LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6530 NOTE PREPARED: Jan 18, 2022
BILL NUMBER: HB 1045 BILL AMENDED: Jan 10, 2022
SUBJECT: 529 College Savings Accounts.
FIRST AUTHOR: Rep. Heine BILL STATUS: As Passed House
FIRST SPONSOR: Sen. Holdman
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill 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. The bill 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 Date: July 1, 2022.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise tax forms, instructions, and computer programs to reflect the changes made by the bill.
The DOR's current level of resources should be sufficient to implement these changes.
Explanation of State Revenues: The bill increases the maximum annual income tax credit amount a
taxpayer may claim for contributions to an Indiana College Choice 529 Savings Plan from $1,000 to $1,500.
The credit modification is effective beginning in tax year 2023, so it will impact state General Fund revenue
beginning in FY 2024. The bill is estimated to reduce state General Fund revenue by about $28.1 M annually
beginning in FY 2024.
The bill would also result in shifts of state revenue across fiscal years as a portion of taxpayer contributions
made to an Indiana 529 College Savings Plan in a given tax year could now be attributed to the prior tax year
for purposes of claiming the state tax credit. The amount of credits that could be newly attributable to the
preceding tax year is indeterminable, but the impact would begin in FY 2024 after taxpayers have the
opportunity to claim the credit on their 2023 state income tax return. [Every credit claimed will reduce
HB 1045 1 General Fund revenue by an equal amount.]
Additional Information - This tax credit may be claimed by individual taxpayers who make contributions to
an Indiana College Choice 529 Education Savings Plan. The credit is equal to 20% of the taxpayer’s annual
contributions to an Indiana College Choice 529 Education Savings Plan, up to a current maximum credit of
$1,000 annually. The credit is nonrefundable and unused credits may not be carried forward or carried back.
In tax year 2019, the credit was claimed on 115,203 returns for a total of $78.7 M.
The revenue loss associated with the bill was estimated using a combination of data from the DOR and the
Indiana Education Savings Authority. The estimate assumes taxpayers that currently claim the maximum
credit will be claiming the new maximum $1,500 credit provided by this bill. The estimate allows for some
taxpayers to have insufficient tax liabilities to exhaust the full value of the nonrefundable credit, and it also
allows for some taxpayers to claim less than the current $1,000 credit limit.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue; Indiana Education Savings Authority.
Local Agencies Affected:
Information Sources: LSA Income Tax Database; CollegeChoice Basic Financial Statements and
Supplementary Information for the year ended 06/30/2021,
https://emma.msrb.org/P21512815-P21170221-P21585941.pdf
Fiscal Analyst: Olivia Smith, 317-232-9869.
HB 1045 2