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Read. Follow. Verify.Indiana House Bill 1425 Creates Tax Credits for Donations to Qualified Family and Social Service Nonprofits
Last action · January 8, 2026: First reading: referred to Committee on Ways and MeansSponsors: Hunter Smith and 2 others
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What This Bill Proposed
Indiana House Bill 1425 establishes a state tax credit for taxpayers who make designated monetary contributions to qualified nonprofit organizations providing family support, case management for at-risk families, or parenting programs. The bill caps individual credits at $1 million per taxable year and limits total statewide awards to $5 million per state , effective for taxable years beginning after December 31, 2026.
Taxpayers who donate to eligible social service nonprofits can offset up to 50% of their , while organizations must submit annual audits, pass criminal background checks for workers, and spend the majority of funds on Indiana residents.
Who It Would Have Affected
Groups the bill's text would have affected, as described in the record. Being affected is not a position for or against it.
Taxpayers
Taxpayers making designated contributions to eligible nonprofits can claim a tax credit against their state tax liability.
Qualified nonprofit organizations
Nonprofits must undergo annual certification, submit financial audits and background checks, and comply with administrative spending caps to participate.
At risk families and parents
Receive expanded services and resources funded by designated contributions directed through participating nonprofits.
Key Facts
- Establishes the social service provider tax credit for taxable years beginning after December 31, 2026.
- Allows a credit equal to the lesser of total designated contributions or 50% of the taxpayer's state tax liability.
- Caps individual taxpayer credits at $1,000,000 per taxable year and total statewide credits at $5,000,000 per state fiscal year on a first-come, first-served basis.
- Limits qualifying nonprofits to those exempt under Section 501(c)(3) that have provided specific family, fatherhood, or motherhood support services in Indiana for at least 10 years and do not provide abortion services.
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- Limits qualified organizations to spending no more than 5% of designated contribution totals on administrative expenses.
- Requires qualified organizations to conduct local, state, and national criminal background checks for individuals working directly with children.
- Requires qualified organizations to submit an annual financial audit and IRS Form 990 to the department within 180 days after the end of their fiscal year.
- Allows unused tax credits to be carried forward to succeeding taxable years, but prohibits carrybacks or refunds.
- Provides that the chapter expires on January 1, 2036.
- Prohibits qualified organizations from providing abortion services either directly or indirectly or offering information related to such services.
Frequently Asked Questions
What organizations qualify to receive designated contributions for this tax credit?
What is the maximum tax credit a taxpayer can claim in a year?
Can unused tax credits be refunded to the taxpayer?
What else do you want to know?
News Coverage
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Votes, people, money & the original sourceWhere This Stands
This bill did not become law - Died at adjournment · in House committee.
Procedural history
3 actions- Jan 8, 2026HouseIntroducedFirst reading: referred to Committee on Ways and Means
- Jan 8, 2026HouseCoauthored by Representatives Heaton, DeVon
- Jan 8, 2026HouseAuthored by Representative Smith H
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
View official text →Lobbying Activity
No state lobbying filings in our records match this bill. Federal lobbying reports (LDA) cover Congress, so they are not listed on state bills.
Full breakdown
Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Sponsors
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Introduction of Performance and Audit Oversight for Donated Funds
The bill couples tax incentives with strict accountability measures, requiring annual audits, background checks, and continuous quality improvement processes for participating organizations.
Connected Entities
Sources
iga.in.gov
Analysis Score
0–100- Significance20Lowered because this bill did not pass (its text scored 65)
- Controversy50Intensity of disagreement among stakeholders
- Entertainment5Compellingness for a non-policy-wonk reader
- Buzz30Current news / social attention level
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