*HB1303.1*
January 24, 2022
HOUSE BILL No. 1303
_____
DIGEST OF HB 1303 (Updated January 20, 2022 7:38 pm - DI 134)
Citations Affected: IC 6-3; noncode.
Synopsis: Tax credit for ABLE account contributions. Creates a stand-
alone credit for contributions to Indiana ABLE accounts. Provides that
a taxpayer is entitled to a credit against adjusted gross income tax equal
to the least of: (1) 20% of the amount of the total contributions made
by the taxpayer to an account or accounts of an Indiana ABLE 529A
savings plan during the taxable year; (2) $500; or (3) the amount of the
taxpayer's adjusted gross income tax for the taxable year, reduced by
the sum of all allowable credits. Provides that a taxpayer is not entitled
to a carryback, carryover, or refund of an unused credit. Provides that
a taxpayer may not sell, assign, convey, or otherwise transfer the tax
credit. Provides that an account owner of an Indiana ABLE 529A
savings plan must repay all or a part of the credit in a taxable year in
which any nonqualified withdrawal is made.
Effective: January 1, 2023.
Olthoff, Karickhoff, Davisson J.,
Clere
January 11, 2022, read first time and referred to Committee on Ways and Means.
January 24, 2022, amended, reported — Do Pass.
HB 1303—LS 6935/DI 129 January 24, 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. 1303
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 JANUARY 1, 2023]: Sec. 12. (a) As used in this section, "account" has
4 the 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 1303—LS 6935/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 from any qualified ABLE program under
6 account (as defined in Section 529A of the Internal Revenue Code
7 or any other similar plan.
8 (f) As used in this section, "nonqualified withdrawal" means a
9 withdrawal or distribution from a college choice 529 education savings
10 plan that is not a qualified withdrawal.
11 (g) As used in this section, "qualified higher education expenses"
12 has the meaning set forth in IC 21-9-2-19.5, except that the term does
13 not include qualified education loan repayments under Section
14 529(c)(9) of the Internal Revenue Code.
15 (h) As used in this section, "qualified K-12 education expenses"
16 means expenses that are for tuition in connection with enrollment or
17 attendance at an elementary or secondary public, private, or religious
18 school located in Indiana and are permitted under Section 529 of the
19 Internal Revenue Code.
20 (i) As used in this section, "qualified withdrawal" means a
21 withdrawal or distribution from a college choice 529 education savings
22 plan that is made:
23 (1) to pay for qualified higher education expenses, excluding any
24 withdrawals or distributions used to pay for qualified higher
25 education expenses, if the withdrawals or distributions are made
26 from an account of a college choice 529 education savings plan
27 that is terminated within twelve (12) months after the account is
28 opened;
29 (2) as a result of the death or disability of an account beneficiary;
30 (3) because an account beneficiary received a scholarship that
31 paid for all or part of the qualified higher education expenses of
32 the account beneficiary, to the extent that the withdrawal or
33 distribution does not exceed the amount of the scholarship; or
34 (4) by a college choice 529 education savings plan as the result of
35 a transfer of funds by a college choice 529 education savings plan
36 from one (1) third party custodian to another.
37 However, a qualified withdrawal does not include a withdrawal or
38 distribution that will be used for expenses that are for tuition in
39 connection with enrollment or attendance at an elementary or
40 secondary public, private, or religious school unless the school is
41 located in Indiana. A qualified withdrawal does not include a rollover
42 distribution or transfer of assets from a college choice 529 education
HB 1303—LS 6935/DI 129 3
1 savings plan to any other qualified tuition program under Section 529
2 of the Internal Revenue Code, to any qualified ABLE program under
3 Section 529A other than an Indiana ABLE 529A savings plan
4 adopted by the state under IC 12-11, or to any other similar plan.
5 (j) As used in this section, "taxpayer" means:
6 (1) an individual filing a single return;
7 (2) a married couple filing a joint return; or
8 (3) for taxable years beginning after December 31, 2019, a
9 married individual filing a separate return.
10 (k) A taxpayer is entitled to a credit against the taxpayer's adjusted
11 gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
12 year equal to the least of the following:
13 (1) The following amount:
14 (A) For taxable years beginning before January 1, 2019, the
15 sum of twenty percent (20%) multiplied by the amount of the
16 total contributions that are made by the taxpayer to an account
17 or accounts of a college choice 529 education savings plan
18 during the taxable year and that will be used to pay for
19 qualified higher education expenses that are not qualified K-12
20 education expenses, plus the lesser of:
21 (i) five hundred dollars ($500); or
22 (ii) ten percent (10%) multiplied by the amount of the total
23 contributions that are made by the taxpayer to an account or
24 accounts of a college choice 529 education savings plan
25 during the taxable year and that will be used to pay for
26 qualified K-12 education expenses.
27 (B) For taxable years beginning after December 31, 2018, the
28 sum of:
29 (i) twenty percent (20%) multiplied by the amount of the
30 total contributions that are made by the taxpayer to an
31 account or accounts of a college choice 529 education
32 savings plan during the taxable year and that are designated
33 to pay for qualified higher education expenses that are not
34 qualified K-12 education expenses; plus
35 (ii) twenty percent (20%) multiplied by the amount of the
36 total contributions that are made by the taxpayer to an
37 account or accounts of a college choice 529 education
38 savings plan during the taxable year and that are designated
39 to pay for qualified K-12 education expenses.
40 (2) One thousand dollars ($1,000), or five hundred dollars ($500)
41 in the case of a married individual filing a separate return.
42 (3) The amount of the taxpayer's adjusted gross income tax
HB 1303—LS 6935/DI 129 4
1 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
2 reduced by the sum of all credits (as determined without regard to
3 this section) allowed by IC 6-3-1 through IC 6-3-7.
4 (l) This subsection applies after December 31, 2018. At the time a
5 contribution is made to or a withdrawal is made from an account or
6 accounts of a college choice 529 education savings plan, the person
7 making the contribution or withdrawal shall designate whether the
8 contribution is made for or the withdrawal will be used for:
9 (1) qualified higher education expenses that are not qualified
10 K-12 education expenses; or
11 (2) qualified K-12 education expenses.
12 The Indiana education savings authority (IC 21-9-3) shall use
13 subaccounting to track the designations.
14 (m) A taxpayer who makes a contribution to a college choice 529
15 education savings plan is considered to have made the contribution on
16 the date that:
17 (1) the taxpayer's contribution is postmarked or accepted by a
18 delivery service, for contributions that are submitted to a college
19 choice 529 education savings plan by mail or delivery service; or
20 (2) the taxpayer's electronic funds transfer is initiated, for
21 contributions that are submitted to a college choice 529 education
22 savings plan by electronic funds transfer.
23 (n) A taxpayer is not entitled to a carryback, carryover, or refund of
24 an unused credit.
25 (o) A taxpayer may not sell, assign, convey, or otherwise transfer the
26 tax credit provided by this section.
27 (p) To receive the credit provided by this section, a taxpayer must
28 claim the credit on the taxpayer's annual state tax return or returns in
29 the manner prescribed by the department. The taxpayer shall submit to
30 the department all information that the department determines is
31 necessary for the calculation of the credit provided by this section.
32 (q) An account owner of an account of a college choice 529
33 education savings plan must repay all or a part of the credit in a taxable
34 year in which any nonqualified withdrawal is made from the account.
35 The amount the taxpayer must repay is equal to the lesser of:
36 (1) twenty percent (20%) of the total amount of nonqualified
37 withdrawals made during the taxable year from the account; or
38 (2) the excess of:
39 (A) the cumulative amount of all credits provided by this
40 section that are claimed by any taxpayer with respect to the
41 taxpayer's contributions to the account for all prior taxable
42 years beginning on or after January 1, 2007; over
HB 1303—LS 6935/DI 129 5
1 (B) the cumulative amount of repayments paid by the account
2 owner under this subsection for all prior taxable years
3 beginning on or after January 1, 2008.
4 (r) Any required repayment under subsection (q) shall be reported
5 by the account owner on the account owner's annual state income tax
6 return for any taxable year in which a nonqualified withdrawal is made.
7 (s) A nonresident account owner who is not required to file an
8 annual income tax return for a taxable year in which a nonqualified
9 withdrawal is made shall make any required repayment on the form
10 required under IC 6-3-4-1(2). If the nonresident account owner does
11 not make the required repayment, the department shall issue a demand
12 notice in accordance with IC 6-8.1-5-1.
13 (t) The executive director of the Indiana education savings authority
14 shall submit or cause to be submitted to the department a copy of all
15 information returns or statements issued to account owners, account
16 beneficiaries, and other taxpayers for each taxable year with respect to:
17 (1) nonqualified withdrawals made from accounts, including
18 subaccounts of a college choice 529 education savings plan for
19 the taxable year; or
20 (2) account closings for the taxable year.
21 SECTION 2. IC 6-3-3-12.1 IS ADDED TO THE INDIANA CODE
22 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
23 JANUARY 1, 2023]: Sec. 12.1. (a) As used in this section, "ABLE
24 account" has the meaning set forth in IC 12-11-14-1.
25 (b) As used in this section, "contribution" means the amount of
26 money directly provided to an Indiana ABLE 529A savings plan
27 account by a taxpayer. A contribution does not include any of the
28 following:
29 (1) Money credited to an ABLE account as a result of bonus
30 points or other forms of consideration earned by the taxpayer
31 that result in a transfer of money to the ABLE account.
32 (2) Money transferred from any qualified ABLE program
33 under Section 529A of the Internal Revenue Code or from any
34 other similar plan.
35 (3) Money transferred from any qualified tuition program
36 under Section 529 of the Internal Revenue Code or from any
37 other similar plan.
38 (c) As used in this section, "designated beneficiary" has the
39 meaning set forth in IC 12-11-14-5.
40 (d) As used in this section, "Indiana ABLE 529A savings plan"
41 refers to the Achieving a Better Life Experience (ABLE) 529A plan
42 established under IC 12-11.
HB 1303—LS 6935/DI 129 6
1 (e) As used in this section, "nonqualified withdrawal" means a
2 withdrawal or distribution from an Indiana ABLE 529A savings
3 plan that is not a qualified withdrawal.
4 (f) As used in this section, "qualified disability expense" has the
5 meaning set forth in IC 12-11-14-8.
6 (g) As used in this section, "qualified withdrawal" means a
7 withdrawal or distribution from an Indiana ABLE 529A savings
8 plan that is made:
9 (1) to pay for qualified disability expenses, excluding any
10 withdrawals or distributions used to pay for qualified
11 disability expenses, if the withdrawals or distributions are
12 made from an Indiana ABLE 529A savings plan that is
13 terminated within twelve (12) months after the ABLE account
14 is opened;
15 (2) as a result of the death of a designated beneficiary; or
16 (3) by an Indiana ABLE 529A savings plan as the result of a
17 transfer of funds by an Indiana ABLE 529A savings plan
18 from one (1) third party custodian to another.
19 A qualified withdrawal does not include a rollover distribution or
20 transfer of assets from an Indiana ABLE 529A savings plan to any
21 other qualified ABLE program under Section 529A of the Internal
22 Revenue Code, or to any qualified tuition program under Section
23 529 of the Internal Revenue Code other than a college choice 529
24 saving plan established under IC 21-9, or to any other similar plan.
25 (h) As used in this section, "taxpayer" means:
26 (1) an individual filing a single return;
27 (2) a married couple filing a joint return; or
28 (3) a married individual filing a separate return.
29 (i) A taxpayer is entitled to a credit against the taxpayer's
30 adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7
31 for a taxable year equal to the least of the following:
32 (1) Twenty percent (20%) of the amount of the total
33 contributions made by the taxpayer to an ABLE account or
34 accounts of an Indiana ABLE 529A savings plan during the
35 taxable year.
36 (2) Five hundred dollars ($500).
37 (3) The amount of the taxpayer's adjusted gross income tax
38 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
39 reduced by the sum of all credits (as determined without
40 regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
41 (j) A taxpayer is not entitled to a carryback, carryover, or
42 refund of an unused credit.
HB 1303—LS 6935/DI 129 7
1 (k) A taxpayer may not sell, assign, convey, or otherwise
2 transfer the tax credit provided by this section.
3 (l) To receive the credit provided by this section, a taxpayer
4 must claim the credit on the taxpayer's annual state tax return or
5 returns in the manner prescribed by the department. The taxpayer
6 shall submit to the department all information that the department
7 determines is necessary for the calculation of the credit provided
8 by this section.
9 (m) An owner of an ABLE account of an Indiana ABLE 529A
10 savings plan must repay all or a part of the credit in a taxable year
11 in which any nonqualified withdrawal is made from the ABLE
12 account. The amount the taxpayer must repay is equal to the lesser
13 of:
14 (1) twenty percent (20%) of the total amount of nonqualified
15 withdrawals made during the taxable year from the ABLE
16 account; or
17 (2) the excess of:
18 (A) the cumulative amount of all credits provided by this
19 section that are claimed by any taxpayer with respect to
20 the taxpayer's contributions to the ABLE account for all
21 prior taxable years; over
22 (B) the cumulative amount of repayments paid by the
23 owner of the ABLE account under this subsection for all
24 prior taxable years.
25 (n) Any required repayment under subsection (m) must be
26 reported by the owner of the ABLE account on the owner's annual
27 state income tax return for any taxable year in which a
28 nonqualified withdrawal is made.
29 (o) A nonresident owner of an ABLE account who is not
30 required to file an annual income tax return for a taxable year in
31 which a nonqualified withdrawal is made shall make any required
32 repayment on the form required under IC 6-3-4-1(2). If the
33 nonresident owner of the ABLE account does not make the
34 required repayment, the department shall issue a demand notice in
35 accordance with IC 6-8.1-5-1.
36 (p) The executive director of the Indiana ABLE authority shall
37 submit or cause to be submitted to the department a copy of all
38 information returns or statements issued to ABLE account owners,
39 designated beneficiaries, and other taxpayers for each taxable year
40 with respect to:
41 (1) nonqualified withdrawals made from ABLE accounts for
42 the taxable year; or
HB 1303—LS 6935/DI 129 8
1 (2) ABLE account closings for the taxable year.
2 SECTION 3. [EFFECTIVE JANUARY 1, 2023] (a) IC 6-3-3-12.1,
3 as added by this act, and IC 6-3-3-12, as amended by this act, apply
4 to taxable years beginning after December 31, 2022.
5 (b) This SECTION expires January 1, 2026.
HB 1303—LS 6935/DI 129 9
COMMITTEE REPORT
Mr. Speaker: Your Committee on Ways and Means, to which was
referred House Bill 1303, 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 6, line 36, delete "One thousand dollars ($1,000), or five" and
insert "Five".
Page 6, line 37, after "(500)" insert ".".
Page 6, line 37, delete "in the case of a married individual filing a
separate".
Page 6, delete line 38.
and when so amended that said bill do pass.
(Reference is to HB 1303 as introduced.)
BROWN T
Committee Vote: yeas 20, nays 0.
HB 1303—LS 6935/DI 129