Introduced Version
HOUSE BILL No. 1533
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3; IC 6-3.1-35.6.
Synopsis: Individual tax deductions and credits. Increases the amount
from $1,000 to $1,500 per dependent child for purposes of the
unreimbursed education expenditure tax deduction. Repeals the
provision providing a tax credit for contributions to an ABLE account
and replaces it with a provision with retroactive language that increases
the credit to: (1) $750 for an individual filing a single return; and (2)
$1,500 for a married couple filing a joint return. Provides a tax credit
for contributions made to a public school foundation in an amount that
may not exceed: (1) $750 for an individual filing a single return; and
(2) $1,500 for a married couple filing a joint return. Provides that any
combination of credits claimed under the ABLE account credit and the
public school foundation credit may not exceed: (1) $750 for an
individual filing a single return; and (2) $1,500 for a married couple
filing a joint return.
Effective: January 1, 2023 (retroactive); January 1, 2024.
Cherry, Olthoff
January 19, 2023, read first time and referred to Committee on Ways and Means.
2023 IN 1533—LS 6886/DI 134 Introduced
First Regular Session of the 123rd General Assembly (2023)
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 2022 Regular Session of the General Assembly.
HOUSE BILL No. 1533
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 6-3-2-22, AS AMENDED BY P.L.92-2020,
2 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2024]: Sec. 22. (a) The following definitions apply
4 throughout this section:
5 (1) "Dependent child" means an individual who:
6 (A) is eligible to receive a free elementary or high school
7 education in an Indiana school corporation;
8 (B) qualifies as a dependent (as defined in Section 152 of the
9 Internal Revenue Code) of the taxpayer; and
10 (C) is the natural or adopted child of the taxpayer or, if custody
11 of the child has been awarded in a court proceeding to
12 someone other than the mother or father, the court appointed
13 guardian or custodian of the child.
14 If the parents of a child are divorced, the term refers to the parent
15 who is eligible to take the exemption for the child under Section
16 151 of the Internal Revenue Code.
17 (2) "Education expenditure" refers to any expenditures made in
2023 IN 1533—LS 6886/DI 134 2
1 connection with enrollment, attendance, or participation of the
2 taxpayer's dependent child in a private elementary or high school
3 education program. The term includes tuition, fees, computer
4 software, textbooks, workbooks, curricula, school supplies (other
5 than personal computers), and other written materials used
6 primarily for academic instruction or for academic tutoring, or
7 both.
8 (3) "Private elementary or high school education program" means
9 attendance at:
10 (A) a nonpublic school (as defined in IC 20-18-2-12); or
11 (B) a state accredited nonpublic school (as defined in
12 IC 20-18-2-18.7);
13 in Indiana that satisfies a child's obligation under IC 20-33-2 for
14 compulsory attendance at a school. The term does not include the
15 delivery of instructional service in a home setting to a dependent
16 child who is enrolled in a school corporation or a charter school.
17 (b) This section applies to taxable years beginning after December
18 31, 2010.
19 (c) A taxpayer who makes an unreimbursed education expenditure
20 during the taxpayer's taxable year is entitled to a deduction against the
21 taxpayer's adjusted gross income in the taxable year.
22 (d) The amount of the deduction is:
23 (1) one thousand dollars ($1,000); one thousand five hundred
24 dollars ($1,500); multiplied by
25 (2) the number of the taxpayer's dependent children for whom the
26 taxpayer made education expenditures in the taxable year.
27 A husband and wife are entitled to only one (1) deduction under this
28 section.
29 (e) To receive the deduction provided by this section, a taxpayer
30 must claim the deduction on the taxpayer's annual state tax return or
31 returns in the manner prescribed by the department.
32 SECTION 2. IC 6-3-3-12.1 IS REPEALED [EFFECTIVE
33 JANUARY 1, 2023 (RETROACTIVE)]. Sec. 12.1. (a) As used in this
34 section, "ABLE account" has the meaning set forth in IC 12-11-14-1.
35 (b) As used in this section, "contribution" means the amount of
36 money directly provided to an Indiana ABLE 529A savings plan
37 account by a taxpayer. A contribution does not include any of the
38 following:
39 (1) Money credited to an ABLE account as a result of bonus
40 points or other forms of consideration earned by the taxpayer that
41 result in a transfer of money to the ABLE account.
42 (2) Money transferred from any qualified ABLE program under
2023 IN 1533—LS 6886/DI 134 3
1 Section 529A of the Internal Revenue Code or from any other
2 similar plan.
3 (3) Money transferred from any qualified tuition program under
4 Section 529 of the Internal Revenue Code or from any other
5 similar plan.
6 (c) As used in this section, "designated beneficiary" has the meaning
7 set forth in IC 12-11-14-5.
8 (d) As used in this section, "Indiana ABLE 529A savings plan"
9 refers to the Achieving a Better Life Experience (ABLE) 529A plan
10 established under IC 12-11.
11 (e) As used in this section, "nonqualified withdrawal" means a
12 withdrawal or distribution from an Indiana ABLE 529A savings plan
13 that is not a qualified withdrawal.
14 (f) As used in this section, "qualified disability expense" has the
15 meaning set forth in IC 12-11-14-8.
16 (g) As used in this section, "qualified withdrawal" means a
17 withdrawal or distribution from an Indiana ABLE 529A savings plan
18 that is made:
19 (1) to pay for qualified disability expenses, excluding any
20 withdrawals or distributions used to pay for qualified disability
21 expenses, if the withdrawals or distributions are made from an
22 Indiana ABLE 529A savings plan that is terminated within twelve
23 (12) months after the ABLE account is opened;
24 (2) as a result of the death of a designated beneficiary; or
25 (3) by an Indiana ABLE 529A savings plan as the result of a
26 transfer of funds by an Indiana ABLE 529A savings plan from
27 one (1) third party custodian to another.
28 A qualified withdrawal does not include a rollover distribution or
29 transfer of assets from an Indiana ABLE 529A savings plan to any
30 other qualified ABLE program under Section 529A of the Internal
31 Revenue Code, or to any qualified tuition program under Section 529
32 of the Internal Revenue Code other than a college choice 529 saving
33 plan established under IC 21-9, or to any other similar plan.
34 (h) As used in this section, "taxpayer" means:
35 (1) an individual filing a single return;
36 (2) a married couple filing a joint return; or
37 (3) a married individual filing a separate return.
38 (i) A taxpayer is entitled to a credit against the taxpayer's adjusted
39 gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
40 year equal to the least of the following:
41 (1) Twenty percent (20%) of the amount of the total contributions
42 made by the taxpayer to an ABLE account or accounts of an
2023 IN 1533—LS 6886/DI 134 4
1 Indiana ABLE 529A savings plan during the taxable year.
2 (2) Five hundred dollars ($500).
3 (3) The amount of the taxpayer's adjusted gross income tax
4 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
5 reduced by the sum of all credits (as determined without regard to
6 this section) allowed by IC 6-3-1 through IC 6-3-7.
7 (j) A taxpayer is not entitled to a carryback, carryover, or refund of
8 an unused credit.
9 (k) A taxpayer may not sell, assign, convey, or otherwise transfer the
10 tax credit provided by this section.
11 (l) To receive the credit provided by this section, a taxpayer must
12 claim the credit on the taxpayer's annual state tax return or returns in
13 the manner prescribed by the department. The taxpayer shall submit to
14 the department all information that the department determines is
15 necessary for the calculation of the credit provided by this section.
16 (m) An owner of an ABLE account of an Indiana ABLE 529A
17 savings plan must repay all or a part of the credit in a taxable year in
18 which any nonqualified withdrawal is made from the ABLE account.
19 The amount the taxpayer must repay is equal to the lesser of:
20 (1) twenty percent (20%) of the total amount of nonqualified
21 withdrawals made during the taxable year from the ABLE
22 account; or
23 (2) the excess of:
24 (A) the cumulative amount of all credits provided by this
25 section that are claimed by any taxpayer with respect to the
26 taxpayer's contributions to the ABLE account for all prior
27 taxable years; over
28 (B) the cumulative amount of repayments paid by the owner of
29 the ABLE account under this subsection for all prior taxable
30 years.
31 (n) Any required repayment under subsection (m) must be reported
32 by the owner of the ABLE account on the owner's annual state income
33 tax return for any taxable year in which a nonqualified withdrawal is
34 made.
35 (o) A nonresident owner of an ABLE account who is not required
36 to file an annual income tax return for a taxable year in which a
37 nonqualified withdrawal is made shall make any required repayment on
38 the form required under IC 6-3-4-1(2). If the nonresident owner of the
39 ABLE account does not make the required repayment, the department
40 shall issue a demand notice in accordance with IC 6-8.1-5-1.
41 (p) The executive director of the Indiana ABLE authority shall
42 submit or cause to be submitted to the department a copy of all
2023 IN 1533—LS 6886/DI 134 5
1 information returns or statements issued to ABLE account owners,
2 designated beneficiaries, and other taxpayers for each taxable year with
3 respect to:
4 (1) nonqualified withdrawals made from ABLE accounts for the
5 taxable year; or
6 (2) ABLE account closings for the taxable year.
7 SECTION 3. IC 6-3-3-12.2 IS ADDED TO THE INDIANA CODE
8 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
9 JANUARY 1, 2023 (RETROACTIVE)]: Sec. 12.2. (a) As used in this
10 section, "ABLE account" has the meaning set forth in
11 IC 12-11-14-1.
12 (b) As used in this section, "contribution" means the amount of
13 money directly provided to an Indiana ABLE 529A savings plan
14 account by a taxpayer. A contribution does not include any of the
15 following:
16 (1) Money credited to an ABLE account as a result of bonus
17 points or other forms of consideration earned by the taxpayer
18 that result in a transfer of money to the ABLE account.
19 (2) Money transferred from any qualified ABLE program
20 under Section 529A of the Internal Revenue Code or from any
21 other similar plan.
22 (3) Money transferred from any qualified tuition program
23 under Section 529 of the Internal Revenue Code or from any
24 other similar plan.
25 (c) As used in this section, "designated beneficiary" has the
26 meaning set forth in IC 12-11-14-5.
27 (d) As used in this section, "Indiana ABLE 529A savings plan"
28 refers to the achieving a better life experience (ABLE) 529A plan
29 established under IC 12-11.
30 (e) As used in this section, "nonqualified withdrawal" means a
31 withdrawal or distribution from an Indiana ABLE 529A savings
32 plan that is not a qualified withdrawal.
33 (f) As used in this section, "qualified disability expense" has the
34 meaning set forth in IC 12-11-14-8.
35 (g) As used in this section, "qualified withdrawal" means a
36 withdrawal or distribution from an Indiana ABLE 529A savings
37 plan that is made:
38 (1) to pay for qualified disability expenses, excluding any
39 withdrawals or distributions used to pay for qualified
40 disability expenses, if the withdrawals or distributions are
41 made from an Indiana ABLE 529A savings plan that is
42 terminated within twelve (12) months after the ABLE account
2023 IN 1533—LS 6886/DI 134 6
1 is opened;
2 (2) as a result of the death of a designated beneficiary; or
3 (3) by an Indiana ABLE 529A savings plan as the result of a
4 transfer of funds by an Indiana ABLE 529A savings plan
5 from one (1) third party custodian to another.
6 A qualified withdrawal does not include a rollover distribution or
7 transfer of assets from an Indiana ABLE 529A savings plan to any
8 other qualified ABLE program under Section 529A of the Internal
9 Revenue Code, or to any qualified tuition program under Section
10 529 of the Internal Revenue Code other than a college choice 529
11 education savings plan established under IC 21-9, or to any other
12 similar plan.
13 (h) As used in this section, "taxpayer" means:
14 (1) an individual filing a single return;
15 (2) a married couple filing a joint return; or
16 (3) a married individual filing a separate return.
17 (i) A taxpayer is entitled to a credit against the taxpayer's
18 adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7
19 for a taxable year equal to the least of the following:
20 (1) Twenty percent (20%) of the amount of the total
21 contributions made by the taxpayer to an ABLE account or
22 accounts of an Indiana ABLE 529A savings plan during the
23 taxable year.
24 (2) Seven hundred fifty dollars ($750) for an individual filing
25 a single return.
26 (3) One thousand five hundred dollars ($1,500) for a married
27 couple filing a joint return.
28 (4) The amount of the taxpayer's adjusted gross income tax
29 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
30 reduced by the sum of all credits (as determined without
31 regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
32 (j) Notwithstanding subsection (i), the amount claimed as a
33 credit under this section, combined with any credit claimed under
34 IC 6-3.1-35.6, may not exceed:
35 (1) seven hundred fifty dollars ($750) in the case of an
36 individual filing a single return; or
37 (2) one thousand five hundred dollars ($1,500) in the case of
38 a married couple filing a joint return.
39 (k) A taxpayer is not entitled to a carryback, carryover, or
40 refund of an unused credit.
41 (l) A taxpayer may not sell, assign, convey, or otherwise transfer
42 the tax credit provided by this section.
2023 IN 1533—LS 6886/DI 134 7
1 (m) To receive the credit provided by this section, a taxpayer
2 must claim the credit on the taxpayer's annual state tax return or
3 returns in the manner prescribed by the department. The taxpayer
4 shall submit to the department all information that the department
5 determines is necessary for the calculation of the credit provided
6 by this section.
7 (n) An owner of an ABLE account of an Indiana ABLE 529A
8 savings plan must repay all or a part of the credit in a taxable year
9 in which any nonqualified withdrawal is made from the ABLE
10 account. The amount the taxpayer must repay is equal to the lesser
11 of:
12 (1) twenty percent (20%) of the total amount of nonqualified
13 withdrawals made during the taxable year from the ABLE
14 account; or
15 (2) the excess of:
16 (A) the cumulative amount of all credits provided by this
17 section that are claimed by any taxpayer with respect to
18 the taxpayer's contributions to the ABLE account for all
19 prior taxable years; over
20 (B) the cumulative amount of repayments paid by the
21 owner of the ABLE account under this subsection for all
22 prior taxable years.
23 (o) Any required repayment under subsection (n) must be
24 reported by the owner of the ABLE account on the owner's annual
25 state income tax return for any taxable year in which a
26 nonqualified withdrawal is made.
27 (p) A nonresident owner of an ABLE account who is not
28 required to file an annual income tax return for a taxable year in
29 which a nonqualified withdrawal is made shall make any required
30 repayment on the form required under IC 6-3-4-1(2). If the
31 nonresident owner of the ABLE account does not make the
32 required repayment, the department shall issue a demand notice in
33 accordance with IC 6-8.1-5-1.
34 (q) The executive director of the Indiana ABLE authority shall
35 submit or cause to be submitted to the department a copy of all
36 information returns or statements issued to ABLE account owners,
37 designated beneficiaries, and other taxpayers for each taxable year
38 with respect to:
39 (1) nonqualified withdrawals made from ABLE accounts for
40 the taxable year; or
41 (2) ABLE account closings for the taxable year.
42 SECTION 4. IC 6-3.1-35.6 IS ADDED TO THE INDIANA CODE
2023 IN 1533—LS 6886/DI 134 8
1 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
2 JANUARY 1, 2024]:
3 Chapter 35.6. Public School Foundation Contribution Tax
4 Credit
5 Sec. 1. This chapter applies only to taxable years beginning after
6 December 31, 2023.
7 Sec. 2. As used in this chapter, "credit" refers to a credit
8 granted under this chapter.
9 Sec. 3. As used in this chapter, "pass through entity" has the
10 meaning set forth in IC 6-3-1-35.
11 Sec. 4. As used in this chapter, "public elementary school or
12 public secondary school" means any Indiana public school or
13 school corporation, including a charter school (as defined in
14 IC 20-24-1-4), that offers any combination of grades from
15 kindergarten through grade 12.
16 Sec. 5. As used in this chapter, "public school foundation"
17 means a nonprofit organization that is:
18 (1) exempt from federal income taxation under Section
19 501(c)(3) of the Internal Revenue Code; and
20 (2) organized and operated solely for the benefit of an Indiana
21 public elementary school or public secondary school.
22 The term includes a public school foundation established under
23 IC 20-26-5-22.5.
24 Sec. 6. As used in this chapter, "state tax liability" means a
25 taxpayer's total tax liability that is incurred under:
26 (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
27 (2) IC 6-5.5 (the financial institutions tax); and
28 (3) IC 27-1-18-2 (the insurance premiums tax);
29 as computed after the application of the credits that under
30 IC 6-3.1-1-2 are to be applied before the credit provided by this
31 chapter.
32 Sec. 7. As used in this chapter, "taxpayer" means an individual
33 or entity that has any state tax liability.
34 Sec. 8. (a) At the election of the taxpayer, a credit is allowed
35 against the taxpayer's state tax liability for the taxable year in
36 which the taxpayer makes a contribution to a public school
37 foundation. Subject to the limitations provided by this chapter, the
38 amount of the credit for a taxable year is equal the total amount of
39 the contributions made by the taxpayer.
40 (b) The amount allowable as a credit under this section for any
41 taxable year may not exceed:
42 (1) seven hundred fifty dollars ($750) in the case of an
2023 IN 1533—LS 6886/DI 134 9
1 individual filing a single return; or
2 (2) one thousand five hundred dollars ($1,500) in the case of
3 a married couple filing a joint return.
4 (c) Notwithstanding subsection (b), the amount claimed as a
5 credit under this chapter, combined with any credit claimed under
6 IC 6-3-3-12.2, may not exceed:
7 (1) seven hundred fifty dollars ($750) in the case of an
8 individual filing a single return; or
9 (2) one thousand five hundred dollars ($1,500) in the case of
10 a married couple filing a joint return.
11 Sec. 9. (a) A public school foundation receiving a contribution
12 that will be used as the basis for a tax credit under this chapter
13 must provide to the department by August 1 of each year the
14 following information regarding the public school foundation's use
15 of the contributions received under this chapter:
16 (1) The name of the public school foundation.
17 (2) The total number and total dollar amount of contributions
18 received during the previous school year.
19 (3) A description of each use or purpose for which the
20 contributions were spent.
21 (4) A copy of the public school foundation's annual financial
22 audit.
23 In addition, the public school foundation shall make the annual
24 financial audit available to a member of the public upon request.
25 The information provided under this subsection is a public record.
26 (b) The report must be certified under penalties of perjury by
27 the chief executive officer of the public school foundation.
28 Sec. 10. (a) Subject to section 11 of this chapter, if the credit
29 provided by this chapter exceeds the taxpayer's state tax liability
30 for the taxable year for which the credit is first claimed, the excess
31 may be carried forward to succeeding taxable years and used as a
32 credit against the taxpayer's state tax liability during those taxable
33 years. Each time the credit is carried forward to a succeeding
34 taxable year, the credit is reduced by the amount that was used as
35 a credit during the immediately preceding taxable year.
36 (b) A taxpayer is not entitled to a carryback or refund of any
37 unused credit.
38 Sec. 11. If a pass through entity is entitled to a credit under this
39 chapter but does not have state tax liability against which the tax
40 credit may be applied, a shareholder, partner, or member of the
41 pass through entity is entitled to a tax credit equal to:
42 (1) the tax credit determined for the pass through entity for
2023 IN 1533—LS 6886/DI 134 10
1 the taxable year; multiplied by
2 (2) the percentage of the pass through entity's distributive
3 income to which the shareholder, partner, or member is
4 entitled.
5 Sec. 12. To apply a credit against the taxpayer's state tax
6 liability, a taxpayer must claim the credit on the taxpayer's annual
7 state tax return or returns in the manner prescribed by the
8 department. The taxpayer shall submit to the department the
9 information that the department determines is necessary for the
10 department to determine whether the taxpayer is eligible for the
11 credit.
12 Sec. 13. The total amount of tax credits awarded under this
13 chapter may not exceed five million dollars ($5,000,000) each state
14 fiscal year.
15 Sec. 14. The department, on a website used by the department
16 to provide information to the public, shall provide the following
17 information:
18 (1) The form the department prescribes for claiming the
19 credit provided by this chapter.
20 (2) A timeline for receiving the credit provided by this
21 chapter.
22 (3) The total amount of credits awarded under this chapter
23 during the current state fiscal year.
24 SECTION 5. [EFFECTIVE JANUARY 1, 2024] (a) IC 6-3-2-22,
25 as amended by this act, applies to taxable years beginning after
26 December 31, 2023.
27 (b) This SECTION expires July 1, 2026.
28 SECTION 6. [EFFECTIVE JANUARY 1, 2023 (RETROACTIVE)]
29 (a) IC 6-3-3-12.2, as added by this act, applies to taxable years
30 beginning after December 31, 2022.
31 (b) This SECTION expires July 1, 2026.
32 SECTION 7. An emergency is declared for this act.
2023 IN 1533—LS 6886/DI 134