Tax Abatement

What is Tax Abatement?

Tax abatement is a tool used by local governments to stimulate the local economy, promote job creation, and encourage capital investment. By fostering new investments, tax abatement helps increase or sustain employment in the community, supports the redevelopment of blighted or underutilized areas, and/or stimulates investment in targeted areas of the community.

Purpose

The purpose of tax abatement is to encourage investment and job development, as well as to promote other community goals, such as affordable housing, that might not otherwise occur.

  • In a global economy, tax abatement is often essential for competing with other localities for job creation.
  • Tax abatement serves as an affirmation of confidence in a business by the community.
  • Tax abatement is expected to expand the community’s tax base by attracting new businesses, investment, and jobs. Over time, this will lead to increased tax funds for community infrastructure improvements, growth, and help stabilize the tax rate.

Community Growth

Tax abatement, or the phasing in of taxes for new business and housing activities, is one way to foster continued growth within the community. Abatement does not reduce funds available for municipal activities such as police services, schools, or libraries. In a Tax Increment Finance (TIF) district, abatement can increase the tax revenue available to the TIF fund by promoting growth.

Dollar Impact

Abatement applies only to increases in assessed property value. It cannot be used to reduce current taxes. The full tax rate is phased in gradually over a period of 1 to 10 years. If the planned investment does not materialize as expected, resulting in no increase in assessed value, no tax abatement will be granted.

Who is Eligible for Tax Abatement?

Property owners in Economic Revitalization Areas (ERA) are eligible for tax abatements. To qualify, owners must make improvements to real property (real estate) or personal property, such as installing new manufacturing equipment, logistical equipment, information technology, or equipment used in research and development activities related to experimental or laboratory research.

Projects will be considered for abatement only if the proposed investment is at least $250,000 and if development has not yet begun or equipment has not been ordered. Additionally, if the applicant is not the property owner, written authorization from the owner is required.

Recommendation by the Redevelopment Commission, Approval by the City Council

The approval process is designed to ensure multiple opportunities for public comment and review. The City of Lafayette Redevelopment Commission conducts a preliminary review and makes a recommendation on tax abatement applications. This recommendation is then forwarded to the Lafayette City Council, which holds a public hearing to review the request and gather input from the public. The City Council, in conjunction with the Redevelopment Commission, reviews compliance annually. Compliance is evaluated based on how well a company has met its proposed benefits to the community in terms of investment, job creation, wages, and other factors.

How to apply for tax abatement

The tax abatement process begins with the Greater Lafayette Commerce team, which will guide interested companies through the process. For questions or to file for an abatement, please contact:

Greater Lafayette Commerce
337 Columbia Street
Lafayette, IN 47902
(765) 742-4044

Applications and Forms

Click here to access the forms required to apply for Tax Abatement.