Add Indiana SB 243 OBBBA tax conformity (tips, overtime, car loan interest deductions) #7770
Description
Summary
Implement Indiana Senate Bill 243's conformity to federal OBBBA (One Big Beautiful Bill Act of 2025) tax provisions.
Provisions to Implement
| Provision | IN Code | Federal IRC | Tax Year |
|---|---|---|---|
| Qualified Tips Deduction | IC 6-3-2-31 | Section 224 | 2026 only |
| Qualified Overtime Deduction | IC 6-3-2-32 | Section 225 | 2026 only |
| Car Loan Interest Deduction | IC 6-3-2-33 | Section 163(h)(4) | 2026 only |
Key Details
- Effective Date: January 1, 2026 (retroactive)
- Duration: Tax year 2026 only (temporary)
- Mechanism: Indiana deductions from state AGI equal to federal deduction amounts
- Fiscal Impact: ~$109M-$152M total revenue loss
Regulatory Authority
- Bill: Indiana Senate Bill 243 (SEA 243)
- Session: 2026 Indiana General Assembly
- Status: Enrolled
- Source: https://iga.in.gov/pdf-documents/124/2026/senate/bills/SB0243/SB0243.05.ENRH.pdf
Implementation Notes
Indiana's tax starts from federal AGI. These federal OBBBA deductions are "below-the-line" at federal level but Indiana is conforming by creating state-level deductions that equal the federal amounts.
Each deduction has a proration formula if taxpayer has partial exclusions already applied.