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Tax Credit Details

Adoption Credit

You may be eligible to claim an adoption credit on your state tax return if you claimed an adoption credit on your federal tax return. The amount of the credit may be as much as 10 percent of the federal credit allowed per child, or $1,000 per child, whichever is less. Complete Worksheet B in the IT-40 Booklet to figure your credit.

Alternative Fuel Vehicle Manufacturer Credit

This credit has been repealed. However, any previously approved yet unused credit is available to be claimed.

Coal Gasification Technology Investment Credit

A credit may be available for a qualified investment in an integrated coal gasification power plant or a fluidized bed combustion technology. This credit is available to pass-through entities, such as members of partnerships and S corporations.

You must file an application with the Indiana Economic Development Corporation.

CollegeChoice 529 Education Savings Plan Credit

You may be eligible for a credit if you made a contribution(s) to Indiana’s CollegeChoice 529 education savings plan. However, if you made a non-qualified withdrawal(s) from this plan, you will probably have to repay some or all of any credits previously claimed. Get Schedule IN-529 for additional information.

College Credit

If you donated money or property to an Indiana college or university, you may be able to take a credit.

  • For an individual filing a single return, the credit is the lesser of one-half of the amount contributed, or $100.
  • For individuals filing a joint return, the credit is the lesser of one-half of the amount contributed, or $200.

Note: Tuition paid to a college or university is not a contribution, and does not qualify for this credit.
Get Schedule CC-40 for complete details.

Credit for Taxes Paid to Other States

Indiana residents must report all income that is reported for federal income tax purposes on their Indiana individual income tax return. This includes income from sources outside Indiana. Likewise, nonresidents who receive income from Indiana generally will owe tax to Indiana on the part of their income that is from or connected with Indiana sources.

When this happens, individuals may be subject to individual income tax by both their state of residence and the state where the income comes from. Indiana has entered into agreements with several states to eliminate the requirement of paying tax to two states on the same income. Tax treatment of out-of-state income depends upon the types of income and the state from which the income is derived.

Note: Indiana only allows credits for individual income tax paid to other states or localities. Other taxes such as property taxes, corporate income taxes, and unincorporated business taxes are not allowed as a basis for claiming such credits.

Community Revitalization Enhancement District Credit

A state and local income tax liability credit is available for a qualified investment made within a community revitalization enhancement district. The expenditure must be made under a plan adopted by an advisory commission on industrial development and approved by the Indiana Economic Development Corporation before it is made. The credit is equal to 25 percent of the qualified investment made by the taxpayer during the taxable year.

This credit is available to pass-through entities, such as members of partnerships and S corporations.

The credit is nonrefundable and cannot be carried back. You may carry forward any excess credit to the next tax year.

Economic Development for a Growing Economy Credit (EDGE)
Economic Development for a Growing Economy Retention Credit (EDGE-R)

If you have business income (including partnership or S corporation income) you may be eligible for one or both of these credits. These credits are available to businesses who conduct certain activities that are designed to foster job creation and/or job retention in Indiana.

This credit is available to pass-through entities, such as members of partnerships and S corporations.

Enterprise Zone Employment Expense Credit

This credit is based on qualified investments made within Indiana. It is the lesser of 10 percent of qualifying wages, or $1,500 per qualified employee, up to the amount of tax liability on income derived from the enterprise zone.

Headquarters Relocation Credit

A business with annual worldwide revenue of $50 million, and at least 75 employees, which relocates its corporate headquarters to Indiana may be eligible for a credit. The credit may be as much as 50 percent of the cost incurred in relocating the headquarters

Hoosier Business Investment Credit

This credit is for qualified investments, which include the purchase of new telecommunications, production, manufacturing, fabrication, processing, refining or finishing equipment. Pass-through entities are eligible for this credit.

This credit is administered by the Indiana Economic Development Corporation (IEDC).

Individual Development Account Credit

A credit is available for qualified contributions made to a community development corporation participating in an Individual Development Account (IDA) program.  The organization must have an approved program number from the Indiana Housing and Community Development Authority (IHCDA) before a contribution qualifies for pre-approval. Applications for the credit are filed through the IHCDA.

S corporations and partnerships may take this credit and pass through the unused portion to their shareholders and partners.

Indiana’s Research Expense Credit

Indiana has a research expense credit that is similar to the federal credit for research and experimental expenses paid in carrying on your trade or business in Indiana. S corporations and partnerships may pass through the credit to their shareholders and partners. Enclose your schedule IN K-1 to support your claim.

A completed Form IT-20REC must be kept with your records as the department can require you to provide this information.

For a more thorough explanation of this tax credit, please visit the Indiana Research Expense Credit webpage.

Indiana State and County Tax Withholding Credits

Claim the Indiana state and Indiana County tax withholding amounts as credits when you file your Indiana income tax return (Forms IT-40, IT-40PNR, IT-40RNR or IT-40X).
Indiana withholding amounts may be found on any of the following forms:

  •  W-2: Wage and Tax Statement
  •  W-2G: Certain Gambling Winnings
  • 1099-G: Certain Government Payments
  • 1099-R: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, etc.
  • 1099-MISC: Miscellaneous Income
  • Schedule IN K-1: Shareholder's/Partner's Share of IN AGI, Deductions, Modifications and Credits
  • WH-4852: Indiana Substitute for Form W-2 or Form 1099-R (Indiana form)

Do not claim other state's or non-Indiana locality withholding amounts on your Indiana income tax return. You'll need to contact those states/localities for instructions on how to claim those credits.

Indiana's Earned Income Credit

You may be eligible for Indiana’s earned income credit if you have claimed an earned income credit on your federal tax return. Get Schedule IN-EIC and review the detailed instructions as found in the IT-40/IT-40PNR instruction booklets.

Industrial Recovery Credit

This credit is based on a taxpayer’s qualified investment in a vacant industrial facility located in a designated industrial recovery site. If the Indiana Economic Development Corporation approves the application and the plan for rehabilitation, you are entitled to a credit based on the “qualified investment.” The minimum age for a facility to be eligible for this credit has been reduced from 20 years to 15 years. This credit is available to pass-through entities, such as members of partnerships and S corporations.

Lake County (Indiana) Residential Income Tax Credit

You may be eligible to claim a Lake County (Indiana) Residential Income Tax credit if you meet all three of the following requirements.

  1.  You paid property tax to Lake County (Indiana) on your residence. Your “residence” is your principal dwelling. You must either own or be buying the residence under contract, and must pay property tax to Lake County (Indiana) on that residence.
  2.  Your Modified Indiana Adjusted Gross Income is less than $18,600.
  3.  You are not claiming the Homeowner’s Residential Property Tax Deduction.

Neighborhood Assistance Credit

If you made a contribution or engaged in activities to upgrade areas in Indiana, you may be able to claim a credit for this assistance.

Contact the Indiana Housing & Community Development Authority, Neighborhood Assistance Program, 30 S. Meridian, Suite 1000, Indianapolis, IN 46204, telephone number (317) 232-7777 (800- 872-0371 outside Indianapolis), for more information. Pass-through entities are eligible for the credit.

Important: Do not report fees paid to your neighborhood association on this line. They are not eligible for this credit.

Public School Educator Expense Credit

If you are an eligible educator working for an Indiana school corporation, you may be entitled to a credit for qualified expenses paid for certain classroom supplies. The credit can be as much as $100 ($200 if married filing joint and both spouses meet the requirements, but not more than $100 each).
You are an eligible educator if, during the taxable year, you are employed as a Kindergarten -12 Indiana public school:

  •  Teacher
  •  Librarian
  •  Counselor
  •  Principal
  •  Superintendent

 Residential Historic Rehabilitation Credit

A credit is available for the repair and rehabilitation of residential property that is listed on the Indiana Register of Historic Sites and Structures, is at least 50 years old, and will be used as your primary residence. All work must meet the Secretary of the Interior’s Standards for Rehabilitation of Historic Properties.
 

School Scholarship Credit

A credit is available for donations to certain scholarship-granting organizations (SGOs). The amount of credit is equal to 50 percent of the amount of the contribution. While there are no limits to how much a donor can contribute to a qualified SGO, the entire tax credit program cannot award more than $14 million in credits per state fiscal year of July 1, 2018 – June 30, 2019.

Unified Tax Credit for the Elderly

  • You may be able to claim the unified tax credit for the elderly if you or your spouse meet all the following requirements:
  • You and/or your spouse are age 65 or older by the end of the tax year;
  • You must file a joint return if you were married and living together at any time during the year;
  • Your federal adjusted gross income must be less than $10,000;
  • You must claim the credit by June 30 of the tax year;
  • You must have been a resident of Indiana for six months or more during the tax year; and
  • You must not have been in prison for 180 days or more during the tax year.

The credit ranges from $40 to $140, depending on your age, marital status and income, and must be claimed no later than June 30 following the close of the tax year.

Venture Capital Investment Credit

A taxpayer that provides qualified investment capital to a qualified Indiana business may be eligible for this credit.

Additional resources:

 

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