LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7083 NOTE PREPARED: Jan 27, 2025
BILL NUMBER: HB 1235 BILL AMENDED: Jan 27, 2025
SUBJECT: Military and Veteran Matters.
FIRST AUTHOR: Rep. Bartels BILL STATUS: CR Adopted - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
XFEDERAL
Summary of Legislation: This bill expands the eligibility requirements for admission to the Indiana
Veterans' Home.
The bill adds a definition of an "eligible person" for purposes of administering grants for veteran services
(GVS). It also provides that a qualified entity may receive a GVS to provide certain services to support an
eligible person.
The bill makes changes to the qualifications to receive a veteran's burial allowance.
The bill establishes the Medal of Honor license plate.
The bill restores a provision of current law concerning certain disability ratings, as determined by the United
States Department of Veterans Affairs, and educational cost exemptions. It also provides that the disability
ratings and educational cost exemptions apply to an individual whose parent enlisted in the armed forces after
June 30, 2017 (instead of June 30, 2011).
The bill updates references throughout the Indiana Code relating to the armed forces of the United States or
uniformed services to include the United States Space Force.
The bill replaces references to an honorable discharge with references to a discharge under conditions other
than dishonorable.
The bill makes technical changes to various references relating to the components of the armed forces of the
United States. It also makes technical corrections.
Effective Date: July 1, 2025; January 1, 2026.
Explanation of State Expenditures: Modification of Reduction of Fee Exemption Based on Disability
Rating: There will be minimal impact on expenditures for fee exemptions due to this bill in the near term
HB 1235 1 because very few CVO applicants for financial assistance have parents who entered service after June 30,
2011. The Indiana Department of Veterans Affairs (IDVA) reports that applicants who fall under the 2011
enlistment rule have thus far had disability ratings of 80% or above and are receiving the same 100%
exemption to which they would be entitled under this bill. However, this bill will increase expenditures for
CVO fee remissions in the future as children of veterans who entered the military after June 30, 2011, but
before June 30, 2017, reach college age and become eligible. The impact will increase over time, peaking
in the late 2030s and decreasing throughout the 2040s.
Commission for Higher Education (CHE): The CHE administers the CVO fee exemptions. This bill delays
implementation of the reduction of the fee exemption based on the parent’s disability rating. It will simplify
administration of the fee exemption for children of veterans who entered the military after June 30, 2011,
but before June 30, 2017 and reduce the workload associated with such applicants. The bill’s requirements
should be able to be implemented with no additional appropriations, assuming near customary agency
staffing and resource levels.
Grants for Veterans’ Services: This bill expands the types of programs for which a GVS may be received.
It expands the classifications of eligible veterans from those discharged under honorable conditions to those
discharged under any conditions other than dishonorable. It also enables “eligible persons” as defined in the
bill to receive services from programs funded by grants. The category of eligible persons includes the
immediate family (spouse, children, stepchildren, parents, or grandparents) and/or primary caregiver of a
veteran. These provisions significantly expand the types of programs that may apply for a GVS and may
increase total GVS applications and the associated workload for IDVA. It will not increase the total number
of grants made or the total amount of funds granted to recipients.
Eligibility for Admission to the Indiana Veterans’ Home: In addition to changing eligibility requirements
from veterans and spouses of veterans discharged under honorable conditions to those discharged under any
conditions other than dishonorable, this bill changes the residency requirements for admission to the Indiana
Veterans’ Home. Under current law, an applicant must have been a resident of Indiana for at least one year
before applying for admission to the home. Under this bill, an otherwise eligible person who is not a resident
of Indiana may apply to the home and be admitted so long as they change their legal residence to Indiana
within 6 months of admission. This will significantly expand the eligible population of veterans and veterans
spouses that may apply for and be admitted to the home. Any increase in home admissions and residency will
increase expenditures but will also increase revenues. The net impact of an increase in residency is
indeterminate at this time.
Statutory References to the Armed Forces and Uniformed Services: Provisions of this bill affect Bureau of
Motor Vehicle procedures, burial rights in the Veterans Cemetery, professional licensing provisions, actions
by the Attorney General and Civil Rights Commissions regarding discrimination and predatory practices
targeting military members, rights of veteran students at state educational institutions, and leaves of absence
for elected officials who are called to active duty. Some agencies will need to amend administrative forms
and processes to be inclusive of USSF personnel. All of these provisions are within the routine administrative
functions of their respective agencies and should be able to be implemented with no additional
appropriations, assuming near customary agency staffing and resource levels.
Department of Veterans Affairs: The bill also reduces the workload for IDVA in determining eligibility for
those students whose parents entered military services in the 2011-2017 period. Its requirements are within
the IDVA’s routine administrative functions and should be able to be implemented with no additional
appropriations, assuming near customary agency staffing and resource levels.
HB 1235 2 Medal of Honor Recipient License Plates: This bill codifies current practice by the Bureau of Motor Vehicles
regarding Medal of Honor Recipient License Plates. These provisions have no fiscal impact.
Additional Information – Modification of Reduction of Fee Exemption Based on Disability Rating: The bill
modifies the provision which reduces the fee exemption for students based on their parents’ disability rating.
This aspect of current law applies to students whose parents joined the military after June 30, 2011. Under
current law, approximately 72% of that cohort would experience a significant decrease in their benefits
relative to those whose parents joined the military before July 1, 2011. Under this bill, students whose
parents entered the military after June 30, 2011, but before June 30, 2017, would receive full fee exemptions.
Veterans’ Home: Expenses are paid primarily from two dedicated funds, the Veterans’ Home Comfort and
Welfare Fund and the Veterans’ Home Building Fund. As of FY 2024, the Veterans’ Home Comfort and
Welfare Fund has a balance of $9.9 M and Veterans’ Home Building Fund has a balance of $8.4 M.
Statutory References to Armed Forces and Uniformed Services: This bill makes members of the USSF
eligible for a number of benefits and programs for which all other members of the armed forces have been
eligible. It is likely that most of these benefits were being provided even without the USSF being listed in
statute because the majority of USSF members–known as Guardians–transferred into the USSF from other
services, and the USSF falls under the Department of the Air Force. The overall effect of this bill on state
revenues is likely to be small since the total size of the USSF is less than 2% of current US military members
and less than 1% of total active duty personnel assigned to Indiana. It is likely that fluctuations in the
membership of other services will have a greater impact on program expenditures than extending the relevant
benefits to Guardians.
Explanation of State Revenues: Veterans’ Home: Residents are required to pay member maintenance fees.
The home also receives per capita federal funding that is deposited in the Veterans’ Home Comfort and
Welfare Fund (80%) and the Veterans’ Home Building Fund (20%). Revenue from these sources totaled
$12.6 M in FY 2023 and is likely to increase under the provisions of this bill. [See Explanation of State
Expenditures].
Military Service Income Tax Provisions: The state may experience a minor reduction in General Fund
revenue from individual income tax collections. The bill makes members of the Space Force eligible for the
state income tax exemption for military pay. Prior to tax year 2024, the exemption is for up to $5,000 of
income. Beginning in tax year 2024, all active duty, reserve and National Guard military pay is exempt from
state income tax. The bill would also allow taxpayers to receive up to a 100% deduction for military
retirement income or survivor’s benefits received due to service in the Space Force. Any impact to state
revenues is expected to be minor.
Explanation of Local Expenditures: Statutory References to Armed Forces and Uniformed Services:
Provisions of this bill affect leaves of absence for elected officials who are called to active duty and county-
funded burial allowances (capped at $1,000). Some agencies will need to amend administrative forms and
processes to be inclusive of USSF personnel. These provisions may cause minor increases in local
expenditures but are within each local unit’s routine administrative functions and should be able to be
implemented with no additional appropriations, assuming near customary agency staffing and resource levels.
Explanation of Local Revenues: Property Tax Deductions: This bill changes criteria to receive certain
property tax deductions so that veterans now must have received a discharge “other than dishonorable” rather
than “honorable.” This will increase the number of veterans eligible for these deductions by 12-18%, or about
HB 1235 3 $200 M to $300 M in tax deductions statewide. The new deductions will cause tax rates to rise, resulting in
tax shifts to other taxpayers to the extent that tax bills do not exceed the tax caps. Some of the tax shift will
result in revenue losses to taxing units through higher tax cap credits.
Military Service Income Tax Deductions: If additional taxpayers claim military service income tax deductions
due to service in or retirement from the Space Force, taxable income will decrease. Counties imposing a local
income tax (LIT) could potentially experience a minor decrease in revenue from this tax. Any impact is
expected to be minor.
State Agencies Affected: Indiana Department of Veterans’ Affairs; Indiana Veterans’ Home; Department
of State Revenue, Bureau of Motor Vehicles; Department of Health; Office of the Attorney General; Civil
Rights Commission; state educational institutions; any agency that issues professional licenses.
Local Agencies Affected: Elected officials, county auditors, local units that collect property taxes.
Information Sources: Kyle Gross, IDVA; IDVA Annual Reports,
https://www.in.gov/dva/programs-and-services2/the-commission/annual-reports/; LSA Handbook of
Taxes, Revenue and Appropriations, FY 2024; Defense Manpower Data Center June 2024 Location
Report, https://dwp.dmdc.osd.mil/dwp/app/dod-data-reports/workforce-reports; US Department of
Veterans Affairs VETPOP2020 dataset, https://www.va.gov/vetdata/veteran_population.asp;
https://www.vetsprobono.org/library/item.655363-Underserved_How_the_VA_Wrongfully_Excludes_V
eterans_with_Bad_Paper;
Fiscal Analyst: Alexander Raggio, 317-234-9485; James Johnson, 317-232-9869; Bill Brumbach, 317-232-
9559; Nate Bodnar, 317-234-9476; Camille Tesch, 317-232-5293.
HB 1235 4