Taxation of military income., the official text

First Regular Session of the 124th General Assembly (2025)

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  HOUSE ENROLLED ACT No. 1280

   AN ACT to amend the Indiana Code concerning taxation.

   Be it enacted by the General Assembly of the State of Indiana:

   SECTION 1. IC 6-3-1-34, AS AMENDED BY P.L.121-2023,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2025 (RETROACTIVE)]: Sec. 34. "Qualified military
income" means the following:

      (1) Wages that are paid to a member of a reserve component of
      the armed forces of the United States, including the United
      States Space Force, or the National Guard for the member's
      service in the reserve component or National Guard.
      (2) For a member of an active component of the armed forces of
      the United States, including the United States Space Force, one
      hundred percent (100%) of wages that are paid to the member for
      taxable years beginning in 2024 and thereafter for service in the
      active component.
      (3) Wages that are paid to a member of the United States
      Public Health Service Commissioned Corps or the National
      Oceanic and Atmospheric Administration Commissioned
      Officer Corps for the member's service.
   SECTION 2. IC 6-3-2-4, AS AMENDED BY P.L.162-2019,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2025 (RETROACTIVE)]: Sec. 4. (a) Each taxable year,
an individual, or the individual's surviving spouse, is entitled to the
following:

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      (1) An adjusted gross income tax deduction for the first five
      thousand dollars ($5,000) of income, excluding adjusted gross
      income described in subdivision (2), received during the taxable
      year by the individual, or the individual's surviving spouse, for the
      individual's service in an active or reserve component of the
      armed forces of the United States, including the army, navy, air
      force, space force, coast guard, marine corps, merchant marine,
      Indiana army national guard, or Indiana air national guard, or the
      United States Public Health Service Commissioned Corps or
      the National Oceanic and Atmospheric Administration
      Commissioned Officer Corps.
      (2) An adjusted gross income tax deduction for income from
      retirement or survivor's benefits received during the taxable year
      by the individual, or the individual's surviving spouse, for the
      individual's service in an active or reserve component of the
      armed forces of the United States, including the army, navy, air
      force, space force, coast guard, marine corps, merchant marine,
      Indiana army national guard, or Indiana air national guard, or the
      United States Public Health Service Commissioned Corps or
      the National Oceanic and Atmospheric Administration
      Commissioned Officer Corps. The amount of the deduction is
      the lesser of:

         (A) the benefits included in the adjusted gross income of the
         individual or the individual's surviving spouse; or
         (B) six thousand two hundred fifty dollars ($6,250) plus the
         following:

            (i) For taxable years beginning in 2019, twenty-five percent
            (25%) of the amount of the benefits in excess of six
            thousand two hundred fifty dollars ($6,250).
            (ii) For taxable years beginning in 2020, fifty percent (50%)
            of the amount of the benefits in excess of six thousand two
            hundred fifty dollars ($6,250).
            (iii) For taxable years beginning in 2021, seventy-five
            percent (75%) of the amount of the benefits in excess of six
            thousand two hundred fifty dollars ($6,250).
            (iv) For taxable years beginning after 2021, one hundred
            percent (100%) of the amount of the benefits in excess of six
            thousand two hundred fifty dollars ($6,250).
   (b) An individual whose qualified military income is subtracted
from the individual's federal adjusted gross income under
IC 6-3-1-3.5(a)(18) for Indiana individual income tax purposes is not,
for that taxable year, entitled to a deduction under this section for the

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same qualified military income that is deducted under
IC 6-3-1-3.5(a)(18).

   SECTION 3. [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]
(a) IC 6-3-1-34 and IC 6-3-2-4, both as amended by this act, apply
to taxable years after December 31, 2024.

   (b) This SECTION expires July 1, 2028.
   SECTION 4. An emergency is declared for this act.

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Speaker of the House of Representatives

President of the Senate

President Pro Tempore

Governor of the State of Indiana

Date:                             Time:

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