Bill > HB1138

This bill establishes a new state tax credit for child and dependent care expenses in Indiana, which will be available for taxable years beginning after December 31, 2025. The credit is based on the federal child and dependent care tax credit (Section 21 of the Internal Revenue Code) and is calculated as a percentage of the federal credit depending on the taxpayer's adjusted gross income. For households with income of $40,000 or less, the credit will be 100% of the federal credit; for those with income between $40,000 and $60,000, the credit will be 75%; and for households with income between $60,000 and $75,000, the credit will be 50%. Taxpayers with income above $75,000 will not be eligible for the credit. The bill also stipulates that if the credit amount exceeds the taxpayer's tax liability, the excess will be refunded to the individual. The provision is set to expire on June 30, 2029, and is considered an emergency act, meaning it can take effect immediately upon passage.

Budget and Finance

https://iga.in.gov/legislative/2026/bills/house/1138/details