Indiana 2024 Regular Session

Indiana House Bill HB1039 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. 1039
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 2025,
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, 2025.
13	13	Klinker
14	14	January 8, 2024, read first time and referred to Committee on Ways and Means.
15	15	2024 IN 1039—LS 6345/DI 125 Introduced
16	16	Second Regular Session of the 123rd General Assembly (2024)
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 2023 Regular Session of the General Assembly.
26	26	HOUSE BILL No. 1039
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.236-2023,
31	31	2 SECTION 65, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
32	32	3 JANUARY 1, 2025]: 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	2024 IN 1039—LS 6345/DI 125 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	2024 IN 1039—LS 6345/DI 125 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) Two thousand dollars ($2,000), or one
131	131	41 thousand dollars ($1,000) in the case of a married individual
132	132	42 filing a separate return.
133	133	2024 IN 1039—LS 6345/DI 125 4
134	134	1 (3) The amount of the taxpayer's adjusted gross income tax
135	135	2 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
136	136	3 reduced by the sum of all credits (as determined without regard to
137	137	4 this section) allowed by IC 6-3-1 through IC 6-3-7.
138	138	5 (l) This subsection applies after December 31, 2018. At the time a
139	139	6 contribution is made to or a withdrawal is made from an account or
140	140	7 accounts of a college choice 529 education savings plan, the person
141	141	8 making the contribution or withdrawal shall designate whether the
142	142	9 contribution is made for or the withdrawal will be used for:
143	143	10 (1) qualified higher education expenses that are not qualified
144	144	11 K-12 education expenses; or
145	145	12 (2) qualified K-12 education expenses.
146	146	13 The Indiana education savings authority (IC 21-9-3) shall use
147	147	14 subaccounting to track the designations.
148	148	15 (m) A taxpayer who makes a contribution to a college choice 529
149	149	16 education savings plan is considered to have made the contribution on
150	150	17 the date that:
151	151	18 (1) the taxpayer's contribution is postmarked or accepted by a
152	152	19 delivery service, for contributions that are submitted to a college
153	153	20 choice 529 education savings plan by mail or delivery service; or
154	154	21 (2) the taxpayer's electronic funds transfer is initiated, for
155	155	22 contributions that are submitted to a college choice 529 education
156	156	23 savings plan by electronic funds transfer.
157	157	24 (n) A taxpayer is not entitled to a carryback, carryover, or refund of
158	158	25 an unused credit.
159	159	26 (o) A taxpayer may not sell, assign, convey, or otherwise transfer the
160	160	27 tax credit provided by this section.
161	161	28 (p) To receive the credit provided by this section, a taxpayer must
162	162	29 claim the credit on the taxpayer's annual state tax return or returns in
163	163	30 the manner prescribed by the department. The taxpayer shall submit to
164	164	31 the department all information that the department determines is
165	165	32 necessary for the calculation of the credit provided by this section.
166	166	33 (q) An account owner of an account of a college choice 529
167	167	34 education savings plan must repay all or a part of the credit in a taxable
168	168	35 year in which any nonqualified withdrawal is made from the account.
169	169	36 The amount the taxpayer must repay is equal to the lesser of:
170	170	37 (1) twenty percent (20%) of the total amount of nonqualified
171	171	38 withdrawals made during the taxable year from the account; or
172	172	39 (2) the excess of:
173	173	40 (A) the cumulative amount of all credits provided by this
174	174	41 section that are claimed by any taxpayer with respect to the
175	175	42 taxpayer's contributions to the account for all prior taxable
176	176	2024 IN 1039—LS 6345/DI 125 5
177	177	1 years beginning on or after January 1, 2007; over
178	178	2 (B) the cumulative amount of repayments paid by the account
179	179	3 owner under this subsection for all prior taxable years
180	180	4 beginning on or after January 1, 2008.
181	181	5 (r) Any required repayment under subsection (q) shall be reported
182	182	6 by the account owner on the account owner's annual state income tax
183	183	7 return for any taxable year in which a nonqualified withdrawal is made.
184	184	8 (s) A nonresident account owner who is not required to file an
185	185	9 annual income tax return for a taxable year in which a nonqualified
186	186	10 withdrawal is made shall make any required repayment on the form
187	187	11 required under IC 6-3-4-1(2). If the nonresident account owner does
188	188	12 not make the required repayment, the department shall issue a demand
189	189	13 notice in accordance with IC 6-8.1-5-1.
190	190	14 (t) The executive director of the Indiana education savings authority
191	191	15 shall submit or cause to be submitted to the department a copy of all
192	192	16 information returns or statements issued to account owners, account
193	193	17 beneficiaries, and other taxpayers for each taxable year with respect to:
194	194	18 (1) nonqualified withdrawals made from accounts, including
195	195	19 subaccounts of a college choice 529 education savings plan for
196	196	20 the taxable year; or
197	197	21 (2) account closings for the taxable year.
198	198	22 (u) The following apply to contributions made after December 31,
199	199	23 2023:
200	200	24 (1) For purposes of this section, all or part of a contribution made
201	201	25 after the end of a taxable year, and not later than the due date of
202	202	26 the taxpayer's adjusted gross income tax return for the taxable
203	203	27 year under this article (as determined without regard to any
204	204	28 allowable extensions), shall be considered as having been made
205	205	29 during the taxable year preceding the contribution if:
206	206	30 (A) the taxpayer elects to treat all or part of a contribution as
207	207	31 occurring in the taxable year preceding the contribution;
208	208	32 (B) the taxpayer designates the amounts of the contribution to
209	209	33 be treated as occurring in each taxable year, in the case of a
210	210	34 single contribution that is to be allowable under this section in
211	211	35 two (2) separate years; and
212	212	36 (C) the taxpayer irrevocably waives the right to claim the
213	213	37 contribution claimed in the taxable year preceding the
214	214	38 contribution as occurring in the taxable year of the
215	215	39 contribution.
216	216	40 (2) The Indiana education savings authority may prescribe any
217	217	41 forms necessary for purposes of this subsection.
218	218	42 SECTION 2. [EFFECTIVE JANUARY 1, 2025] (a) IC 6-3-3-12,
219	219	2024 IN 1039—LS 6345/DI 125 6
220	220	1 as amended by this act, applies to taxable years beginning after
221	221	2 December 31, 2024.
222	222	3 (b) This SECTION expires January 1, 2027.
223	223	2024 IN 1039—LS 6345/DI 125