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 6345 NOTE PREPARED: Dec 9, 2023
BILL NUMBER: HB 1039 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: Beginning in taxable year 2025, the bill increases the credit provided for a
contribution to a College Choice 529 Education Savings Plan against a taxpayer's adjusted gross income from
$1,500 to $2,000 (and from $750 to $1,000 in the case of a married individual filing a separate return),
subject to other requirements.
Effective Date: January 1, 2025.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise tax forms, instructions, and computer programs to reflect the changes made by the bill.
The DOR's current level of resources should be sufficient to implement these changes.
Explanation of State Revenues: The bill increases the maximum annual income tax credit amount a
taxpayer may claim for contributions to an Indiana College Choice 529 Savings Plan from $1,500 to $2,000.
The credit modification is effective beginning in tax year 2025, so it will impact state General Fund revenue
beginning in FY 2026. The bill is estimated to reduce state General Fund revenue by about $6 M annually
beginning in FY 2026. To the extent that additional filers claim the credit or increase contributions to 529
accounts because of the increased credit cap under the bill, the fiscal impact would be greater than estimated.
Additional Information - This tax credit may be claimed by individual taxpayers who make contributions to
an Indiana College Choice 529 Education Savings Plan. The credit is equal to 20% of the taxpayer’s annual
contributions to an Indiana College Choice 529 Education Savings Plan, up to a maximum annual credit of
$1,500 under current law beginning in tax year 2023. The credit is nonrefundable, and unused credits may
not be carried forward or carried back. In tax year 2021, the credit was claimed on 122,275 returns for a total
HB 1039 1 of $86.9 M.
The revenue loss associated with the bill was estimated using a combination of data from the DOR and the
Indiana Education Savings Authority. The estimate assumes a similar level of contributions to 529 accounts
and tax filers claiming the credit as in tax year 2021.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue; Indiana Education Savings Authority.
Local Agencies Affected:
Information Sources: LSA Income Tax Database; Indiana Education Savings Authority. CollegeChoice
Basic Financial Statements and Supplementary Information for the year ended 06/30/2022.
https://emma.msrb.org/P21669091-P21284572-P21713773.pdf
Fiscal Analyst: Camille Tesch, 317-232-5293.
HB 1039 2