Indiana offers several deductions that may reduce your Indiana taxable income. Review the deductions below to determine whether you qualify.
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Indiana Return → Subtractions from Income → Other Deductions
Enter the applicable Code and Deduction Amount.
Civil Service Annuity Deduction (601)
What It Is
Deduction for certain taxable federal civil service retirement benefits.
Who Can Claim It?
- Taxpayers age 62 or older receiving taxable civil service annuity income.
- Surviving spouses receiving qualifying civil service annuity income.
Deduction Amount
- Up to $16,000.
- Limited to the lesser of:
- Taxable civil service annuity income included in federal income, or
- $16,000.
- Reduced by Social Security and Tier 1 Railroad Retirement benefits received.
Example
Taxable annuity: $6,000
Social Security benefits: $1,200
$6,000 − $1,200 = $4,800 deduction
Enterprise Zone Employee Deduction (603)
What It Is
Deduction for qualifying employees who live and work in an Indiana Enterprise Zone.
Who Can Claim It?
Taxpayers who:
- Lived in an Indiana Enterprise Zone,
- Worked in the same Enterprise Zone, and
- Worked for a qualified employer.
Deduction Amount
The lesser of:
- 50% of qualifying earned income, or
- $7,500.
Example
Qualifying income: $12,000
50% × $12,000 = $6,000 deduction
Human Services Deduction (605)
What It Is
Deduction for certain Medicaid recipients living in qualifying care facilities.
Who Can Claim It?
Medicaid recipients residing in:
- Hospitals,
- Skilled nursing facilities,
- Intermediate care facilities,
- Licensed county homes,
- Licensed residential facilities, or
- Qualified Christian Science facilities.
Deduction Amount
Varies based on individual circumstances.
Example
The deduction amount depends on your eligibility and living arrangement. See instructions for calculation instructions.
Indiana Partnership Long-Term Care Policy Premiums Deduction (608)
What It Is
Deduction for premiums paid on a qualifying Indiana Partnership Long-Term Care Insurance policy.
Who Can Claim It?
Taxpayers who paid premiums for a qualifying Indiana Partnership Long-Term Care policy.
Deduction Amount
Amount of qualifying premiums paid during the year.
Recovery of Itemized Deductions (616)
What It Is
Deducts recovered itemized deductions that were included in federal income.
Who Can Claim It?
Taxpayers who reported recovered itemized deductions as income on their federal return.
Deduction Amount
The amount of recovered itemized deductions included in federal income.
Do not use this code for state income tax refunds reported on your federal return.
National Guard and Reserve Component Members Deduction (621)
What It Is
Deduction for qualifying military income earned during certain involuntary military service.
Who Can Claim It?
Members of:
- National Guard,
- Army Reserve,
- Navy Reserve,
- Air Force Reserve,
- Coast Guard Reserve,
- Marine Corps Reserve, or
- Merchant Marine Reserve,
who received qualifying income while serving under involuntary orders.
Deduction Amount
Qualifying military income earned during eligible periods of service.
Qualified Patent Income Exemption (622)
What It Is
Exempts a portion of income earned from qualifying utility or plant patents.
Who Can Claim It?
Indiana taxpayers receiving qualifying patent-derived income.
Deduction Amount
Exemption percentages:
- Years 1-5: 50%
- Year 6: 40%
- Year 7: 30%
- Year 8: 20%
- Years 9-10: 10%
Maximum annual exemption: $5 million
Example
Patent income: $100,000
Year 3 exemption rate: 50%
Deduction: $50,000
Railroad Unemployment and Sickness Benefits Deduction (624)
What It Is
Excludes certain Railroad Retirement Board (RRB) unemployment and sickness benefits from Indiana income.
Who Can Claim It?
Taxpayers who:
- Received qualifying RRB unemployment or sickness benefits, and
- Included the benefits in federal income.
Deduction Amount
Amount of qualifying benefits included in federal income.
Do not include supplemental sick pay benefits.
Olympic/Paralympic Medal Winners Deduction (627)
What It Is
Excludes certain Olympic and Paralympic medal income from Indiana taxation.
Who Can Claim It?
Taxpayers who won:
- Gold,
- Silver, or
- Bronze medals
in the Olympic or Paralympic Games.
Deduction Amount
The total of:
- The value of qualifying medals, plus
- Related prize money received from the U.S. Olympic & Paralympic Committee.
Example
Medal value: $600
Prize money: $37,500
Deduction: $38,100
Indiana Lottery Winnings Annuity Deduction (629)
What It Is
Deduction for certain Hoosier Lottery annuity payments.
Who Can Claim It?
Taxpayers receiving annuity payments from a Hoosier Lottery drawing held before July 1, 2002.
Deduction Amount
Amount of qualifying annuity payment included in income.
Not eligible:
- Casino winnings
- Sports betting winnings
- Other state lotteries
- Hoosier Lottery drawings after June 30, 2002
Repayment of Previously Taxed Income Deduction (630)
What It Is
Allows a deduction when income previously taxed by Indiana is later repaid.
Who Can Claim It?
Taxpayers who:
- Previously reported the income to Indiana, and
- Repaid the income during the current tax year.
Deduction Amount
Amount repaid during the year.
Repayments of Social Security benefits do not qualify.
Infrastructure Fund Gift Deduction (631)
What It Is
Deduction for contributions made to a qualifying Indiana infrastructure fund.
Who Can Claim It?
Taxpayers who made qualifying contributions directly or through a pass-through entity.
Deduction Amount
Amount of qualifying contribution.
Government or Civic Group Capital Contribution Deduction (633)
What It Is
Deduction for qualifying government or civic group capital contribution amounts reported to you.
Who Can Claim It?
Taxpayers receiving qualifying amounts through:
- An S corporation,
- An estate, or
- A trust.
Deduction Amount
The qualifying amount reported to you.
COVID-Related Employee Retention Credit Disallowed Expenses Deduction (634)
What It Is
Allows a deduction for expenses that were disallowed federally because of the COVID-related Employee Retention Credit (ERC).
Who Can Claim It?
Taxpayers whose federal deductions were reduced due to a COVID-related ERC.
Deduction Amount
Amount of qualifying expenses disallowed federally.
Do not use this code for non-COVID employee retention credits.
Indiana Education Scholarship Account Deduction (635)
What It Is
Excludes qualifying Indiana Education Scholarship Account grant funds used for educational expenses.
Who Can Claim It?
Taxpayers who:
- Received an Indiana Education Scholarship Account grant,
- Included the grant in federal income, and
- Used the funds for qualified educational expenses.
Deduction Amount
Amount included in federal income and used for qualified expenses.
Indiana-Only Tax-Exempt Bonds Deduction (636)
What It Is
Deduction for qualifying interest income earned from Indiana governmental bonds.
Who Can Claim It?
Taxpayers who received qualifying Indiana bond interest included in federal income.
Deduction Amount
Qualifying interest income included in federal income.
Not eligible:
- Interest from bonds issued by other states
- Capital gains from bond sales
Employer Student Loan Payment Interest Deduction (637)
What It Is
Allows a deduction for certain employer-paid student loan interest added back to Indiana income.
Who Can Claim It?
Taxpayers who were required to add back employer-paid student loan payments using Code 148.
Deduction Amount
The amount of qualifying interest that would otherwise be deductible.
Maximum deduction: $2,500
Indiana Enrichment Scholarship Account Deduction (638)
What It Is
Excludes qualifying Indiana Enrichment Scholarship Account grant funds used for approved enrichment activities.
Who Can Claim It?
Taxpayers who:
- Received an Indiana Enrichment Scholarship Account grant,
- Included the grant in federal income, and
- Used the funds for qualified enrichment expenses.
Deduction Amount
Amount included in federal income and used for qualified expenses.
Small Employer Insurance Premium Deduction (639)
What It Is
Allows a deduction for health insurance premiums disallowed because of the federal Small Employer Health Insurance Credit.
Who Can Claim It?
Taxpayers who claimed the federal Small Employer Health Insurance Credit.
Deduction Amount
Amount of qualifying premiums disallowed federally.
Specified Research or Experimental Expenditures Deduction (641)
What It Is
Allows certain research and development expenses to be deducted for Indiana purposes.
Who Can Claim It?
Taxpayers with qualifying research or experimental expenses subject to IRC Section 174.
Deduction Amount
Amount of qualifying expenditures allowed under Indiana law.
Career Scholarship Account Deduction (642)
What It Is
Excludes qualifying Career Scholarship Account distributions used for approved expenses.
Who Can Claim It?
Taxpayers who:
- Received a Career Scholarship Account distribution,
- Included the distribution in federal income, and
- Used it for qualified expenses.
Deduction Amount
Amount included in federal income and used for qualified expenses.
Health Care Sharing Ministry Deduction (643)
What It Is
Deduction for membership fees paid to a qualifying Health Care Sharing Ministry.
Who Can Claim It?
Indiana residents who:
- Are members of a qualifying Health Care Sharing Ministry, and
- Paid qualifying membership fees during the year.
Deduction Amount
Total qualifying membership fees paid during the year.
Keep in Mind
Only claim deductions for which you meet all eligibility requirements. Keep records supporting your deduction in case the Indiana Department of Revenue requests verification.