Citations Affected: IC 6-3.1-31.
Synopsis: Income tax credit for tuition costs. Provides an individual
who is an eligible graduate of an Indiana institution of higher learning
with a tax credit against the individual's adjusted gross income tax
liability in the amount of 5% of the individual's qualified educational
investment. Defines "qualified educational investment" as: (1) the sum
of expenditures made by an eligible graduate for tuition and required
instructional materials in the course of obtaining a degree from an
institution of higher learning; multiplied by (2) a percentage, the
magnitude of which varies with the academic accomplishments of the
eligible graduate and different types of career service.
Effective: January 1, 2008.
January 16, 2007, read first time and referred to Committee on Tax and Fiscal Policy.
A BILL FOR AN ACT to amend the Indiana Code concerning
means a public or private educational institution located within
(1) normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the location where the institution's educational activities are carried on;
(2) regularly offers education at a level above grade 12;
(3) regularly awards associate, bachelor's, master's, or doctoral degrees or any combination of those degrees; and
(4) is accredited by the North Central Association of Colleges and Schools, the Indiana state board of education, or the Association of Theological Schools in the United States and Canada.
Sec. 4. As used in this chapter, "instructional materials" means tangible personal property used to promote the learning goals of an individual undertaking a structured course of study. The term includes the following:
(2) Prewritten computer software.
Sec. 5. As used in this chapter, "qualified educational investment" with respect to an eligible graduate means the amount determined in STEP FOUR of the following formula:
STEP ONE: For each degree awarded to the eligible graduate by an institution of higher learning, determine the sum of expenditures made by the eligible graduate for tuition and required instructional materials in the course of obtaining that degree. Under this STEP, an expenditure for tuition or required instructional materials may not be included in the sum computed for more than one (1) degree awarded to the eligible graduate.
STEP TWO: Determine the sum of the STEP ONE results.
STEP THREE: Determine the percentage applicable to the eligible graduate under section 9 of this chapter.
STEP FOUR: Multiply:
(A) the STEP TWO result; by
(B) the STEP THREE result.
Sec. 6. As used in this chapter, "state tax liability" means a taxpayer's total tax liability incurred under IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax) as computed after the application of all credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
Sec. 7. As used in this chapter, "taxpayer" means any individual
that has any state tax liability.
Sec. 8. (a) Each taxable year, an eligible graduate is entitled to a credit against the eligible graduate's state tax liability in an amount equal to the lesser of:
(1) the eligible graduate's adjusted educational investment; or
(2) the product of:
(A) the eligible graduate's qualified educational investment; multiplied by
(B) five percent (5%).
(b) If a husband and wife file a joint income tax return and each spouse is eligible for the credit provided by this section during a taxable year, the amount of the credit that may be claimed on the joint return is equal to the amount of the credit the husband is entitled to claim under this section plus the amount of the credit the wife is entitled to claim under this section.
(c) A taxpayer is first entitled to the credit provided by this chapter in the taxable year in which the taxpayer becomes an eligible graduate.
Sec. 9. (a) Subject to subsection (b), an eligible graduate is entitled to a percentage in determining the eligible graduate's qualified educational investment that is the sum of all the following percentages that apply to the eligible graduate:
(1) Ten percent (10%) if the eligible graduate:
(A) was awarded a high school diploma from an Indiana high school;
(i) the Core 40 curriculum established under IC 20-30-10; or
(ii) a curriculum equivalent to the Core 40 curriculum; and
(C) maintained a grade point average of at least three (3) on a scale of four (4) in earning the high school diploma.
(2) Ten percent (10%) if the eligible graduate:
(A) was awarded an associate's degree from an institution of higher learning;
(B) maintained a grade point average of at least three (3) on a scale of four (4) in earning the associate's degree; and
(C) has not been awarded a bachelor's degree or a more advanced degree from an institution of higher learning.
(3) Twenty-five percent (25%) if the eligible graduate:
(A) was awarded a bachelor's degree from an institution of higher learning; and