Indiana SB 314: Tax exemption for eligible events.

Bill Text

Introduced Version
SENATE BILL No. 314
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3-2.1.
Synopsis: Pass through entity tax. Amends a provision of the pass
through entity tax concerning the determination of a resident direct
owner's share of adjusted gross income before allocation and
apportionment of that income to allow the electing entity to exclude the
resident direct owner's share of adjusted gross income tax that is
subject to an individual income tax in another state from the
determination. Specifies that other tax credits that pass through to the
entity owners apply to the pass through entity tax. (Under current law,
when those tax credits pass through to the entity owners they do not
apply to the pass through entity tax.)
Effective: January 1, 2025 (retroactive).
Baldwin
January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
2025 IN 314—LS 7438/DI 129

Introduced
First Regular Session of the 124th General Assembly (2025)
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 2024 Regular Session of the General Assembly.
SENATE BILL No. 314
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 6-3-2.1-4, AS AMENDED BY P.L.118-2024,
2 SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 4. (a) A tax shall be
4 imposed on the adjusted gross income of an electing entity for the
5 taxable year of the election. The adjusted gross income of the electing
6 entity shall be the aggregate of the direct owners' share of the electing
7 entity's adjusted gross income. For purposes of this section:
8 (1) the electing entity shall determine each nonresident direct
9 owner's share after allocation and apportionment pursuant to
10 IC 6-3-2-2; and
11 (2) the electing entity shall determine the resident direct owner's
12 share either:
13 (A) before allocation and apportionment pursuant to
14 IC 6-3-2-2; or
15 (B) after allocation and apportionment pursuant to IC 6-3-2-2.
16 For the purposes of clause (A), the electing entity may exclude
17 the resident direct owner's share of adjusted gross income tax
2025 IN 314—LS 7438/DI 129

2
1 that is subject to an individual income tax in another state.
2 The electing entity must use the same method for all resident
3 direct owners.
4 (b) The tax rate shall be the tax rate specified in IC 6-3-2-1(b) as of
5 the last day of the electing entity's taxable year, and the tax shall be due
6 on the same date as the entity return for the taxable year is due under
7 this article, without regard to extensions.
8 (c) On its return for the taxable year, the electing entity shall attach
9 a schedule showing the calculation of the tax and the credit for each
10 direct owner, and remit the tax with the return, taking into account
11 prior estimated tax payments and other tax payments by the electing
12 entity, along with other payments that are credited to the electing entity
13 as tax paid under this chapter or as tax withheld under IC 6-3-4 or
14 IC 6-5.5-2-8. The department may prescribe the form for providing the
15 information required by this section.
16 (d) If a pass through entity makes estimated tax payments, makes
17 other tax payments, or has other payments that are credited to the
18 electing entity as tax paid under this chapter or a tax withheld under
19 IC 6-3-4 or IC 6-5.5-2-8, and the pass through entity does not make the
20 election under section 3 of this chapter, the pass through entity:
21 (1) may treat pass through entity tax remitted on its behalf under
22 this chapter as pass through entity tax to its direct owners,
23 provided that:
24 (A) the tax is designated on a schedule similar to the schedule
25 required under subsection (c) and is reported to the direct
26 owners in the manner provided in section 5 of this chapter; and
27 (B) the pass through entity credits an amount to a direct owner
28 no greater than the tax that otherwise would be due under this
29 chapter on their share of the adjusted gross income from the
30 pass through entity or the direct owner's portion (as
31 determined under subsection (a)) of the pass through entity tax
32 passed through to the pass through entity, whichever is greater
33 (for purposes