Ind. Code ch. 6-3.1-38.1

Ind. Code ch. 6-3.1-38.1
in effect

Ind. Code § 6-3.1-38.1-1 "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 limited liability company; or (4) a limited liability partnership. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-2 "Qualified applicant"

Sec. 2. As used in this chapter, "qualified applicant" means: (1) a short line rail company located in whole or in part in Indiana that is classified by the United States Surface Transportation Board as a Class II or Class III railroad that makes qualified railroad expenditures; or (2) an owner or lessee of a rail siding, industrial spur, or industry track located: (A) on or adjacent to a Class II or Class III railroad in Indiana; or (B) in a qualified rural county; that makes qualified new rail infrastructure expenditures. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-3 "Qualified new rail infrastructure expenditures"

Sec. 3. As used in this chapter, "qualified new rail infrastructure expenditures" means gross expenditures for new rail infrastructure, including: (1) construction of new track infrastructure such as industrial leads, switches, spurs, sidings, rail loading docks, and transloading structures, and engineering and site preparation involved with servicing new customer locations; (2) the expansion by a Class II or Class III railroad; or (3) construction of new track infrastructure involved with servicing new customer locations located in a qualified rural county. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-4 "Qualified railroad expenditures"

Sec. 4. As used in this chapter, "qualified railroad expenditures" means gross expenditures for maintenance, reconstruction, or replacement of railroad infrastructure, including track, roadbed, bridges, crossings, signals, industrial leads and sidings, and track related structures, owned or leased by a Class II or Class III railroad located in Indiana. The term does not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-5 "Qualified rural county"

Sec. 5. As used in this chapter, "qualified rural county" means a county in Indiana with a population of not more than three hundred thousand (300,000). As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-6 "State tax liability"

Sec. 6. As used in this chapter, "state tax liability" means a taxpayer's total tax liability incurred under IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax), as computed after the application of all 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.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-7 "Taxpayer"

Sec. 7. As used in this chapter, "taxpayer" means a qualified applicant that has any state tax liability, or a qualified applicant that is considered a tax exempt entity (owned by a port or governmental entity). As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-8 Applying for tax credit; eligibility

Sec. 8. (a) A taxpayer wishing to claim a tax credit under this chapter must apply to the department after completion of the project for which qualified railroad expenditures or qualified new rail infrastructure expenditures were incurred. The department shall prescribe the form and manner of the application, which must include: (1) the number of miles of railroad track owned or leased in Indiana; and (2) a description and certification of the amount of the taxpayer's qualified railroad expenditures or qualified new rail infrastructure expenditures. (b) The department shall evaluate a taxpayer's eligibility for a tax credit under this chapter. (c) The department shall certify the eligibility of a taxpayer that meets the requirements for a tax credit under this chapter. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-9 Amount of tax credit

Sec. 9. (a) Subject to subsection (b), if the department certifies a taxpayer under section 8 of this chapter, the taxpayer is entitled to a tax credit against the taxpayer's state tax liability equal to: (1) the taxpayer's: (A) qualified railroad expenditures; or (B) qualified new rail infrastructure expenditures; multiplied by (2) fifty percent (50%). (b) The amount of a tax credit allowed under subsection (a) shall not exceed the following: (1) For qualified railroad expenditures, the product of: (A) the number of miles of Class II or Class III railroad track owned or leased by the taxpayer in Indiana at the close of the taxable year; multiplied by (B) three thousand five hundred dollars ($3,500). (2) For qualified new rail infrastructure expenditures, the lesser of: (A) fifty percent (50%) of the qualified new rail expenditures for each new rail served customer project completed by the taxpayer in the taxable year; or (B) five hundred thousand dollars ($500,000) per rail served customer project. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-10 Amount of tax credit; pass through entities

Sec. 10. (a) If a pass through entity is entitled to a credit under section 9 of this chapter but does not have state tax liability against which the credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a credit equal to: (1) the 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, or member is entitled. (b) The credit provided under subsection (a) is in addition to a credit to which a shareholder, partner, or member of a pass through entity is otherwise entitled under this chapter. However, a pass through entity and a shareholder, partner, or member of the pass through entity may not claim more than one (1) credit for the same qualified railroad expenditure or qualified new rail infrastructure expenditure. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-11 Claiming tax credit

Sec. 11. To obtain a credit under this chapter, a taxpayer must claim the credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department all information that the department determines is necessary for the allowance of the credit provided by this chapter. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-12 Carry over of excess tax credit

Sec. 12. (a) If the credit provided by this chapter exceeds a taxpayer's state tax liability for the taxable year for which the credit is first claimed, the excess may be carried over to succeeding taxable years and used as a credit against the tax otherwise due and payable by the taxpayer under IC 6-3 during those taxable years. Each time that the credit is carried over to a succeeding taxable year, the credit is to be reduced by the amount that was used as a credit during the immediately preceding taxable year. The credit provided by this chapter may be carried forward and applied to succeeding taxable years for five (5) taxable years following the unused credit year. (b) A taxpayer is not entitled to any carryback or refund of any unused credit. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-13 Assignment of tax credit

Sec. 13. (a) A taxpayer may assign any part of the credit that the taxpayer may claim under this chapter. A credit that is assigned under this section remains subject to this chapter. If a taxpayer assigns a part of a credit during a taxable year, the assignee may not subsequently assign all or part of the credit to another taxpayer. A taxpayer may make only one (1) assignment of a credit. (b) An assignment of a credit must be in writing, and both the taxpayer and assignee shall report the assignment on the taxpayer's and assignee's state tax returns for the year in which the assignment is made, in the manner prescribed by the department. A taxpayer may not receive value in connection with an assignment under this section that exceeds the value of the part of the credit assigned. (c) If the transferor is a tax exempt entity, the transfer must be completed on or before the date that is one (1) year after the close of the tax year for which the credit was certified. As used in this subsection, "tax exempt entity" means a government agency or an organization that is recognized as exempt under section 501(c)(3) of the Internal Revenue Code. As added by P.L.173-2025, SEC.2.

Ind. Code § 6-3.1-38.1-14 Aggregate amount of tax credits permitted

Sec. 14. (a) For each state fiscal year beginning after June 30, 2025, the aggregate amount of state tax credits permitted: (1) for qualified railroad expenditures allowed under this chapter may not exceed nine million five hundred thousand dollars ($9,500,000); and (2) for qualified new rail infrastructure expenditures allowed under this chapter may not exceed five million dollars ($5,000,000). (b) Not later than June 15, 2026, and not later than June 15 each year thereafter, the department shall report to the Indiana department of transportation and the state comptroller the total amount of state tax credits certified for the immediately preceding taxable year under section 8(c) of this chapter. As added by P.L.173-2025, SEC.2.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/6Fetched: 10/17/2026