Indiana has enacted a new excise tax on the rental of heavy equipment. The rental excise tax is 2.25% of the gross retail rental income. The renter is liable for the tax and it will be collected by the retail merchant.

Heavy rental equipment is defined as property:

• classified under 532412 of the North American Industry Classification System Manual in effect on January 1, 2018;
• owned by a retail merchant in the business of renting heavy equipment, including any attachments;
• not intended to be permanently affixed to any real property; and
• not subject to registration for use on a public highway.

Equipment this new tax would apply to includes the following types:

• Bulldozer rental or leasing without operator
• Construction machinery and equipment rental or leasing without operator
• Crane rental or leasing without operator
• Earth moving equipment rental or leasing without operator
• Forestry machinery and equipment rental or leasing
• Heavy construction equipment rental without operator
• Logging equipment rental or leasing without operator
• Oil field machinery and equipment rental or leasing
• Oil well drilling machinery and equipment rental or leasing
• Welding equipment rental or leasing
• Well drilling machinery and equipment rental or leasing

However, the term does not include equipment rented for mining purposes or heavy equipment that is eligible for a property tax abatement deduction.

Lastly, heavy rental equipment is excluded from personal property tax assessment. Also keep in mind that rental with an operator is a service, not the rental of tangible personal property, and thus would be a non-taxable service.

For more information, please contact Partner Mike Grim, JD via e-mail or phone (502.882.4510).