Introduced Version
HOUSE BILL No. 1565
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-42.5.
Synopsis: Social service provider tax credit. Allows a qualified
taxpayer to claim a credit against the taxpayer's state tax liability for
designated contributions to qualified nonprofit organizations that
provide: (1) comprehensive case management services for at-risk
families; (2) family support services; (3) in-school programs,
community based events, or online resources to assist fathers in
learning and improving parenting skills; or (4) programs that provide
mutual support systems among mothers in raising children or
information for mothers to enhance child development.
Effective: January 1, 2026.
Smith H, Heaton
January 21, 2025, read first time and referred to Committee on Ways and Means.
2025 IN 1565—LS 7028/DI 134 Introduced
First Regular Session of the 124th General Assembly (2025)
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HOUSE BILL No. 1565
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3.1-42.5 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026]:
4 Chapter 42.5. Social Service Provider Tax Credit
5 Sec. 1. This chapter applies only to taxable years beginning after
6 December 31, 2025.
7 Sec. 2. As used in this chapter, "credit" refers to the social
8 service provider tax credit allowable under this chapter.
9 Sec. 3. As used in this chapter, "designated contribution" means
10 a monetary contribution to a qualified nonprofit organization that
11 the contributor designates at the time of the contribution as being
12 made for the purpose of the credit.
13 Sec. 4. As used in this chapter, "pass through entity" has the
14 meaning set forth in IC 6-3-1-35.
15 Sec. 5. (a) As used in this chapter, "qualified nonprofit
16 organization" means a nonprofit organization that meets the
17 following conditions:
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1 (1) Is exempt from federal income taxation under Section
2 501(c)(3) of the Internal Revenue Code.
3 (2) Is authorized to conduct business in Indiana.
4 (3) Has provided any of the following services in Indiana for
5 at least ten (10) years preceding the organization's initial
6 application for eligibility:
7 (A) Comprehensive case management services for at-risk
8 families based on the assessment of family strengths and
9 needs.
10 (B) Family support services.
11 (C) In-school programs, community based events, or online
12 resources to assist fathers in learning and improving
13 parenting skills.
14 (D) Programs that provide mutual support systems among
15 mothers in raising children or information for mothers to
16 enhance child development.
17 (4) Does not provide abortion services, either directly or
18 indirectly, or offer information related to such services.
19 (b) Services described in subsection (a)(3)(A) through (a)(3)(D)
20 must be implemented with a continuous quality improvement
21 process and evaluated based on outcomes.
22 Sec. 6. As used in this chapter, "state tax liability" means a
23 taxpayer's total tax liability that is incurred under:
24 (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
25 (2) IC 6-5.5 (the financial institutions tax); and
26 (3) IC 27-1-18-2 (the insurance premiums tax);
27 as computed after the application of the credits that under
28 IC 6-3.1-1-2 are to be applied before the credit provided by this
29 chapter.
30 Sec. 7. As used in this chapter, "taxpayer" means an individual
31 or entity that has any state tax liability.
32 Sec. 8. A taxpayer that makes a designated contribution that
33 meets the requirements of this chapter is eligible to apply for a
34 credit in the amount and under the conditions provided by this
35 chapter against the taxpayer's state tax liability.
36 Sec. 9. An organization or qualified nonprofit organization must
37 respectively apply or reapply for certification as a qualified
38 nonprofit organization each calendar year by submitting to the
39 department a signed application form containing:
40 (1) a description of the qualifying services and resources
41 provided by the organization;
42 (2) the total number of individuals served during the previous
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1 calendar year and the number of those individuals who were
2 served and provided resources during that year using
3 designated contributions;
4 (3) outcomes for services provided;
5 (4) the organization's financial information;
6 (5) the organization's contact information;
7 (6) a statement, signed under penalty of perjury by an officer
8 of the organization, that the organization meets all criteria to
9 qualify as a qualified nonprofit organization, has fulfilled the
10 requirements for the previous calendar year (as applicable),
11 and intends to fulfill the requirements for the next calendar
12 year; and
13 (7) any other documentation requested by the department to
14 verify an organization's eligibility.
15 Sec. 10. The department shall do the following:
16 (1) Issue a certificate of eligibility to an eligible applicant
17 stating that the organization meets the qualifications of a
18 qualified nonprofit organization.
19 (2) Revoke an organization's certificate of eligibility if the
20 organization violates the provisions of this chapter or fails to
21 maintain the eligibility requirements of this chapter.
22 (3) Require the return of designated contributions made to an
23 organization that has had the organization's certification as
24 a qualified nonprofit organization revoked or that otherwise
25 fails to comply with the requirements of this chapter.
26 Sec. 11. An organization that is required to return designated
27 contributions under section 10(3) of this chapter is ineligible for
28 future qualification as a qualified nonprofit organization. An
29 organization whose certification as an eligible organization lapses
30 or is revoked for a reason other than the reason described in
31 section 10(2) of this chapter may reapply for certification as a
32 qualified nonprofit organization.
33 Sec. 12. A qualified nonprofit organization shall do the
34 following:
35 (1) Conduct a local, state, and national criminal background
36 check of all individuals working directly with children in a
37 program funded by designated contributions that includes the
38 use of:
39 (A) a commercial multistate and multi-jurisdiction
40 criminal records locator or other similar commercial
41 nationwide data base; and
42 (B) the national sex offender registry data base maintained
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1 by the United States Department of Justice or a successor
2 agency.
3 (2) Spend all designated contributions, other than the amount
4 described in subdivision (3), to provide services and resources
5 for Indiana residents.
6 (3) Spend not more than five percent (5%) of the total dollar
7 amount of designated contributions on administrative
8 expenses.
9 (4) Submit to the department, not later than one hundred
10 eighty (180) days after the end of the qualified nonprofit
11 organization's fiscal year:
12 (A) a copy of the qualified nonprofit organization's annual
13 financial audit; and
14 (B) a copy of the qualified nonprofit organization's most
15 recent Form 990 filed with the Internal Revenue Service.
16 (5) Not later than thirty (30) days after receipt of a designated
17 contribution, provide to the taxpayer making the designated
18 contribution a certificate of designated contribution that
19 includes:
20 (A) the taxpayer's name;
21 (B) the qualified nonprofit organization's name;
22 (C) the amount of the designated contribution; and
23 (D) the date the designated contribution was made.
24 Sec. 13. Subject to the limitations provided by this chapter and
25 at the election of the taxpayer, a credit is allowed against the
26 taxpayer's state tax liability for the taxable year in which the
27 taxpayer makes a designated contribution to a qualified nonprofit
28 organization.
29 Sec. 14. Subject to section 15 of this chapter, the amount
30 allowable as a credit under this chapter for any taxable year is
31 equal to the lesser of:
32 (1) the total amount of the designated contributions made by
33 the taxpayer to one (1) or more qualified nonprofit
34 organizations; or
35 (2) fifty percent (50%) of the taxpayer's state tax liability.
36 Sec. 15. (a) A taxpayer may not apply for a credit in excess of
37 one million dollars ($1,000,000) during a taxable year.
38 (b) The total amount of credits awarded under this chapter may
39 not exceed five million dollars ($5,000,000) during a state fiscal
40 year. Any credits under this chapter are granted on a first-come,
41 first-served basis.
42 Sec. 16. (a) If the credit provided by this chapter exceeds the
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1 taxpayer's state tax liability for the taxable year for which the
2 credit is first claimed, the excess may be carried forward to
3 succeeding taxable years and used as a credit against the
4 taxpayer's state tax liability during those taxable years. Each time
5 the credit is carried forward to a succeeding taxable year, the
6 credit is reduced by the amount that was used as a credit during
7 the immediately preceding taxable year.
8 (b) A taxpayer is not entitled to a carryback or refund of any
9 unused credit.
10 Sec. 17. If a pass through entity is entitled to a credit under this
11 chapter but does not have state tax liability against which the
12 credit may be applied, a shareholder, partner, or member of the
13 pass through entity is entitled to a credit equal to:
14 (1) the credit determined for the pass through entity for the
15 taxable year; multiplied by
16 (2) the percentage of the pass through entity's distributive
17 income to which the shareholder, partner, or member is
18 entitled.
19 Sec. 18. A taxable entity may not convey, assign, or transfer a
20 credit awarded under this chapter to another taxable entity unless
21 substantially all of the assets of the taxable entity are conveyed,
22 assigned, or transferred in the same transaction.
23 Sec. 19. (a) To apply a credit against the taxpayer's state tax
24 liability, a taxpayer must claim the credit on the taxpayer's annual
25 state tax return or returns in the manner prescribed by the
26 department.
27 (b) The taxpayer shall submit to the department the information
28 that the department determines is necessary for the department to
29 determine whether the taxpayer is eligible for the credit.
30 (c) The department shall notify a taxpayer in writing of the
31 department's decision to grant or deny the application. If the
32 department denies a taxpayer's application, the department shall
33 include in the notice of denial the reasons for the department's
34 decision.
35 Sec. 20. The department shall publish on the department's
36 website the following information:
37 (1) The form the department prescribes for claiming the
38 credit provided by this chapter.
39 (2) A timeline for receiving the credit provided by this
40 chapter.
41 (3) The total amount of credits awarded under this chapter
42 during the current state fiscal year.
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1 (4) The requirements and process for an organization to be
2 certified as a qualified nonprofit organization.
3 (5) A list of organizations currently certified as qualified
4 nonprofit organizations.
5 Sec. 21. The expiration of this chapter does not affect the
6 carryforward of a credit under this chapter or those credits for
7 which a taxable entity is eligible after the date this chapter expires
8 based on designated contributions made before that date.
9 Sec. 22. This chapter expires January 1, 2035.
2025 IN 1565—LS 7028/DI 134