Indiana 2023 Regular Session

Indiana House Bill HB1233 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	Introduced Version
3	3	HOUSE BILL No. 1233
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3-3-12.
7	7	Synopsis: College savings tax credit. Beginning in taxable year 2024,
8	8	increases the credit provided for a contribution to a college choice 529
9	9	education savings plan against a taxpayer's adjusted gross income from
10	10	$1,500 to $2,000 (and from $750 to $1,000 in the case of a married
11	11	individual filing a separate return), subject to other requirements.
12	12	Effective: January 1, 2024.
13	13	Klinker
14	14	January 10, 2023, read first time and referred to Committee on Ways and Means.
15	15	2023 IN 1233—LS 6059/DI 134 Introduced
16	16	First Regular Session of the 123rd General Assembly (2023)
17	17	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
18	18	Constitution) is being amended, the text of the existing provision will appear in this style type,
19	19	additions will appear in this style type, and deletions will appear in this style type.
20	20	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
21	21	provision adopted), the text of the new provision will appear in this style type. Also, the
22	22	word NEW will appear in that style type in the introductory clause of each SECTION that adds
23	23	a new provision to the Indiana Code or the Indiana Constitution.
24	24	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
25	25	between statutes enacted by the 2022 Regular Session of the General Assembly.
26	26	HOUSE BILL No. 1233
27	27	A BILL FOR AN ACT to amend the Indiana Code concerning
28	28	taxation.
29	29	Be it enacted by the General Assembly of the State of Indiana:
30	30	1 SECTION 1. IC 6-3-3-12, AS AMENDED BY P.L.122-2022,
31	31	2 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
32	32	3 JANUARY 1, 2024]: Sec. 12. (a) As used in this section, "account" has
33	33	4 the meaning set forth in IC 21-9-2-2.
34	34	5 (b) As used in this section, "account beneficiary" has the meaning
35	35	6 set forth in IC 21-9-2-3.
36	36	7 (c) As used in this section, "account owner" has the meaning set
37	37	8 forth in IC 21-9-2-4.
38	38	9 (d) As used in this section, "college choice 529 education savings
39	39	10 plan" refers to a college choice 529 plan established under IC 21-9.
40	40	11 (e) As used in this section, "contribution" means the amount of
41	41	12 money directly provided to a college choice 529 education savings plan
42	42	13 account by a taxpayer. A contribution does not include any of the
43	43	14 following:
44	44	15 (1) Money credited to an account as a result of bonus points or
45	45	16 other forms of consideration earned by the taxpayer that result in
46	46	17 a transfer of money to the account.
47	47	2023 IN 1233—LS 6059/DI 134 2
48	48	1 (2) Money transferred from any other qualified tuition program
49	49	2 under Section 529 of the Internal Revenue Code or from any other
50	50	3 similar plan.
51	51	4 (3) Money transferred from any qualified ABLE program under
52	52	5 Section 529A of the Internal Revenue Code or any other similar
53	53	6 plan.
54	54	7 (f) As used in this section, "nonqualified withdrawal" means a
55	55	8 withdrawal or distribution from a college choice 529 education savings
56	56	9 plan that is not a qualified withdrawal.
57	57	10 (g) As used in this section, "qualified higher education expenses"
58	58	11 has the meaning set forth in IC 21-9-2-19.5, except that the term does
59	59	12 not include qualified education loan repayments under Section
60	60	13 529(c)(9) of the Internal Revenue Code.
61	61	14 (h) As used in this section, "qualified K-12 education expenses"
62	62	15 means expenses that are for tuition in connection with enrollment or
63	63	16 attendance at an elementary or secondary public, private, or religious
64	64	17 school located in Indiana and are permitted under Section 529 of the
65	65	18 Internal Revenue Code.
66	66	19 (i) As used in this section, "qualified withdrawal" means a
67	67	20 withdrawal or distribution from a college choice 529 education savings
68	68	21 plan that is made:
69	69	22 (1) to pay for qualified higher education expenses, excluding any
70	70	23 withdrawals or distributions used to pay for qualified higher
71	71	24 education expenses, if the withdrawals or distributions are made
72	72	25 from an account of a college choice 529 education savings plan
73	73	26 that is terminated within twelve (12) months after the account is
74	74	27 opened;
75	75	28 (2) as a result of the death or disability of an account beneficiary;
76	76	29 (3) because an account beneficiary received a scholarship that
77	77	30 paid for all or part of the qualified higher education expenses of
78	78	31 the account beneficiary, to the extent that the withdrawal or
79	79	32 distribution does not exceed the amount of the scholarship; or
80	80	33 (4) by a college choice 529 education savings plan as the result of
81	81	34 a transfer of funds by a college choice 529 education savings plan
82	82	35 from one (1) third party custodian to another.
83	83	36 However, a qualified withdrawal does not include a withdrawal or
84	84	37 distribution that will be used for expenses that are for tuition in
85	85	38 connection with enrollment or attendance at an elementary or
86	86	39 secondary public, private, or religious school unless the school is
87	87	40 located in Indiana. A qualified withdrawal does not include a rollover
88	88	41 distribution or transfer of assets from a college choice 529 education
89	89	42 savings plan to any other qualified tuition program under Section 529
90	90	2023 IN 1233—LS 6059/DI 134 3
91	91	1 of the Internal Revenue Code, to any qualified ABLE program under
92	92	2 Section 529A other than an Indiana ABLE 529A savings plan adopted
93	93	3 by the state under IC 12-11, or to any other similar plan.
94	94	4 (j) As used in this section, "taxpayer" means:
95	95	5 (1) an individual filing a single return;
96	96	6 (2) a married couple filing a joint return; or
97	97	7 (3) for taxable years beginning after December 31, 2019, a
98	98	8 married individual filing a separate return.
99	99	9 (k) A taxpayer is entitled to a credit against the taxpayer's adjusted
100	100	10 gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
101	101	11 year equal to the least of the following:
102	102	12 (1) The following amount:
103	103	13 (A) For taxable years beginning before January 1, 2019, the
104	104	14 sum of twenty percent (20%) multiplied by the amount of the
105	105	15 total contributions that are made by the taxpayer to an account
106	106	16 or accounts of a college choice 529 education savings plan
107	107	17 during the taxable year and that will be used to pay for
108	108	18 qualified higher education expenses that are not qualified K-12
109	109	19 education expenses, plus the lesser of:
110	110	20 (i) five hundred dollars ($500); or
111	111	21 (ii) ten percent (10%) multiplied by the amount of the total
112	112	22 contributions that are made by the taxpayer to an account or
113	113	23 accounts of a college choice 529 education savings plan
114	114	24 during the taxable year and that will be used to pay for
115	115	25 qualified K-12 education expenses.
116	116	26 (B) For taxable years beginning after December 31, 2018, the
117	117	27 sum of:
118	118	28 (i) twenty percent (20%) multiplied by the amount of the
119	119	29 total contributions that are made by the taxpayer to an
120	120	30 account or accounts of a college choice 529 education
121	121	31 savings plan during the taxable year and that are designated
122	122	32 to pay for qualified higher education expenses that are not
123	123	33 qualified K-12 education expenses; plus
124	124	34 (ii) twenty percent (20%) multiplied by the amount of the
125	125	35 total contributions that are made by the taxpayer to an
126	126	36 account or accounts of a college choice 529 education
127	127	37 savings plan during the taxable year and that are designated
128	128	38 to pay for qualified K-12 education expenses.
129	129	39 (2) One thousand five hundred dollars ($1,500), or seven hundred
130	130	40 fifty dollars ($750) in the case of a married individual filing a
131	131	41 separate return. Two thousand dollars ($2,000), or one
132	132	42 thousand dollars ($1,000) in the case of a married individual
133	133	2023 IN 1233—LS 6059/DI 134 4
134	134	1 filing a separate return.
135	135	2 (3) The amount of the taxpayer's adjusted gross income tax
136	136	3 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
137	137	4 reduced by the sum of all credits (as determined without regard to
138	138	5 this section) allowed by IC 6-3-1 through IC 6-3-7.
139	139	6 (l) This subsection applies after December 31, 2018. At the time a
140	140	7 contribution is made to or a withdrawal is made from an account or
141	141	8 accounts of a college choice 529 education savings plan, the person
142	142	9 making the contribution or withdrawal shall designate whether the
143	143	10 contribution is made for or the withdrawal will be used for:
144	144	11 (1) qualified higher education expenses that are not qualified
145	145	12 K-12 education expenses; or
146	146	13 (2) qualified K-12 education expenses.
147	147	14 The Indiana education savings authority (IC 21-9-3) shall use
148	148	15 subaccounting to track the designations.
149	149	16 (m) A taxpayer who makes a contribution to a college choice 529
150	150	17 education savings plan is considered to have made the contribution on
151	151	18 the date that:
152	152	19 (1) the taxpayer's contribution is postmarked or accepted by a
153	153	20 delivery service, for contributions that are submitted to a college
154	154	21 choice 529 education savings plan by mail or delivery service; or
155	155	22 (2) the taxpayer's electronic funds transfer is initiated, for
156	156	23 contributions that are submitted to a college choice 529 education
157	157	24 savings plan by electronic funds transfer.
158	158	25 (n) A taxpayer is not entitled to a carryback, carryover, or refund of
159	159	26 an unused credit.
160	160	27 (o) A taxpayer may not sell, assign, convey, or otherwise transfer the
161	161	28 tax credit provided by this section.
162	162	29 (p) To receive the credit provided by this section, a taxpayer must
163	163	30 claim the credit on the taxpayer's annual state tax return or returns in
164	164	31 the manner prescribed by the department. The taxpayer shall submit to
165	165	32 the department all information that the department determines is
166	166	33 necessary for the calculation of the credit provided by this section.
167	167	34 (q) An account owner of an account of a college choice 529
168	168	35 education savings plan must repay all or a part of the credit in a taxable
169	169	36 year in which any nonqualified withdrawal is made from the account.
170	170	37 The amount the taxpayer must repay is equal to the lesser of:
171	171	38 (1) twenty percent (20%) of the total amount of nonqualified
172	172	39 withdrawals made during the taxable year from the account; or
173	173	40 (2) the excess of:
174	174	41 (A) the cumulative amount of all credits provided by this
175	175	42 section that are claimed by any taxpayer with respect to the
176	176	2023 IN 1233—LS 6059/DI 134 5
177	177	1 taxpayer's contributions to the account for all prior taxable
178	178	2 years beginning on or after January 1, 2007; over
179	179	3 (B) the cumulative amount of repayments paid by the account
180	180	4 owner under this subsection for all prior taxable years
181	181	5 beginning on or after January 1, 2008.
182	182	6 (r) Any required repayment under subsection (q) shall be reported
183	183	7 by the account owner on the account owner's annual state income tax
184	184	8 return for any taxable year in which a nonqualified withdrawal is made.
185	185	9 (s) A nonresident account owner who is not required to file an
186	186	10 annual income tax return for a taxable year in which a nonqualified
187	187	11 withdrawal is made shall make any required repayment on the form
188	188	12 required under IC 6-3-4-1(2). If the nonresident account owner does
189	189	13 not make the required repayment, the department shall issue a demand
190	190	14 notice in accordance with IC 6-8.1-5-1.
191	191	15 (t) The executive director of the Indiana education savings authority
192	192	16 shall submit or cause to be submitted to the department a copy of all
193	193	17 information returns or statements issued to account owners, account
194	194	18 beneficiaries, and other taxpayers for each taxable year with respect to:
195	195	19 (1) nonqualified withdrawals made from accounts, including
196	196	20 subaccounts of a college choice 529 education savings plan for
197	197	21 the taxable year; or
198	198	22 (2) account closings for the taxable year.
199	199	23 SECTION 2. [EFFECTIVE JANUARY 1, 2024] (a) IC 6-3-3-12,
200	200	24 as amended by this act, applies to taxable years beginning after
201	201	25 December 31, 2023.
202	202	26 (b) This SECTION expires January 1, 2026.
203	203	2023 IN 1233—LS 6059/DI 134