be met in order for a speculative building to qualify for tax abatement by the City.