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 7351 NOTE PREPARED: Feb 22, 2021
BILL NUMBER: SB 342 BILL AMENDED: Feb 16, 2021
SUBJECT: State Tax Credit for Public School Foundation Contributions.
FIRST AUTHOR: Sen. Buchanan BILL STATUS: As Passed Senate
FIRST SPONSOR: Rep. Manning
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: The bill provides a 25% state tax credit for contributions made to a public school
foundation for taxable years beginning after December 31, 2021, and before January 1, 2024. It provides that
the amount allowable as a credit in a taxable year may not exceed: (1) $1,000 in the case of an individual
filing a single return or a corporation; or (2) $2,000 in the case of a married couple filing a joint return. It
provides that the maximum amount of credits that may be awarded in a state fiscal year to $5 M.
Effective Date: July 1, 2021.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise tax forms, instructions, and computer programs to reflect the changes made by the bill.
The DOR's current level of resources should be sufficient to implement these changes.
Explanation of State Revenues: Summary- The bill establishes a tax credit for contributions made by a
taxpayer to nonprofit public school foundations. The tax credit is equal to 25% of the contribution, up to
$1,000 for single tax filers and corporations, and up to $2,000 for taxpayers filing jointly. Excess credit may
be carried forward to succeeding taxable years. The tax credit is nonrefundable and unused credits may not
be carried back. The tax credit may be applied to Individual Adjusted Gross Income (AGI) Tax, Corporate
AGI Tax, Insurance Premiums Tax, or Financial Institutions Tax.
The tax credit is effective beginning in tax year 2022, and the provision may decrease revenue deposited into
the General Fund beginning in FY 2023. The bill caps the total amount of credits that may be awarded in a
state fiscal year, so while the revenue impact is currently indeterminable and will depend on the amount of
contributions made, the annual state revenue loss cannot exceed $5 M.
SB 342 1
Additional Information - Public School Foundations: Indiana public school foundations are nonprofit
501(c)(3) corporations established to provide financial support to public school corporations. The
foundations are established to hold donation proceeds for the purpose of funding scholarships, teacher
education, capital programs, and special programs. Donations to public school foundations are from
individuals, businesses, corporate sponsorships, other foundation endowments, and special event revenues.
Contributions from individuals and businesses comprise a substantial portion of the revenue.
According to a study submitted to Ball State University, there were 72 known public school foundations in
2012. The study estimated the revenue received by 49 of those foundations to be about $10 M. The amount
of annual contributions currently made to public school foundations is unknown at this time. A research
partnership between Indiana University and Giving USA found that contributions to education organizations
rose by more than 7% between 2012 and 2013.
Explanation of Local Expenditures:
Explanation of Local Revenues: To the extent that the tax credit results in increasing the amount of
donations to public school foundations, it could increase the total revenues to school corporations in Indiana.
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: School corporations.
Information Sources: Effectiveness of Indiana Public Education Foundations,
http://cardinalscholar.bsu.edu/bitstream/handle/123456789/196973/CruserA_2012-1_BODY.pdf;sequenc
e=1; Giving USA 2014 Report, https://www.schoolfoundations.org/giving-usa-2014-report.
Fiscal Analyst: Olivia Smith, 317-232-9869.
SB 342 2