Tax Alert

Indiana Tax Law Changes

(May 14, 2013)

Indiana Gov. Mike Pence signed House Enrolled Act (HEA) 1001 on May 8, 2013, enacting several changes to Indiana’s tax laws.

The legislation reduces the individual adjusted gross income tax rate from 3.4 percent to 3.3 percent for 2015 and 2016, and 3.23 percent beginning in 2017. The legislation also accelerates the phaseout of the Indiana inheritance tax, which is eliminated for decedents whose date of death is after Dec. 31, 2012.

In addition, the legislation adopts the Internal Revenue Code as of Jan. 1, 2013, and eliminates the addback of certain federal deductions for corporate and individual taxpayers. Some of the changes are retroactive to the 2012 tax year. Taxpayers who have already filed their 2012 returns might need to amend their returns to claim any retroactive benefits.

Changes Retroactive to 2012

  • Exclusions from income for charitable distributions made from an individual retirement account
  • Deductions for higher education expenses
  • Exclusions for employer-provided commuter transportation benefits
  • Shortened depreciable lives for certain leasehold improvements, retail improvements, restaurant property, and motorsports entertainment complexes
  • Expenses for qualified advanced mine safety equipment

Changes Effective for 2013 and later

  • Deductions for student loan interest
  • Deductions for school teacher expenses
  • Exclusions for employer-provided education assistance
  • Adjustments to basis of stock by S-Corporation shareholders for donations of appreciated property
  • Deductions for environmental remediation costs
  • Percentage depletion on oil and gas properties
  • Treatment of real estate investment trust (REIT) and regulated investment company (RIC) income for nonresident aliens and foreign corporations


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Brian Myers

Mike Hollowell

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