EARNED INCOME TAX CREDIT (EITC)

Rate (Fully-Refundable): 10% of the federal credit¹

Eligibility Requirements: All Indiana taxpayers must have filed for the federal credit and are subject to slightly different income thresholds than the federal guidelines. See the 2015 IT-40 Individual Income Tax Booklet for more details.

Latest Legislative Action: In 2023, House Bill 1290 was proposed to expand the state EITC from 10% to 12% of the federal credit. The bill did not become law.

• In 2023, EITC was recoupled to the federal credit, but the rate was not increased. This was enacted through the state budget, HEA 1001 (Section 100).
• In 2021, lawmakers increased the state EITC from 9% to 10% of the federal credit, as it was calculated before 2009 (maintained decoupled status from federal credit). The expansion took effect in 2022.²
• During the 2016 legislative session, lawmakers considered a bill that would have increased the state EITC to 10% of the federal credit.

Notes:

• Indiana’s EITC was created in 1999 but was not based on the federal credit. In 2003, Indiana switched to an EITC model replicating the federal program at 6% of the federal credit. This rate was raised to 9% in 2009 as part of a property tax reform package.³

• While the federal program was expanded under a 2010 federal tax relief act, Indiana took action to decouple its state eligibility guidelines from the federal system in 2011. As a result, those claiming Indiana’s EITC no longer benefitted from increased payouts for families with three or more children or the “marriage penalty” reduction, which started the income phase-out at a higher income level for married couples.⁴

CHILD TAX CREDIT (CTC)

Indiana does not currently offer a state-level CTC.

CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)

Indiana does not currently offer a state-level CDCTC.