SENATE BILL No. 389
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-31.
Synopsis: Adult education tax credit. Establishes an adult education
tax credit. Allows employers to receive a tax credit of up to $300 per
employee and up to $5,000 per year for payment of an employee's
expenses related to an adult education program.
Effective: January 1, 2007.
January 11, 2006, read first time and referred to Committee on Tax and Fiscal Policy.
Second Regular Session 114th General Assembly (2006)
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SENATE BILL No. 389
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-3.1-31; (06)IN0389.1.1. -->
SECTION 1. IC 6-3.1-31 IS ADDED TO THE INDIANA CODE
AS A NEW
CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2007]:
Chapter 31. Adult Education Tax Credit
Sec. 1. As used in this chapter, "adult education program"
means an education program with the principal purpose of:
(1) helping an employee become literate;
(2) helping an employee obtain a general educational
development (GED) diploma issued under IC 20-20-6;
(3) teaching an employee English as a second language;
(4) providing citizenship training for an employee who is an
(5) providing vocational training for an employee.
Sec. 2. As used in this chapter, "credit" refers to an adult
education tax credit granted under this chapter.
Sec. 3. As used in this chapter, "eligible education expense"
means a payment for education expenses related to an adult
education program. The term does not include expenses for meals,
lodging, or transportation.
Sec. 4. As used in this chapter, "employee" means an individual
(1) is an employee of an employer; and
(2) has the employee's principal place of business with the
employer in Indiana.
Sec. 5. As used in this chapter, "employer" means a corporation,
person, or pass through entity that employs at least one (1)
Sec. 6. As used in this chapter, "pass through entity" means a:
(1) corporation that is exempt from the adjusted gross income
tax under IC 6-3-2-2.8(2);
(4) limited liability company; or
(5) limited liability partnership.
Sec. 7. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 6-5.5 (the financial institutions tax); and
(3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
Sec. 8. As used in this chapter, "vocational education" means
any postsecondary vocational, agricultural, occupational,
manpower, employment, or technical training or retraining of less
than a baccalaureate level that enhances an individual's career
Sec. 9. (a) An employer who pays for eligible education expenses
of an eligible employee is eligible for a credit in a taxable year
against the employer's state tax liability in the taxable year.
(b) Except as provided in subsections (c) and (d), the amount of
the credit is equal to twenty-five percent (25%) of the sum of the
employer's payments for an employee's eligible education expenses
in a taxable year.
(c) The amount of the credit claimed by an employer in a
taxable year may not exceed five thousand dollars ($5,000).
(d) The amount of the credit attributable to each employee who
incurs eligible education expenses may not exceed three hundred
Sec. 10. (a) If:
(1) a pass through entity does not have state income tax
liability against which the credit provided by this chapter may
be applied; and
(2) the pass through entity would be eligible for a credit under
this chapter if the pass through entity were a taxpayer;
a shareholder, partner, or member of the pass through entity is
entitled to a credit under this chapter.
(b) Subject to this chapter, the amount of the credit to which a
shareholder, partner, or member is entitled is equal to:
(1) the credit determined for the pass through entity for the
taxable year as if the pass through entity were a taxpayer with
state tax liability in the amount of the credit; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder or partner is entitled.
Sec. 11. (a) If the amount of the credit provided under this
chapter for a taxpayer in a taxable year exceeds the taxpayer's
state tax liability for that taxable year, the taxpayer may carry the
excess over to subsequent taxable years. The credit provided by
this chapter may be carried forward and applied to succeeding
taxable years for not more than five (5) taxable years following the
unused credit year. The amount of the credit carryover from a
taxable year shall be reduced to the extent that the carryover is
used by the taxpayer to obtain a credit under this chapter for any
subsequent taxable year.
(b) A taxpayer is not entitled to a carryback or refund of any
Sec. 12. (a) A taxpayer desiring to obtain a credit under this
chapter must apply to the department of workforce development
for a certification that the taxpayer's payments for eligible
education expenses related to an adult education program qualify
for a credit under this chapter.
(b) If the department of workforce development determines that
the payments are eligible for a credit under this chapter, the
department shall certify the taxpayer's payments.
Sec. 13. To receive the credit provided by this chapter, a
(1) claim the credit on the taxpayer's state tax return or
returns in the manner prescribed by the department of state
(2) submit to the department of state revenue, along with the
taxpayer's state tax return or returns, a copy of the certificate
issued by the department of workforce development to the
taxpayer under section 12(b) of this chapter;
(3) submit proof to the department of state revenue that the
employees who incurred the eligible education expenses for
which the credit is claimed:
(A) remained employed by the employer for at least
thirteen (13) consecutive weeks; and
(B) worked a minimum of four hundred fifty-five (455)
after incurring the expenses; and
(4) submit all other information that the department of state
revenue determines is necessary for the calculation of the
credit provided by this chapter.
SOURCE: ; (06)IN0389.1.2. -->
SECTION 2. [EFFECTIVE JANUARY 1, 2007] IC 6-3.1-31, as
added by this act, applies only to taxable years beginning after
December 31, 2006.