Bill > HB1396

This bill establishes a new tax credit for employers in Indiana who employ members of the U.S. military reserve components or the Indiana National Guard. The credit applies when a qualified individual (an Indiana resident serving in a reserve component or National Guard) is training, drilling, or on active duty during their normal working hours. The tax credit amount is calculated by multiplying the hours spent on military duties by the individual's hourly wage, then multiplying that result by 0.5. Employers cannot claim the credit if the employee uses paid leave during their military service. The credit can be applied against various state tax liabilities, including income, insurance premiums, and financial institutions taxes. If the credit exceeds the employer's tax liability, it can be carried forward to subsequent tax years, but cannot be carried back or refunded. For pass-through entities without sufficient tax liability, individual shareholders, partners, or members can claim a proportional credit based on their distributive income. The bill is retroactively effective for taxable years beginning after December 31, 2024, and is set to expire on July 1, 2028. Employers must claim the credit on their annual state tax return and provide any necessary documentation to the state department of revenue.

Budget and Finance

https://iga.in.gov/legislative/2025/bills/house/1396/details