Indiana DOR Updates Income Tax Credit Rules for 529 Plan Contributions

The Indiana Department of Revenue (DOR) has published updated guidance on the Indiana income tax credit for contributions to the Indiana 529 Savings Plan. The guidance outlines changes to the credit amount, eligibility rules, and recapture provisions that are effective for various tax years. Beginning in 2026, the K-12 tuition annual allowance for qualified withdrawals will increase to $20,000, while non-tuition K-12 expenses will be considered nonqualified withdrawals for credit recapture purposes. Additionally, post-secondary credentialing expenses will be treated as qualified withdrawals for credit recapture purposes, effective for distributions made on or after July 5, 2025. [Ind. Dep’t of Revenue, ...