*HB1045.1*
January 10, 2022
HOUSE BILL No. 1045
_____
DIGEST OF HB 1045 (Updated January 6, 2022 2:24 pm - DI 134)
Citations Affected: IC 6-3; noncode.
Synopsis: 529 college savings accounts. Increases the maximum
amount of the annual credit against adjusted gross income to which a
taxpayer is entitled for a contribution to a college choice 529 education
savings plan. Provides that a taxpayer shall be deemed to have made a
contribution to a college choice 529 education savings plan on the last
day of the preceding taxable year if the contribution is made not later
than the time prescribed by law for filing the return for such taxable
year (not including extensions).
Effective: July 1, 2022.
Heine
January 4, 2022, read first time and referred to Committee on Ways and Means.
January 10, 2022, amended, reported — Do Pass.
HB 1045—LS 6530/DI 129 January 10, 2022
Second Regular Session of the 122nd General Assembly (2022)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2021 Regular Session of the General Assembly.
HOUSE BILL No. 1045
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3-3-12, AS AMENDED BY P.L.154-2020,
2 SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2022]: Sec. 12. (a) As used in this section, "account" has the
4 meaning set forth in IC 21-9-2-2.
5 (b) As used in this section, "account beneficiary" has the meaning
6 set forth in IC 21-9-2-3.
7 (c) As used in this section, "account owner" has the meaning set
8 forth in IC 21-9-2-4.
9 (d) As used in this section, "college choice 529 education savings
10 plan" refers to a college choice 529 plan established under IC 21-9.
11 (e) As used in this section, "contribution" means the amount of
12 money directly provided to a college choice 529 education savings plan
13 account by a taxpayer. A contribution does not include any of the
14 following:
15 (1) Money credited to an account as a result of bonus points or
16 other forms of consideration earned by the taxpayer that result in
17 a transfer of money to the account.
HB 1045—LS 6530/DI 129 2
1 (2) Money transferred from any other qualified tuition program
2 under Section 529 of the Internal Revenue Code or from any other
3 similar plan.
4 (3) Money that is credited to an account and that will be
5 transferred to an ABLE account (as defined in Section 529A of
6 the Internal Revenue Code).
7 (f) As used in this section, "nonqualified withdrawal" means a
8 withdrawal or distribution from a college choice 529 education savings
9 plan that is not a qualified withdrawal.
10 (g) As used in this section, "qualified higher education expenses"
11 has the meaning set forth in IC 21-9-2-19.5, except that the term does
12 not include qualified education loan repayments under Section
13 529(c)(9) of the Internal Revenue Code.
14 (h) As used in this section, "qualified K-12 education expenses"
15 means expenses that are for tuition in connection with enrollment or
16 attendance at an elementary or secondary public, private, or religious
17 school located in Indiana and are permitted under Section 529 of the
18 Internal Revenue Code.
19 (i) As used in this section, "qualified withdrawal" means a
20 withdrawal or distribution from a college choice 529 education savings
21 plan that is made:
22 (1) to pay for qualified higher education expenses, excluding any
23 withdrawals or distributions used to pay for qualified higher
24 education expenses, if the withdrawals or distributions are made
25 from an account of a college choice 529 education savings plan
26 that is terminated within twelve (12) months after the account is
27 opened;
28 (2) as a result of the death or disability of an account beneficiary;
29 (3) because an account beneficiary received a scholarship that
30 paid for all or part of the qualified higher education expenses of
31 the account beneficiary, to the extent that the withdrawal or
32 distribution does not exceed the amount of the scholarship; or
33 (4) by a college choice 529 education savings plan as the result of
34 a transfer of funds by a college choice 529 education savings plan
35 from one (1) third party custodian to another.
36 However, a qualified withdrawal does not include a withdrawal or
37 distribution that will be used for expenses that are for tuition in
38 connection with enrollment or attendance at an elementary or
39 secondary public, private, or religious school unless the school is
40 located in Indiana. A qualified withdrawal does not include a rollover
41 distribution or transfer of assets from a college choice 529 education
42 savings plan to any other qualified tuition program under Section 529
HB 1045—LS 6530/DI 129 3
1 of the Internal Revenue Code or to any other similar plan.
2 (j) As used in this section, "taxpayer" means:
3 (1) an individual filing a single return;
4 (2) a married couple filing a joint return; or
5 (3) for taxable years beginning after December 31, 2019, a
6 married individual filing a separate return.
7 (k) A taxpayer is entitled to a credit against the taxpayer's adjusted
8 gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
9 year equal to the least of the following:
10 (1) The following amount:
11 (A) For taxable years beginning before January 1, 2019, the
12 sum of twenty percent (20%) multiplied by the amount of the
13 total contributions that are made by the taxpayer to an account
14 or accounts of a college choice 529 education savings plan
15 during the taxable year and that will be used to pay for
16 qualified higher education expenses that are not qualified K-12
17 education expenses, plus the lesser of:
18 (i) five hundred dollars ($500); or
19 (ii) ten percent (10%) multiplied by the amount of the total
20 contributions that are made by the taxpayer to an account or
21 accounts of a college choice 529 education savings plan
22 during the taxable year and that will be used to pay for
23 qualified K-12 education expenses.
24 (B) For taxable years beginning after December 31, 2018, the
25 sum of:
26 (i) twenty percent (20%) multiplied by the amount of the
27 total contributions that are made by the taxpayer to an
28 account or accounts of a college choice 529 education
29 savings plan during the taxable year and that are designated
30 to pay for qualified higher education expenses that are not
31 qualified K-12 education expenses; plus
32 (ii) twenty percent (20%) multiplied by the amount of the
33 total contributions that are made by the taxpayer to an
34 account or accounts of a college choice 529 education
35 savings plan during the taxable year and that are designated
36 to pay for qualified K-12 education expenses.
37 For purposes of clause (B), a taxpayer shall be deemed to have
38 made a contribution to an account or accounts of a college
39 choice 529 education savings plan on the last day of the
40 preceding taxable year if the contribution is made on account
41 of such taxable year and is made not later than the time
42 prescribed by law for filing the return for such taxable year
HB 1045—LS 6530/DI 129 4
1 (not including extensions).
2 (2) One thousand five hundred dollars ($1,000), ($1,500), or five
3 seven hundred fifty dollars ($500) ($750) in the case of a married
4 individual filing a separate return.
5 (3) The amount of the taxpayer's adjusted gross income tax
6 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
7 reduced by the sum of all credits (as determined without regard to
8 this section) allowed by IC 6-3-1 through IC 6-3-7.
9 (l) This subsection applies after December 31, 2018. At the time a
10 contribution is made to or a withdrawal is made from an account or
11 accounts of a college choice 529 education savings plan, the person
12 making the contribution or withdrawal shall designate whether the
13 contribution is made for or the withdrawal will be used for:
14 (1) qualified higher education expenses that are not qualified
15 K-12 education expenses; or
16 (2) qualified K-12 education expenses.
17 The Indiana education savings authority (IC 21-9-3) shall use
18 subaccounting to track the designations.
19 (m) A taxpayer who makes a contribution to a college choice 529
20 education savings plan is considered to have made the contribution on
21 the date that:
22 (1) the taxpayer's contribution is postmarked or accepted by a
23 delivery service, for contributions that are submitted to a college
24 choice 529 education savings plan by mail or delivery service; or
25 (2) the taxpayer's electronic funds transfer is initiated, for
26 contributions that are submitted to a college choice 529 education
27 savings plan by electronic funds transfer.
28 (n) A taxpayer is not entitled to a carryback, carryover, or refund of
29 an unused credit.
30 (o) A taxpayer may not sell, assign, convey, or otherwise transfer the
31 tax credit provided by this section.
32 (p) To receive the credit provided by this section, a taxpayer must
33 claim the credit on the taxpayer's annual state tax return or returns in
34 the manner prescribed by the department. The taxpayer shall submit to
35 the department all information that the department determines is
36 necessary for the calculation of the credit provided by this section.
37 (q) An account owner of an account of a college choice 529
38 education savings plan must repay all or a part of the credit in a taxable
39 year in which any nonqualified withdrawal is made from the account.
40 The amount the taxpayer must repay is equal to the lesser of:
41 (1) twenty percent (20%) of the total amount of nonqualified
42 withdrawals made during the taxable year from the account; or
HB 1045—LS 6530/DI 129 5
1 (2) the excess of:
2 (A) the cumulative amount of all credits provided by this
3 section that are claimed by any taxpayer with respect to the
4 taxpayer's contributions to the account for all prior taxable
5 years beginning on or after January 1, 2007; over
6 (B) the cumulative amount of repayments paid by the account
7 owner under this subsection for all prior taxable years
8 beginning on or after January 1, 2008.
9 (r) Any required repayment under subsection (q) shall be reported
10 by the account owner on the account owner's annual state income tax
11 return for any taxable year in which a nonqualified withdrawal is made.
12 (s) A nonresident account owner who is not required to file an
13 annual income tax return for a taxable year in which a nonqualified
14 withdrawal is made shall make any required repayment on the form
15 required under IC 6-3-4-1(2). If the nonresident account owner does
16 not make the required repayment, the department shall issue a demand
17 notice in accordance with IC 6-8.1-5-1.
18 (t) The executive director of the Indiana education savings authority
19 shall submit or cause to be submitted to the department a copy of all
20 information returns or statements issued to account owners, account
21 beneficiaries, and other taxpayers for each taxable year with respect to:
22 (1) nonqualified withdrawals made from accounts, including
23 subaccounts of a college choice 529 education savings plan for
24 the taxable year; or
25 (2) account closings for the taxable year.
26 SECTION 2. [EFFECTIVE JULY 1, 2022] (a) IC 6-3-3-12, as
27 amended by this act, applies to taxable years beginning after
28 December 31, 2022.
29 (b) This SECTION expires July 1, 2025.
HB 1045—LS 6530/DI 129 6
COMMITTEE REPORT
Mr. Speaker: Your Committee on Ways and Means, to which was
referred House Bill 1045, has had the same under consideration and
begs leave to report the same back to the House with the
recommendation that said bill be amended as follows:
Page 3, between lines 36 and 37, begin a new line block indented
and insert:
"For purposes of clause (B), a taxpayer shall be deemed to
have made a contribution to an account or accounts of a
college choice 529 education savings plan on the last day of
the preceding taxable year if the contribution is made on
account of such taxable year and is made not later than the
time prescribed by law for filing the return for such taxable
year (not including extensions).".
and when so amended that said bill do pass.
(Reference is to HB 1045 as introduced.)
BROWN T
Committee Vote: yeas 24, nays 0.
HB 1045—LS 6530/DI 129