SUBJECT: Summary of Tax Credits Available to Taxpayers Who File Income Tax Returns

REFERENCES: IC 6-2.5-3-5; IC 6-3-3; IC 6-3-4-8; IC 6-3.1; IC 6-5.5-2

DISCLAIMER: Information bulletins are intended to provide nontechnical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is not consistent with the law, regulations, or court decisions is not binding on either the department or the taxpayer. Therefore, the information provided herein should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein.

SUMMARY OF CHANGES

Aside from nonsubstantive, technical changes, this bulletin has been changed to add new credits and to remove expired credits, remove references to repealed taxes (URT, USUT, CAGITs, COITs, and CEDITs), and add references to LITs and PTET.

INTRODUCTION

Numerous Indiana tax credits are available for individual, fiduciary, partnership, and corporate taxpayers. This bulletin classifies all the various credits into a combined summary. It includes the credits that may be claimed when the annual income tax return or other applicable tax form is filed. In the case of partnerships, limited liability partnerships, S corporations, and limited liability companies, some credits are allocated to pass through to the partners, shareholders, or members of the entity.

Detailed information on selected credits can be found on the department's website at in.gov/dor/individual-income-taxes/filing-my-taxes/tax-credits/. Additionally, some credits are more comprehensively described within other information bulletins, all of which can be found at in.gov/dor/legal-resources/tax-library/information-bulletins/income-tax-information-bulletins/.

TYPES OF CREDITS

Credits are divided into two types:

• Nonrefundable credits that may be applied against certain tax liabilities

• Refundable credits, which are available for a refund after all tax liabilities are offset

Type 1: Nonrefundable Credits and Carryovers

Some of the nonrefundable credits may be used only to reduce specific current-year tax liabilities. The unused portion of the credit cannot be refunded or applied against other outstanding tax liabilities. However, other nonrefundable credits have provisions stipulating that if the credit exceeds the total of the current amount of tax due, the unused portion may be carried forward to the taxpayer's future tax liabilities for the same tax type.

Type 2: Refundable Credits

Refundable credits have a limited period of time in which they may be claimed to be eligible for refund. Also, at the taxpayer's election, all or a portion of a current year's eligible refund can carry over toward the next year's income tax liability. However, the department may reduce or apply an eligible refund toward the taxpayer's other unpaid tax liabilities according to IC 6-8.1-9-2 and for a debtor's offset of refunds under IC 6-8.1-9.5.

CREDITS AVAILABLE TO TAXPAYERS

The chart titled Tax Liability Credits on page 4 lists all the available nonrefundable and refundable credits. Each credit is classified into one of the following five categories.

Type 1 Credits

1-A. Nonrefundable credits for certain charitable contributions made within Indiana

1-B. Nonrefundable credits for qualified investments made within Indiana

1-C. Nonrefundable credits for income and business activities of Indiana taxpayers

Type 2 Credits

2-D. Refundable credits for personal and business activities of Indiana taxpayers

2-E. Refundable credits for estimated and withholding taxes paid to Indiana

Each credit has been assigned a three-digit code or label identifier to be used when claiming credits on the Indiana tax return. The chart includes these codes and a listing of required enclosures for claiming the credit on a tax return.

For filing requirements, eligibility, amount of credit, effective dates, carryback/carryforward application, and other detailed information, refer to the specific income tax information bulletin issued by the department or contact the agency administering the tax credit for instructions. Claims for credits should be supported by filing all applicable schedules and forms or by a separate calculation and certification from the appropriate agency of the amounts eligible for credit.

Restrictions and Limitations

The credits are to be applied against the claimant's tax due in the following order:

• Credits classified as nonrefundable credits are to be applied first.

• Those credits with carryover allowances are to be applied second.

• Refundable credits are to be applied last.

The type of tax to which the credit may be applied is also listed. If the credit can be applied against more than one tax type, the additional tax types are listed in the order to be applied.

Additional Restriction

A taxpayer, pass-through entity, shareholder, partner, or member of a pass-through entity cannot be granted more than one tax credit for the same project. This restriction applies to the following credits:

• Community Revitalization Enhancement District Tax Credit (808)

• Enterprise Zone Investment Credit (813)

• Hoosier Business Investment Tax Credit (820)

• Industrial Recovery Tax Credit (824)

• Venture Capital Investment Tax Credit (835)

Amount of Credit Available

The amount of credit available to be granted may be limited by the statute creating the credit. The following describes those limitations:

• Unlimited - There is no limit other than the provisions governing the calculation of an allowable credit up to the amount of tax available to be offset.

• Limited - The sum of all approved credits is limited to either the annual amount of the grant money available or the total of all credits that are allowed by the tax credit program.

Key for Tax Types

* May include other Indiana state taxes and fees collected on the annual return.

NOTE: Insurance premium tax, nonprofit agricultural organization health coverage tax, and property tax are not listed taxes under IC 6-8.1-1-1.

TAX LIABILITY CREDITS CHART

Nonrefundable Credits

Type 1-A Credit for certain charitable contributions within Indiana

Type 1-B Credit for qualified investments (expenditures) made within Indiana

*Additional restriction: Only one credit is allowed for the same project.

**Additional restriction: Not available against the Nonprofit Agricultural Organization Health Coverage Tax.

Type 1-C Credits for income and business activities of Indiana taxpayers

Refundable Credits

Type 2-D Credits for personal and business activities of Indiana taxpayers

Type 2-E Credit for estimated and withholding taxes paid to Indiana

HOW TO CLAIM CREDIT

To claim credits, you must follow application or claim procedures specified by each tax credit program. Complete the appropriate forms and provide all required supporting documentation. Refer to in.gov/dor/legal-resources/tax-library/information-bulletins/income-tax-information-bulletins/ for additional information issued by the department, or contact the agency administering the credit to verify eligibility requirements and filing instructions.

The following is a list of tax credits and contact information for the administering agency of each credit. For credits directly administered by other agencies, contact the state agency listed that administers the tax credit in cooperation with the department.

If you have any questions concerning this bulletin, please contact the Tax Policy Division at taxpolicy@dor.in.gov.

_________________________

Robert J. Grennes, Jr.

Commissioner

Indiana Department of Revenue