by Chad E. Voss
On August 5, 2022, Indiana Governor Eric J. Holcomb signed a bill providing for an additional $200 automatic taxpayer refund for the 2021 taxable year. The bill also establishes a sales tax exemption for children’s diapers, and it caps the Indiana gasoline use tax rate at $0.295 per gallon through June 30, 2023. A new $3,000 dependent exemption for adopted children under the age of 19 is also enacted (under the age of 24 if a full-time student), and the state adoption tax credit is increased and made refundable. (L. 2022, S2 (S.S.), effective 08/05/2022 and as stated.)
Automatic taxpayer refund. Effective August 5, 2022, the bill provides for an additional $200 automatic taxpayer refund (ATR) to taxpayers who are eligible for an ATR under current law for taxable year 2021. The bill further provides that an individual who is not eligible for an ATR under current law may nevertheless receive the $200 ATR if the individual: was not claimed as a dependent of another taxpayer for taxable year 2022; received Social Security benefits in calendar year 2022; and files an Indiana resident adjusted gross income tax return for the 2022 taxable year before January 1, 2024.
Adopted child exemption. Applicable to tax years beginning after December 31, 2021, the bill provides a new $3,000 dependent exemption for adopted children under the age of 19 (under age of 24 if a full-time student).
Adoption tax credit. Applicable to tax years beginning after December 31, 2021, the bill increases the Indiana child adoption tax credit to an amount equal to the lesser of: 20% of the federal adoption tax credit, or $2,500 (previously, the lesser of 10% of the federal adoption tax credit, or $1,000). The bill also amends Indiana law to make the state credit refundable; however, to the extent that a portion of a taxpayer’s federal adoption credit is carried forward to a subsequent taxable year, the aggregate sum of state adoption credits remains capped at $2,500 per taxable year.
Children’s diapers. Effective August 5, 2022, sales of children’s diapers are exempt from Indiana’s gross retail tax.
Gasoline use tax cap. Effective August 5, 2022 through June 30, 2023, the bill caps Indiana’s gasoline use tax rate to the lesser of: $0.295 per gallon or the monthly amount as determined under existing law.
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