§ 6-3-3-12.1 — Credit for contributions to ABLE account; date of contribution; repayment of credit after nonqualified withdrawals

Indiana § 6-3-3-12.1

• Jurisdiction: Indiana
• Art. 3: STATE INCOME TAXES
• Ch. 3: Credits

Text

Note: This version of section effective until 1-1-2026. See also
following version of this section, effective 1-1-2026.
Sec. 12.1. (a) As used in this section, "ABLE account"
has the meaning set forth in IC 12-11-14-1.
(b) As used in this section, "contribution" means the amount of
money directly provided to an Indiana ABLE 529A savings plan
account by a taxpayer. A contribution does not include any of the
following:
(1) Money credited to an ABLE account as a result of bonus
points or other forms of consideration earned by the taxpayer that
result in a transfer of money to the ABLE account.
(2) Money transferred from any qualified ABLE program under
Section 529A of the Internal Revenue Code or from any other
similar plan.
(3) Money transferred from any qualified tuition program under
Section 529 of the Internal Revenue Code or from any other
similar plan.
(c) As used in this section, "designated beneficiary" has the meaning
set forth in IC 12-11-14-5.
(d) As used in this section, "Indiana ABLE 529A savings plan"
refers to the Achieving a Better Life Experience (ABLE) 529A plan
established under IC 12-11.
(e) As used in this section, "nonqualified withdrawal" means a
withdrawal or distribution from an Indiana ABLE 529A savings plan
that is not a qualified withdrawal.
(f) As used in this section, "qualified disability expense" has the
meaning set forth in IC 12-11-14-8.
(g) As used in this section, "qualified withdrawal" means a
withdrawal or distribution from an Indiana ABLE 529A savings plan
that is made:
(1) to pay for qualified disability expenses, excluding any
withdrawals or distributions used to pay for qualified disability
expenses, if the withdrawals or distributions are made from an
Indiana ABLE 529A savings plan that is terminated within twelve
(12) months after the ABLE account is opened;
(2) as a result of the death of a designated beneficiary; or
(3) by an Indiana ABLE 529A savings plan as the result of a
transfer of funds by an Indiana ABLE 529A savings plan from
one (1) third party custodian to another.
A qualified withdrawal does not include a rollover distribution or
transfer of assets from an Indiana ABLE 529A savings plan to any
other qualified ABLE program under Section 529A of the Internal
Revenue Code, or to any qualified tuition program under Section 529
of the Internal Revenue Code other than a college choice 529 education
savings plan established under IC 21-9, or to any other similar plan.
(h) As used in this section, "taxpayer" means:
(1) an individual filing a single return;
(2) a married couple filing a joint return; or
(3) a married individual filing a separate return.
(i) A taxpayer is entitled to a credit against the taxpayer's adjusted
gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
year equal to the least of the following:
(1) Twenty percent (20%) of the amount of the total contributions
made by the taxpayer to an ABLE account or accounts of an
Indiana ABLE 529A savings plan during the taxable year.
(2) Five hundred dollars ($500).
(3) The amount of the taxpayer's adjusted gross income tax
imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
reduced by the sum of all credits (as determined without regard to
this section) allowed by IC 6-3-1 through IC 6-3-7.
(j) A taxpayer is not entitled to a carryback, carryover, or refund of
an unused credit.
(k) A taxpayer may not sell, assign, convey, or otherwise transfer the
tax credit provided by this section.
(l) To receive the credit provided by this section, 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 calculation of the credit provided by this section.
(m) An owner of an ABLE account of an Indiana ABLE 529A
savings plan must repay all or a part of the credit in a taxable year in
which any nonqualified withdrawal is made from the ABLE account.
The amount the taxpayer must repay is equal to the lesser of:
(1) twenty percent (20%) of the total amount of nonqualified
withdrawals made during the taxable year from the ABLE
account; or
(2) the excess of:
(A) the cumulative amount of all credits provided by this
section that are claimed by any taxpayer with respect to the
taxpayer's contributions to the ABLE account for all prior
taxable years; over
(B) the cumulative amount of repayments paid by the owner of
the ABLE account under this subsection for all prior taxable
years.
(n) Any required repayment under subsection (m) must be reported
by the owner of the ABLE account on the owner's annual state income
tax return for any taxable year in which a nonqualified withdrawal is
made.
(o) A nonresident owner of an ABLE account who is not required
to file an annual income tax return for a taxable year in which a
nonqualified withdrawal is made shall make any required repayment on
the form required under IC 6-3-4-1(2). If the nonresident owner of the
ABLE account does not make the required repayment, the department
shall issue a demand notice in accordance with IC 6-8.1-5-1.
(p) The executive director of the Indiana ABLE authority shall
submit or cause to be submitted to the department a copy of all
information returns or statements issued to ABLE account owners,
designated beneficiaries, and other taxpayers for each taxable year with
respect to:
(1) nonqualified withdrawals made from ABLE accounts for the
taxable year; or
(2) ABLE account closings for the taxable year.
(q) The following apply to contributions made after December 31,
2023:
(1) For purposes of this section, all or part of a contribution made
after the end of a taxable year, and not later than the due date of
the taxpayer's adjusted gross income tax return for the taxable
year under this article (as determined without regard to any
allowable extensions), shall be considered as having been made
during the taxable year preceding the contribution if:
(A) the taxpayer elects to treat all or part of a contribution as
occurring in the taxable year preceding the contribution;
(B) the taxpayer designates the amounts of the contribution to
be treated as occurring in each taxable year, in the case of a
single contribution that is to be allowable under this section in
two (2) separate years; and
(C) the taxpayer irrevocably waives the right to claim the
contribution claimed in the taxable year preceding the
contribution as occurring in the taxable year of the contribution.
(2) An irrevocable election under this subsection must be made
in writing at the time the contribution is made.
(3) The Indiana ABLE authority may prescribe any forms
necessary for purposes of this subsection.

Legislative History

As added by P.L.122-2022, SEC.2. Amended by P.L.11-2023, SEC.25; P.L.236-2023, SEC.66.