(STATEHOUSE) May 11, 2007 – House Enrolled Act 1461 (HEA 1461), authored by Representative Brian C. Bosma (R-Indianapolis), was signed into law today by Governor Mitch Daniels.  The bill will exempt 50 percent of income derived from licensing or commercialization of patented technology for businesses of 500 employees or fewer for a 10-year “startup” phase. HB 1461 was part of the House Republican 2007 legislative agenda as an effort to attract smaller high-tech businesses to Indiana and expand job creation.  Indiana is the first state in the nation to adopt this legislation.

“Over the past two years, House Republicans have focused on legislation to move Indiana forward in the areas of small business growth and development,” said Representative Bosma. “This legislation will enhance our efforts to promote technology-related industries to find a home in Indiana. This bill will not only increase the expansion of new businesses, but will also reward high-tech businesses that choose to stay in our state.”

HEA 1461 defines a qualified patent to include only utility patents and plant patents and provides that the total amount of the exemptions claimed by a taxpayer in a taxable year may not exceed $5 million. In addition, the legislation provides that a taxpayer may not claim an exemption for the income from a particular qualified patent for more than ten years and begins to phase-out the exemption in the sixth taxable year.

“The success of the Purdue Research Park in Lafayette is a great illustration of why this legislation will lead to Indiana’s future success.  Indiana will now be at the forefront of attracting high-tech businesses to Indiana, which will advance high-tech, biotechnology and other technological advancement industries,” said Rep. Bosma.  “We should welcome this growth to Indiana and must do so by focusing on the small businesses and entrepreneurs who will create 75 percent of our state’s new jobs in the next decade.”

House Republicans were successful in 25 out of 51 initiatives they proposed in their 2007 legislative agenda.  As part of their plan, House Republicans committed to expanding job creation efforts that target Indiana’s small business growth and development and protect and build on the job creation success reached in the previous two years.  HEA 1461 was included in this plan as a small business growth initiative.