If you're filing an Indiana individual income tax return, several tax law changes and form updates may affect your 2026 return. Indiana has updated its conformity date with the Internal Revenue Code (IRC), added new deductions, introduced new reporting requirements, and expanded tax benefits in several areas.
Indiana Conformity Update
Line 1 of Form IT-40 assumes conformity with the Internal Revenue Code of 1986, as amended and in effect on January 1, 2026. If the 2027 Indiana General Assembly does not adopt future federal tax law changes, you may need to amend your Indiana return later to account for differences between state and federal law. You can check the DOR’s homepage at www.in.gov/dor for updates.
What's New for Indiana Add-Backs?
Indiana added a new state adjustment and eliminated another beginning with tax year 2026.
- Qualified Production Property Add-Back (157) – New Taxpayers who claim the federal 100% depreciation allowance for qualified production property may need to add that amount back for Indiana purposes.
- Student Loan Discharge Add-Back (150) – Removed Starting with tax year 2026, Indiana follows the federal treatment of qualifying student loan discharges. This add-back is no longer required.
What's New for Indiana Deductions?
New deductions
- Auto Loan Interest Deduction (648) Available for qualified passenger vehicle loan interest claimed for federal purposes.
- Overtime Deduction (647) Available for qualified overtime compensation deducted on the federal return.
- Tips Deduction (649) Available for qualified tip income deducted on the federal return.
Repealed deduction
- Indiana Enrichment Scholarship Deduction (638) This deduction has been repealed and is no longer available.
Other Changes
-
Schedule IN-529 Updates
Two new columns have been added to report the year a contribution was made and the tax year for which the contribution is claimed. In addition, contributions for higher education and K-12 education are now reported in the same column.
Additional Information
Indiana IT-40 Instructions