LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6988 NOTE PREPARED: Dec 30, 2024
BILL NUMBER: SB 361 BILL AMENDED:
SUBJECT: Renter's Deduction for Disabled Veterans.
FIRST AUTHOR: Sen. Niezgodski BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: The bill provides an additional tax deduction for a disabled veteran who rents a
dwelling for use as the disabled veteran's principal place of residence.
Effective Date: January 1, 2026.
Explanation of State Expenditures: Department of State Revenue (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: The bill establishes an additional adjusted gross income (AGI) tax renter’s
deduction for disabled veterans. The deduction is effective beginning in tax year 2026, so the revenue impact
will likely begin in FY 2027. The deduction could reduce state General Fund revenue by an estimated $0.7
M per year beginning in FY 2027.
The bill provides a tax deduction to an Indiana taxpayer who (1) is a disabled veteran, and (2) rents a
dwelling for use as the individual’s principal place of residence. The deduction amount is calculated based
on the taxpayer’s disability rating determined by the U.S. Department of Veterans Affairs multiplied by the
amount of renter’s deduction the taxpayer is able to claim. The maximum deduction is equal to $3,000. This
is in addition to being eligible for an AGI deduction for rent paid by Indiana taxpayers of up to $3,000, which
applies to all Indiana renters.
Additional Information - The estimates are based on disability compensation and disability rating information
published by the U.S. Department of Veterans Affairs. There were 104,877 veterans in Indiana receiving
disability compensation as of 2023. The estimate assumes that 16% of disabled veterans in Indiana are
renting based on sample data from the American Community Survey.
Current federal law exempts the disability compensation received by veterans from adjusted gross income.
This exemption also carries into Indiana adjusted gross income. The analysis assumes that the veterans
receiving disability compensation also receive taxable income from other sources. The additional renter’s
SB 361 1 deduction will reduce the income currently taxable under Indiana tax law.
Explanation of Local Expenditures:
Explanation of Local Revenues: Because the deduction will decrease taxable income, counties imposing
local income taxes could potentially experience a decrease in revenue. Based on the current average local
income tax rate of 1.67%, local income tax collections on a statewide basis could potentially be reduced by
$0.4 M annually beginning in FY 2027.
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: Local units.
Information Sources: U.S. Census Bureau, American Community Survey, 2022. ACS Indiana 5-Year
Estimates Public Use Microdata Sample.
https://data.census.gov/mdat/#/search?ds=ACSPUMS5Y2022&vv=GRNTP&cv=ucgid,DRATX&rv=TE
N&wt=PWGTP&g=0400000US18; U.S. Department of Veterans Affairs. FY 2023 Disability
Compensation Recipients by County.
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 361 2