Indiana 2025 Regular Session

Indiana House Bill HB1396 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. 1396
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3.1-41.
7	7	Synopsis: Tax credit for employer guard and reserve expenses.
8	8	Establishes a tax credit for a taxpayer that employs a member of a
9	9	reserve component of the armed forces of the United States or the
10	10	Indiana National Guard. Requires the taxpayer to submit certain
11	11	information to the department of state revenue to claim the credit.
12	12	Effective: January 1, 2025 (retroactive).
13	13	Genda
14	14	January 13, 2025, read first time and referred to Committee on Ways and Means.
15	15	2025 IN 1396—LS 7641/DI 116 Introduced
16	16	First Regular Session of the 124th General Assembly (2025)
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 2024 Regular Session of the General Assembly.
26	26	HOUSE BILL No. 1396
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 6-3.1-41 IS ADDED TO THE INDIANA CODE
31	31	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
32	32	3 JANUARY 1, 2025 (RETROACTIVE)]:
33	33	4 Chapter 41. Employment of Individuals in the Military
34	34	5 Sec. 1. As used in this chapter, "pass through entity" means:
35	35	6 (1) a corporation that is exempt from the adjusted gross
36	36	7 income tax under IC 6-3-2-2.8(2);
37	37	8 (2) a partnership;
38	38	9 (3) a trust;
39	39	10 (4) an estate;
40	40	11 (5) a limited liability company; or
41	41	12 (6) a limited liability partnership.
42	42	13 Sec. 2. As used in this chapter, "qualified individual" means an
43	43	14 individual who resides in Indiana and serves as a member of:
44	44	15 (1) a reserve component of the armed forces of the United
45	45	16 States; or
46	46	17 (2) the Indiana National Guard.
47	47	2025 IN 1396—LS 7641/DI 116 2
48	48	1 Sec. 3. As used in this chapter, "state tax liability" means the
49	49	2 taxpayer's total tax liability that is incurred under:
50	50	3 (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
51	51	4 (2) IC 27-1-18-2 (the insurance premiums tax) or IC 6-8-15
52	52	5 (the nonprofit agricultural organization health coverage tax);
53	53	6 and
54	54	7 (3) IC 6-5.5 (the financial institutions tax);
55	55	8 as computed after the application of the credits that, under
56	56	9 IC 6-3.1-1-2, are to be applied before the credit provided by this
57	57	10 chapter.
58	58	11 Sec. 4. (a) Subject to subsection (c), a taxpayer who employs a
59	59	12 qualified individual during a taxable year is entitled to a credit
60	60	13 against the taxpayer's state tax liability for the taxable year based
61	61	14 on the time in which the qualified individual is:
62	62	15 (1) employed by the taxpayer; and
63	63	16 (2) training, drilling, or otherwise on active duty orders with
64	64	17 a reserve component of the armed forces of the United States
65	65	18 or the Indiana National Guard during the qualified
66	66	19 individual's normal working hours;
67	67	20 during the taxable year.
68	68	21 (b) The amount of the tax credit with respect to a particular
69	69	22 qualified individual is the amount determined in the last STEP of
70	70	23 the following STEPS:
71	71	24 STEP ONE: Determine the number of hours that the qualified
72	72	25 individual is training, drilling, or otherwise on active duty
73	73	26 orders with a reserve component of the armed forces of the
74	74	27 United States or the Indiana National Guard during the
75	75	28 qualified individual's normal working hours during the
76	76	29 taxable year.
77	77	30 STEP TWO: Multiply the STEP ONE result by the qualified
78	78	31 individual's normal hourly wage.
79	79	32 STEP THREE: Multiply the STEP TWO result by five-tenths
80	80	33 (0.5).
81	81	34 (c) A taxpayer may not claim the credit under this chapter for
82	82	35 a qualified individual who uses any type of paid leave during the
83	83	36 time for which the qualified individual is training, drilling, or
84	84	37 otherwise on active duty orders with a reserve component of the
85	85	38 armed forces of the United States or the Indiana National Guard
86	86	39 during the taxable year.
87	87	40 Sec. 5. In order to receive the credit provided under this
88	88	41 chapter, a taxpayer must claim the credit on the taxpayer's annual
89	89	42 state tax return in the manner prescribed by the department. The
90	90	2025 IN 1396—LS 7641/DI 116 3
91	91	1 taxpayer shall submit to the department any information that the
92	92	2 department determines is necessary for the calculation of the
93	93	3 credit.
94	94	4 Sec. 6. (a) If the amount determined under section 4(b) of this
95	95	5 chapter for a taxable year exceeds the taxpayer's state tax liability
96	96	6 for that taxable year, the taxpayer may carry the excess over to the
97	97	7 immediately following taxable years. The amount of the credit
98	98	8 carryover from a taxable year shall be reduced to the extent that
99	99	9 the carryover is used by the taxpayer to obtain a credit under this
100	100	10 chapter for any subsequent taxable year.
101	101	11 (b) A taxpayer is not entitled to any carryback or refund of any
102	102	12 unused credit.
103	103	13 (c) A taxpayer may not assign any part of a credit to which the
104	104	14 taxpayer is entitled under this chapter.
105	105	15 Sec. 7. If a pass through entity is entitled to a credit under this
106	106	16 chapter but does not have state tax liability against which the tax
107	107	17 credit may be applied, an individual who is a shareholder, partner,
108	108	18 beneficiary, or member of the pass through entity is entitled to a
109	109	19 tax credit equal to:
110	110	20 (1) the tax credit determined for the pass through entity for
111	111	21 the taxable year; multiplied by
112	112	22 (2) the percentage of the pass through entity's distributive
113	113	23 income to which the shareholder, partner, beneficiary, or
114	114	24 member is entitled.
115	115	25 The credit provided under this section is in addition to a tax credit
116	116	26 to which a shareholder, partner, beneficiary, or member of a pass
117	117	27 through entity is entitled. However, a pass through entity and an
118	118	28 individual who is a shareholder, partner, beneficiary, or member
119	119	29 of a pass through entity may not claim more than one (1) credit.
120	120	30 SECTION 2. [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]
121	121	31 (a) IC 6-3.1-41, as added by this act, applies to taxable years
122	122	32 beginning after December 31, 2024.
123	123	33 (b) This SECTION expires July 1, 2028.
124	124	34 SECTION 3. An emergency is declared for this act.
125	125	2025 IN 1396—LS 7641/DI 116