LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7641 NOTE PREPARED: Jan 10, 2025
BILL NUMBER: HB 1396 BILL AMENDED:
SUBJECT: Tax Credit for Employer Guard and Reserve Expenses.
FIRST AUTHOR: Rep. Genda BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill establishes a tax credit for a taxpayer that employs a member of a reserve
component of the armed forces of the United States or the Indiana National Guard. It requires the taxpayer
to submit certain information to the Department of State Revenue (DOR) to claim the credit.
Effective Date: January 1, 2025 (retroactive).
Explanation of State Expenditures: 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: Employer Tax Credit: The bill establishes a nonrefundable tax credit for
employers whose employees are also reservists or members of the Indiana National Guard. The tax credit
is available beginning in tax year 2025 and could reduce state General Fund revenues by an estimated $22
M annually beginning in FY 2026. The estimate assumes that employers claim the credit for half of Indiana
National Guard and reserve members while they are away from work for two weeks of drilling annually. The
estimate also assumes that 5% of Guard and reserve members are activated annually and serve for six
months. The actual revenue impact will depend on the number of members of the National Guard and
reservists who are away from private sector employment to fulfill training, drilling, or active duty orders and
the length of active duty service. It will also depend on the employee’s wage and the employer’s paid leave
policy.
Additional Information - As of September 2023, there were 16,399 members of the National Guard and
reserves in Indiana (DMDC, 2023). The average weekly wage in Indiana as of the second quarter of 2024
was $1,170 (STATSIndiana).
The tax credit amount is equal to 50% of the employee’s normal wages multiplied by the number of normal
working hours while the employee was away from their job due to Guard or reservist duty. The credit may
not be claimed by the employer if the employee uses paid leave while away from that job to perform their
Guard or reservist duty.
HB 1396 1 The credit may be carried forward. The tax credit may be applied to corporate or individual Adjusted Gross
Income (AGI) Tax, the Insurance Premiums Tax, the Nonprofit Agricultural Organization Health Coverage
Tax, or the Financial Institutions Tax.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected:
Information Sources: STATSIndiana QCEW. Covered Employment & Wages for Indiana, in Quarter 2 of
2024. https://www.stats.indiana.edu/cew/; DMDC. (2023, September 30). Number of Military and DoD
Appropriated (APF) Civilian Personnel by Assigned Duty Location and Service/Component.
Fiscal Analyst: Camille Tesch, 317-232-5293.
HB 1396 2