Legislation Has Millions In New Or Expanded Tax Credits, Exemptions And Medicaid Aid

By Whitney Downard

An unnumbered House bill included in a packet for the chambers’s Ways and Means Committee has millions for new and expanded adoption and child credits; additional Medicaid help and a repeal of the state sales tax on diapers.

The bill provides a rundown of priorities for House Republicans in the special session, slated to start Monday. It isn’t listed on the General Assembly’s website because House members can’t formally introduce bills yet but it will be filed as House Bill 1001.

The packet lists Rep. Sharon Negele, R-Attica, as the author and retroactively takes effect on Jan. 1, 2022.

On inflation relief, the bill conforms with Gov. Eric Holcomb’s push to return $1 billion of the state’s reserves to Hoosiers via an automatic taxpayer refund of $225 to each eligible taxpayer. The bill expands the eligibility pool to individuals who don’t file tax returns, such as those on disability or social security, by requiring them to file affidavits with the Indiana Department of Revenue.

After the agency verifies the affidavit, an estimated 300,000 to 800,000 Hoosiers on disability and social security will also qualify for the refund, increasing the $1.05 billion expenditure to $1.15 billion.

On Wednesday, Senate Republicans offered their own version of inflation relief that caps certain taxes and repeals utility taxes temporarily but reserves the bulk of the $1 billion to pad state budgets for capital improvement projects and pension debt.

Appropriations for social services

The proposed House bill includes $58.5 million for various programs to support families and children, including $30 million to the Family and Social Services Administration for enhanced Medicaid and Healthy Indiana Plan services.

That includes money to cover donated breast milk for Medicaid-covered newborns and other pregnancy services such as noninvasive prenatal screening as well as labor and delivery costs.

Waiving the tax on baby diapers, as outlined in the bill, would cost an estimated $6.2 million to $8.3 million annually and could possibly be in effect as early as September.

Other appropriations include $10 million to expand the Nurse-Family Partnership program for first-time parents, which currently serves 39 counties and aims to increase child well-being.

Safety PIN — or Protecting Indiana’s Newborns — works to decrease the state’s infant mortality rate, which recently improved in the state after being one of the worst in the nation. The program will receive $5.5 million in the proposal while another grant for $1 million will purchase newborn safety devices.

Finally, the Child Care and Development Fund voucher program will receive a $10 million boost, funding childcare options for poor families.

Provisions for adoptions

For parents looking to adopt in Indiana, the bill would increase the exemption amount subtracted from an individual’s adjusted gross income as well as the tax credit, and creates an additional exemption.

Combined with an additional exemption for dependent children, the bill’s fiscal statement estimates Indiana would lose between $22.9 million and $24 million in tax revenue in fiscal year 2024.

For dependent children, the exemption will increase from $1,500 to $1,600, or $100 for an estimated 1,750,000 dependent children, costing the state approximately $5.3 million annually.

First-time exemptions for newly claimed children (newborns or adopted children) doubles from $1,600 to $3,200, reducing General Fund revenues by an estimated $4.3 million yearly for 84,000 children. In 2019, Indiana had 80,851 births and the state averaged 3,044 adoptions annually between 2017 and 2021, the fiscal impact statement said.

On top of that exemption, adoptive parents will also receive a new $3,000 exemption.

The General Fund will receive another $800,000-$1 million reduction if the state increases its adoption tax credit to $2,500 – a tax credit approximately 1,535 tax filers claimed between 2017 and 2019.

“In anticipation of a bill protecting life passing during the special session, House Republicans will also pursue making significant investments to support moms, babies and families,” said House Speaker Todd Huston. “Our proposal includes more than $20 million in tax exemptions and appropriates more than $58 million to boost proven programs, including helping more mothers in crisis, increasing availability and affordability of child care, supporting community-based programs focused on healthy babies and families, and encouraging more people to consider adoption.”

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