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HB 1256

College savings tax credit.

2025 Regular Session Introduced by Sheila Klinker

Indiana proposes a state tax credit for residents contributing to college savings accounts to reduce education financing burdens through foregone tax revenue.

First reading: referred to Committee on Ways and Means
#agencies;departmentofrevenue(dor) #highereducation;collegesanduniversities(includingivytech) #schools;financialassistance(includingvouchers #choicescholarships #andeducationsavingsaccounts) #taxes;credits
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WeVote Research Nonpartisan
Bill Summary · HB 1256

Legislative bill overview

HB 1256 proposes to establish a tax credit for Indiana residents who contribute to college savings accounts, likely targeting 529 plans or similar education savings vehicles. The bill would reduce state income tax liability based on qualifying education savings contributions, effectively subsidizing higher education financing through the tax code.

Why is this important

College costs continue rising faster than inflation, making education financing a significant burden for middle and working-class families. Tax incentives for savings can increase accessibility to higher education by reducing the net cost of attendance and encouraging families to plan ahead for education expenses.

Potential points of contention

  • Revenue impact: The state will forgo tax revenue for each credit claimed, which could affect funding for other priorities unless offset elsewhere in the budget
  • Regressivity concerns: Tax credits primarily benefit higher-income earners who can afford to save; lower-income families may not have sufficient income tax liability to benefit meaningfully
  • Credit structure details: The bill's effectiveness depends on crucial unspecified details—credit percentage, contribution caps, income limits, and whether it's refundable or nonrefundable—which remain unclear at this early stage

Compiled from official sources — confirm details with the bill’s official record.

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