LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6187 NOTE PREPARED: Oct 20, 2020
BILL NUMBER: SB 16 BILL AMENDED:
SUBJECT: Tax Credit for Teachers' Classroom Supplies.
FIRST AUTHOR: Sen. Randolph Lonnie M BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill increases the maximum amount of the income tax credit for an individual
employed as a teacher for amounts expended for classroom supplies from $100 to $500 per taxable year.
Effective Date: January 1, 2021 (retroactive).
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise forms, update instructions, and modify the existing tax processing system to implement
this bill. The DOR’s current level of funding and resources should be sufficient to administer this tax credit.
Explanation of State Revenues: The bill modifies the public school educator expense tax credit. It
increases the maximum income tax credit a teacher receives for classroom supply expenses from $100 to
$500. The modification is effective beginning in tax year 2021. The bill is estimated to reduce state General
Fund revenue by between $6.1 M and $16.2 M annually beginning in FY 2022.
Additional Information: This bill increases the tax credit for teachers’ un-reimbursed classroom expenses.
The nonrefundable credit equals the lesser of $500 or the total amount paid by teachers for classroom
supplies during the taxable year. It also expands the definition of qualified expenses to include certain
expenses for professional development courses related to the curriculum, or to the students, that the educator
teaches. The credit must be claimed in the tax year of the qualifying expenses. Unused credits may not be
carried forward or carried back. The credit may not exceed the amount of the individual’s Adjusted Gross
Income (AGI) Tax liability. Revenue collected from the Individual AGI Tax is deposited in the state General
Fund.
SB 16 1
The revenue loss estimate for this bill is based on 2018 data from the DOR and the Internal Revenue Service.
The lower bound estimate assumes classroom expenses are equal to the average $250 federal educator
expense deduction claimed in 2018 by Indiana teachers. The federal deduction may not exceed $250, but the
average unreimbursed Indiana teacher classroom expenses may exceed $250. The upper bound estimate
assumes the maximum $500 credit provided by this bill. Both estimates allow for some taxpayers to have
insufficient tax liabilities to exhaust the full value of the nonrefundable credit. Both estimates also allow for
some taxpayers to spend less than the current $100 credit limit.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected:
Information Sources: LSA Income Tax Database; Internal Revenue Service, Statistics of Income Tax Stats
- Historic Table 2: State Data Tax Year 2018; Internal Revenue Service, Educator Expense Deduction.
Fiscal Analyst: Olivia Smith, 317-232-9869.
SB 16 2


Statutes affected:
1. Introduced Senate Bill (S): 6-3-3-14.5