Bill > HB1150

This bill modifies Indiana's tax code and 529 college savings plan regulations to exclude certain distributions from a 529 college savings account from state income tax, specifically those that meet the requirements under Section 126 of the SECURE 2.0 Act of 2022. Currently, withdrawals from 529 accounts that are not used for qualified higher education expenses are typically subject to income tax penalties and potential repayment of previous tax credits. Under this bill, distributions that satisfy the specific requirements of the SECURE 2.0 Act will be exempt from these penalties and tax consequences. The bill applies retroactively to taxable years beginning after December 31, 2024, and provides tax relief for account owners who make withdrawals for purposes outlined in the federal legislation, such as certain emergency expenses or long-term care needs. The changes aim to provide more flexibility for 529 account holders while maintaining the overall intent of these education savings plans.

Budget and Finance

https://iga.in.gov/legislative/2025/bills/house/1150/details