Ind. Code ch. 6-3.1-38.3

in effect

Ind. Code § 6-3.1-38.3-1 "Pass through entity"

Sec. 1. As used in this chapter, "pass through entity" means: (1) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2); (2) a partnership; (3) a trust; (4) an estate; (5) a limited liability company; or (6) a limited liability partnership. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-2 "State tax liability"

Sec. 2. As used in this chapter, "state tax liability" means the taxpayer's total tax liability that is incurred under: (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax); (2) IC 27-1-18-2 (the insurance premiums tax) or IC 6-8-15 (the nonprofit agricultural organization health coverage tax); and (3) IC 6-5.5 (the financial institutions tax); as computed after the application of the credits that, under IC 6-3.1-1-2, are to be applied before the credit provided by this chapter. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-3 Credit

Sec. 3. (a) Except as provided in subsections (b) and (c), and subject to section 4 of this chapter, a taxpayer that employs an individual who: (1) is referred to the employer for employment through a vocational rehabilitation services program for individuals with a disability; and (2) was initially hired by the taxpayer after December 31, 2023; during a taxable year is entitled to a credit in the amount determined under section 5 or 6 of this chapter, as applicable, against the taxpayer's state tax liability for the taxable year based on the wages paid to the particular employee during the taxable year. (b) A taxpayer that has received an authorization certificate from the United States Department of Labor, Wage and Hour Division, under Section 14(c) of the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C. 201 et seq.), is not eligible for a credit under this chapter. (c) A taxpayer is not eligible for a credit under this chapter for employment of a particular employee described in subsection (a) if the employee was hired within the previous twelve (12) months to replace a former employee who was terminated, unless the employee who is being replaced: (1) was terminated for misconduct in connection with that employee's employment; or (2) voluntarily left that employee's position. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-4 Eligibility requirements

Sec. 4. To be eligible for the credit under this chapter, a taxpayer must employ an individual described in section 3(a) of this chapter who works at least an average of twenty (20) hours per week for the employer in a similar setting and at a rate that is comparable to other employees of the taxpayer who perform the same or similar tasks. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-5 Computation of credit amount; certain taxpayers

Sec. 5. (a) This section applies to a taxpayer that satisfies the following requirements: (1) The taxpayer is a benefit corporation (as defined in IC 23-1.3-2-3). (2) The taxpayer employs not more than fifty (50) individuals. (3) The majority of the taxpayer's employees are individuals described in section 3(a) of this chapter. (b) The amount of the tax credit is determined according to the following: (1) In the first taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to thirty percent (30%) of the wages paid to the employee during the taxable year. (2) In the second taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to forty percent (40%) of the wages paid to the employee during the taxable year. (3) In the third and each subsequent taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to fifty percent (50%) of the wages paid to the employee during the taxable year. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-6 Computation of credit amount; certain taxpayers

Sec. 6. (a) This section applies to a taxpayer that does not meet the requirements under section 5(a) of this chapter and employs five hundred (500) or less total employees. (b) The amount of the tax credit is determined according to the following: (1) In the first taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to twenty percent (20%) of the wages paid to the employee during the taxable year. (2) In the second taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to thirty percent (30%) of the wages paid to the employee during the taxable year. (3) In the third and each subsequent taxable year for which the credit is claimed with respect to wages paid to a particular employee, an amount equal to forty percent (40%) of the wages paid to the employee during the taxable year. As added by P.L.236-2023, SEC.68. Amended by P.L.9-2024, SEC.189.

Ind. Code § 6-3.1-38.3-7 Pass through entity; shareholder, partner, or member

Sec. 7. If a pass through entity is entitled to a credit under this chapter but does not have state tax liability against which the tax credit may be applied, an individual who is a shareholder, partner, beneficiary, or member of the pass through entity is entitled to a tax credit equal to: (1) the tax credit determined for the pass through entity for the taxable year; multiplied by (2) the percentage of the pass through entity's distributive income to which the shareholder, partner, beneficiary, or member is entitled. The credit provided under this section is in addition to a tax credit to which a shareholder, partner, beneficiary, or member of a pass through entity is entitled. However, a pass through entity and an individual who is a shareholder, partner, beneficiary, or member of a pass through entity may not claim more than one (1) credit. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-8 Claiming of credit on state tax return

Sec. 8. In order to receive the credit provided under this chapter, a taxpayer must claim the credit on the taxpayer's annual state tax return in the manner prescribed by the department. The taxpayer shall submit to the department any information that the department determines is necessary for the calculation of the credit. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-9 Credit carryover

Sec. 9. (a) If the amount of the credit determined under section 5 or 6 of this chapter, as applicable, for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess credit over for a period not to exceed the taxpayer's following five (5) taxable years. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year. A taxpayer is not entitled to a carryback or a refund of any unused credit amount. (b) A taxpayer may not assign any part of a credit to which the taxpayer is entitled under this chapter. As added by P.L.236-2023, SEC.68.

Ind. Code § 6-3.1-38.3-10 Report

Sec. 10. The tax credit under this chapter shall be included in the legislative services agency's tax expenditure report in 2026. As added by P.L.236-2023, SEC.68. Amended by P.L.9-2024, SEC.190.

Ind. Code § 6-3.1-38.3-11 Expiration of chapter

Sec. 11. This chapter expires December 31, 2028. As added by P.L.236-2023, SEC.68.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/6Fetched: 10/17/2026