Introduced Version
SENATE BILL No. 238
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-35.1.
Synopsis: Child and dependent care tax credit. Provides a refundable
child and dependent care tax credit to taxpayers whose adjusted gross
income for the taxable year is not more than 250% of the federal
poverty level. Provides that the credit is equal to the lesser of: (1) an
amount ranging from $200 to $1,000, depending on the extent to which
the taxpayer's adjusted gross income exceeds the federal poverty level;
or (2) 20% of the taxpayer's employment related expenses.
Effective: January 1, 2023 (retroactive).
Taylor G
January 10, 2023, read first time and referred to Committee on Tax and Fiscal Policy.
2023 IN 238—LS 6361/DI 129 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.
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between statutes enacted by the 2022 Regular Session of the General Assembly.
SENATE BILL No. 238
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 6-3.1-35.1 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2023 (RETROACTIVE)]:
4 Chapter 35.1. Child and Dependent Care Tax Credit
5 Sec. 1. As used in this chapter, "adjusted gross income" has the
6 meaning set forth in IC 6-3-1-3.5.
7 Sec. 2. (a) As used in this chapter, "employment related
8 expenses" means amounts that are:
9 (1) paid for the care of a qualifying individual; and
10 (2) incurred to enable an individual taxpayer, including an
11 individual taxpayer's spouse in the case of a joint return, to be
12 gainfully employed.
13 (b) The term does not include an amount paid for services
14 outside the taxpayer's household at a camp where a qualifying
15 individual stays overnight.
16 (c) The term does not include amounts paid for services outside
17 the taxpayer's household that are not provided in conformity with
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1 applicable state and local laws.
2 Sec. 3. As used in this chapter, "federal poverty level" refers to
3 the poverty income guidelines published by the United States
4 Department of Health and Human Services.
5 Sec. 4. As used in this chapter, "qualifying individual" has the
6 meaning set forth in Section 21(b)(1) of the Internal Revenue Code.
7 Sec. 5. As used in this chapter, "state income tax liability"
8 means the total income tax liability incurred under IC 6-3, as
9 computed after application of the credits that under IC 6-3.1-1-2
10 are to be applied before the credit provided by this chapter.
11 Sec. 6. An individual taxpayer, including an individual
12 taxpayer's spouse in the case of a joint return, who has:
13 (1) employment related expenses during the taxable year; and
14 (2) adjusted gross income, or combined adjusted gross income
15 with the taxpayer's spouse in the case of a joint return, of not
16 more than two hundred fifty percent (250%) of the federal
17 poverty level for the taxable year;
18 is entitled to a refundable credit against the taxpayer's state
19 income tax liability for the taxable year.
20 Sec. 7. The amount of a credit allowed under section 6 of this
21 chapter for a taxable year is equal to the following:
22 (1) The lesser of:
23 (A) the amount of employment related expenses incurred
24 in the taxable year multiplied by twenty percent (20%); or
25 (B) one thousand dollars ($1,000);
26 if the taxpayer's adjusted gross income, or combined adjusted
27 gross income with the taxpayer's spouse in the case of a joint
28 return, is not more than one hundred eighty-five percent
29 (185%) of the federal poverty level.
30 (2) The lesser of:
31 (A) the amount of employment related expenses incurred
32 in the taxable year multiplied by twenty percent (20%); or
33 (B) eight hundred dollars ($800);
34 if the taxpayer's adjusted gross income, or combined adjusted
35 gross income with the taxpayer's spouse in the case of a joint
36 return, is more than one hundred eighty-five percent (185%)
37 but not more than two hundred one percent (201%) of the
38 federal poverty level.
39 (3) The lesser of:
40 (A) the amount of employment related expenses incurred
41 in the taxable year multiplied by twenty percent (20%); or
42 (B) six hundred dollars ($600);
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1 if the taxpayer's adjusted gross income, or combined adjusted
2 gross income with the taxpayer's spouse in the case of a joint
3 return, is more than two hundred one percent (201%) but not
4 more than two hundred seventeen percent (217%) of the
5 federal poverty level.
6 (4) The lesser of:
7 (A) the amount of employment related expenses incurred
8 in the taxable year multiplied by twenty percent (20%); or
9 (B) four hundred dollars ($400);
10 if the taxpayer's adjusted gross income, or combined adjusted
11 gross income with the taxpayer's spouse in the case of a joint
12 return, is more than two hundred seventeen percent (217%)
13 but not more than two hundred thirty-three percent (233%)
14 of the federal poverty level.
15 (5) The lesser of:
16 (A) the amount of employment related expenses incurred
17 in the taxable year multiplied by twenty percent (20%); or
18 (B) two hundred dollars ($200);
19 if the taxpayer's adjusted gross income, or combined adjusted
20 gross income with the taxpayer's spouse in the case of a joint
21 return, is more than two hundred thirty-three percent (233%)
22 but not more than two hundred fifty percent (250%) of the
23 federal poverty level.
24 Sec. 8. If both spouses reside in the same household, the total
25 amount of the credit computed under section 7 of this chapter may
26 be claimed only once.
27 Sec. 9. If the credit provided under this chapter exceeds the state
28 income tax liability due from the taxpayer for the taxable year, the
29 excess shall be refunded to the taxpayer.
30 Sec. 10. (a) The department may adopt rules under IC 4-22-2 to
31 implement this chapter.
32 (b) The department may require that a taxpayer apply for a
33 credit under this chapter on a form designated by the department.
34 SECTION 2. [EFFECTIVE JANUARY 1, 2023 (RETROACTIVE)]
35 (a) IC 6-3.1-35.1, as added by this act, applies only to taxable years
36 beginning after December 31, 2022.
37 (b) This SECTION expires January 1, 2026.
38 SECTION 3. An emergency is declared for this act.
2023 IN 238—LS 6361/DI 129