SB 455 creates a new refundable Indiana income tax credit for eligible newborn children. A taxpayer may claim $500 per eligible newborn child, or $250 per eligible newborn child for a married individual filing separately, but only in the first taxable year in which that child qualifies for the federal dependent exemption under Section 151(c)(1)(B). The credit is limited to taxpayers with adjusted gross income at or below 720% of the federal poverty level and is available to Indiana residents and part-year residents. If the credit exceeds the taxpayer’s state income tax liability, the excess is refundable.
The bill also makes a technical change to Indiana’s adjusted gross income definition by removing the special additional dependent-child exemption amount of $1,500 in the first taxable year a child is claimed, while retaining and reorganizing the broader structure of Indiana’s income tax modifications. The newborn credit is added as a new chapter in the Indiana Code and is set to apply retroactively to taxable years beginning after December 31, 2024, with the chapter expiring July 1, 2028. The bill declares an emergency, indicating an intent for immediate legislative effect once enacted.
Impact
The bill would amend IC 6-3-1-3.5, Indiana’s adjusted gross income definition for individuals and related taxpayers, by deleting the special first-year dependent exemption increase and adding a new refundable credit chapter, IC 6-3.1-42. It would affect individual income tax filers, especially low- and moderate-income families with newborn children, by reducing tax liability or generating refunds for eligible taxpayers. Because the credit is refundable, it could result in state payments even when no income tax is owed. The bill would apply beginning with taxable years after December 31, 2024, and would sunset in 2028 unless extended or reenacted.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be framed as a family tax relief proposal rather than a controversial tax overhaul. Its structure suggests a policy goal of supporting new parents and newborn households through a targeted refundable credit. No formal opposition or support is documented in the provided context, so the overall sentiment cannot be measured from debate history; however, the bill’s design indicates a generally pro-family, pro-tax-relief posture.
Contention
The main policy questions raised by the bill are likely to involve cost, eligibility, and whether a refundable credit is the best way to provide family support. The income cap at 720% of the federal poverty level is relatively broad, which could draw scrutiny from those concerned about fiscal impact or whether benefits should be more tightly targeted. The bill also removes the first-year additional dependent exemption amount from the adjusted gross income definition while creating the new credit, which may prompt questions about whether the new credit fully offsets that change for all taxpayers. No specific objections or competing viewpoints are recorded in the provided committee or vote history.