HB 1378

                                                           Introduced Version
          HOUSE BILL No. 1378
                _____
              DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3-3; IC 6-3.1-39.5.
Synopsis: Child care tax credits. Provides a child and dependent care
refundable tax credit against an individual's Indiana adjusted gross
income tax for employment related child and dependent care expenses
based on the percentage of the federal child and dependent care tax
credit the taxpayer claimed for the taxable year for federal income tax
purposes. Provides a child tax credit against an individual's Indiana
adjusted gross income tax. Provides that costs incurred: (1) for the
operating costs of a child care facility operated for a taxpayer's
employees; or (2) under a contract with a child care facility to provide
child care services to employees of the taxpayer, or under a contract
with an intermediate entity that contracts with one or more child care
facilities for child care services; are qualified expenditures for purposes
of the employer child care expenditure income tax credit.
Effective: January 1, 2026 (retroactive).
Campbell, Jackson C, Errington
   January 8, 2026, read first time and referred to Committee on Ways and Means.
2026  IN 1378—LS 6788/DI 125
                                                                                       Introduced
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
 Constitution) is being amended, the text of the existing provision will appear in this style type,
 additions will appear in this style type, and deletions will appear in this style type.
   Additions: Whenever a new statutory provision is being enacted (or a new constitutional
 provision adopted), the text of the new provision will appear in this style type. Also, the
 word NEW will appear in that style type in the introductory clause of each SECTION that adds
 a new provision to the Indiana Code or the Indiana Constitution.
  Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
 between statutes enacted by the 2025 Regular Session of the General Assembly.
                   HOUSE BILL No. 1378
    A BILL FOR AN ACT to amend the Indiana Code concerning
 taxation.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 6-3-3-11 IS ADDED TO THE INDIANA CODE
2 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026 (RETROACTIVE)]: Sec. 11. (a) Each taxable
4 year, an individual who is eligible to claim the federal child and
5 dependent care tax credit under Section 21 of the Internal Revenue
6 Code is entitled to a credit against the individual's, and the
7 individual's spouse's in the case of a joint return, adjusted gross
8 income tax liability equal to:
9      (1) the allowable amount of the federal child and dependent
10      care tax credit that the taxpayer claimed on the taxpayer's
11      federal income tax return for the taxable year under Section
12      21 of the Internal Revenue Code; multiplied by
13      (2) twenty percent (20%).
14    (b) If the credit provided by this section exceeds the amount of
15 the individual's adjusted gross income tax liability for the taxable
16 year, reduced by the sum of all credits for the taxable year that are
17 applied before the application of the credit provided by this
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1 section, the excess shall be refunded to the individual.
2     SECTION 2. IC 6-3-3-15 IS ADDED TO THE INDIANA CODE
3 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
4 JANUARY 1, 2026 (RETROACTIVE)]: Sec. 15. (a) As used in this
5 section, "qualifying child" has the meaning set forth in Section
6 24(c) of the Internal Revenue Code.
7     (b) Each taxable year, an individual is entitled to a credit
8 against the individual's, and the individual's spouse's in the case of
9 a joint return, adjusted gross income tax liability equal to:
10(1) three hundred dollars ($300); multiplied by
11(2) the number of qualifying children for which the taxpayer
12was eligible to claim the federal child tax credit under Section
1324 of the Internal Revenue Code for the taxable year.
14     (c) If the credit provided by this section exceeds the amount of
15 the individual's adjusted gross income tax liability for the taxable
16 year, reduced by the sum of all credits for the taxable year that are
17 applied before the application of the credit provided by this
18 section, the excess shall be refunded to the individual.
19     SECTION 3. IC 6-3.1-39.5-1, AS ADDED BY P.L.201-2023,
20 SECTION 103, IS AMENDED TO READ AS FOLLOWS
21 [EFFECTIVE JANUARY 1, 2026 (RETROACTIVE)]: Sec. 1. As used
22 in this chapter, "Indiana qualified child care facility" means a facility
23 that is:
24(1) a qualified child care facility (as defined in Section 45F of the
25Internal Revenue Code);
26(2) located in Indiana; and
27(3) licensed by the division of family resources under IC 12-17.2.
28and
29(4) operated:
30(A) by a taxpayer;
31(B) by a taxpayer jointly with one (1) or more other individuals
32or entities; or
33(C) under a contract described in Section 45F(c)(1)(A)(iii) of
34the Internal Revenue Code with the taxpayer.
35     SECTION 4. IC 6-3.1-39.5-3, AS ADDED BY P.L.201-2023,
36 SECTION 103, IS AMENDED TO READ AS FOLLOWS
37 [EFFECTIVE JANUARY 1, 2026 (RETROACTIVE)]: Sec. 3. As used
38 in this chapter, "qualified child care expenditure" means an
39 expenditure:
40(1) for the acquisition, construction, rehabilitation, or expansion
41of property used as part of an Indiana qualified child care facility
42of a taxpayer that is operated for the taxpayer's employees;
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1(2) incurred under a contract between a taxpayer and an Indiana
2qualified child care facility to provide for the acquisition,
3construction, rehabilitation, or expansion of property used as part
4of the Indiana qualified child care facility; or
5(3) for purposes of complying with the qualified child care facility
6licensure requirements under IC 12-17.2, as part of the taxpayer
7acquiring or constructing an Indiana qualified child care facility;
8(4) incurred for the operating costs of an Indiana qualified
9child care facility of a taxpayer that is operated for the
10taxpayer's employees, including costs related to training of
11employees, to scholarship programs, and to provide increased
12compensation to employees with higher levels of child care
13training;
14(5) under a contract with an Indiana qualified child care
15facility to provide child care services to employees of the
16taxpayer, or under a contract with an intermediate entity that
17contracts with one (1) or more Indiana qualified child care
18facilities for child care services; or
19(6) under a contract to provide child care resources and
20referral services to an employee of the taxpayer.
21     SECTION 5. IC 6-3.1-39.5-5, AS ADDED BY P.L.201-2023,
22 SECTION 103, IS AMENDED TO READ AS FOLLOWS
23 [EFFECTIVE JANUARY 1, 2026 (RETROACTIVE)]: Sec. 5. As used
24 in this chapter, "recapture event" means:
25(1) the cessation of the operation of the Indiana qualified child
26care facility as an Indiana qualified child care facility; or
27(2) subject to section 12(c) of this chapter, a change in ownership
28of an Indiana qualified child care facility for which a credit was
29allowed under this chapter, unless the person acquiring an interest
30agrees to assume the recapture liability of the person disposing of
31an interest. or
32(3) the use of an Indiana qualified child care facility for the
33enrollment of a child from any individual who is not an employee
34of the taxpayer.
35 The term does not include a cessation of operation or change in
36 ownership due to accident or casualty.
37     SECTION 6. [EFFECTIVE JANUARY 1, 2026 (RETROACTIVE)]
38 (a) IC 6-3-3-11 and IC 6-3-3-15, both as added by this act, apply to
39 taxable years beginning after December 31, 2025.
40     (b) IC 6-3.1-39.5-1, IC 6-3.1-39.5-3, and IC 6-3.1-39.5-5, all as
41 amended by this act, apply to taxable years beginning after
42 December 31, 2025.
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1   (c) This SECTION expires June 30, 2028.
2   SECTION 7. An emergency is declared for this act.
2026  IN 1378—LS 6788/DI 125