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 6382 NOTE PREPARED: Dec 13, 2021
BILL NUMBER: HB 1382 BILL AMENDED:
SUBJECT: College Savings Tax Credit.
FIRST AUTHOR: Rep. Klinker BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill provides that "qualified higher education expense" includes qualified
education loan repayments under Section 529(c)(9) of the Internal Revenue Code.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will be required to
update forms, documentation, and software to reflect the modifications to the 529 college contribution tax
credit. The DOR's current level of resources should be sufficient to implement the bill's provisions.
Explanation of State Revenues: For purposes of the Indiana 529 College Savings Account Contribution
Credit, this bill provides that the definition of "qualified higher education expenses" will include qualified
education loan repayments defined under Section 529(c)(9) of the Internal Revenue Code. This will establish
the use of 529 College Savings account funds for student loan repayments as a qualified withdrawal
beginning in FY 2023. This provision would decrease the amount of 529 contribution tax credit recaptured
from individual taxpayers. The provision could encourage additional contributions to 529 accounts and
increase the amount of contribution credits claimed.
The Setting Every Community Up for Retirement Enhancement Act (federal SECURE Act of 2019) allows
529 plan holders to: (1) use 529 Savings Accounts towards expenses for fees, books, supplies, and equipment
required for the participation of a designated beneficiary in an apprenticeship program; and (2) withdraw a
lifetime maximum of $10,000 to pay down student loan debt. Under current law, Indiana classifies the use
of funds withdrawn from an Indiana 529 savings plan used for student loan payments as a nonqualified
withdrawal. [Prior to the changes in SECURE Act, any withdrawals from a 529 Savings Account for the
HB 1382 1 purpose of student loan payments were subject to a tax credit recapture.] The bill would result in Indiana
conforming to the federal definition of qualified higher education expenses for the purpose of the state 529
contribution tax credit.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected:
Information Sources:
Fiscal Analyst: Olivia Smith, 317-232-9869.
HB 1382 2