Tax Benefits and Credits for Immigrants in Indiana in 2025

Key Takeaways

• Indiana EITC remains 10% of the federal credit for 2025, fully refundable for eligible immigrants with valid SSNs.
• Federal Child Tax Credit is $2,000 per qualifying child; Indiana lacks a separate state child tax credit.
• Undocumented immigrants filing with ITINs cannot claim Indiana EITC or federal child tax credits in 2025.

As of July 10, 2025, important updates have been made to the tax benefits and credits available to immigrants living and working in Indiana. These changes affect The Indiana Earned Income Tax Credit (EITC), child-related tax credits, and several other state-level tax benefits. This update provides a clear summary of what has changed, who is affected, the effective dates, required actions for immigrant taxpayers, and the broader implications for those with pending or future applications.

Summary of What Changed

The main updates for 2025 focus on the Indiana Earned Income Tax Credit, which remains set at 10% of the federal EITC amount. There are no new increases or separate state-level child tax credits for Indiana this year. However, several other credits, such as the ABLE 529A Account Credit, Adoption Credit, and Attainable Homeownership Tax Credit, continue to be available. The eligibility criteria for these credits, especially for immigrants, have been clarified and are closely tied to federal requirements, particularly regarding Social Security Numbers (SSNs) and Individual Taxpayer Identification Numbers (ITINs).

Who Is Affected

• Immigrants with Legal Status: Green card holders, work visa holders, and other immigrants with valid SSNs who file state tax returns in Indiana.
• Immigrant Families with Children: Those with children who have valid SSNs may qualify for both federal and state-level tax benefits.
• Undocumented Immigrants and ITIN Filers: Generally excluded from the Indiana Earned Income Tax Credit and federal child tax credits.
• Employers and Donors: Those supporting immigrant employees or contributing to programs like Habitat for Humanity or InvestABLE Indiana.

Effective Dates

• All updates and eligibility rules described here apply to the 2025 tax year, with returns filed in early 2026.
• The most recent legislative changes, including the recoupling of Indiana’s EITC to the federal credit at a 10% rate, are in effect as of July 10, 2025.

Required Actions for Immigrant Taxpayers

• File the Correct Forms: Use Form IT-40 (for residents) or IT-40PNR (for part-year/nonresidents) to file Indiana state taxes. To claim the Indiana Earned Income Tax Credit, you must also file Schedule IN-EIC.
• Meet Eligibility Requirements: Ensure you have claimed the federal EITC and have a valid SSN. Keep all supporting documents, such as proof of income, federal EITC claim, and records of contributions for other credits.
• Monitor Legislative Changes: Stay updated on any new federal or state laws that could affect eligibility for tax credits in future years.

Detailed Overview of Indiana Earned Income Tax Credit (EITC) in 2025

What Is the Indiana EITC?

The Indiana Earned Income Tax Credit is a state-level tax benefit designed to help low- and moderate-income workers. In 2025, the credit is set at 10% of the federal EITC amount claimed by the taxpayer. This credit is fully refundable, which means it can reduce your state tax bill below zero, resulting in a refund if the credit is larger than the taxes you owe.

Eligibility Requirements

• Federal EITC Claim: You must have claimed the federal EITC on your federal tax return.
• Income Limits: Your Indiana adjusted gross income must be below $66,819 to qualify.
• Legal Status and SSN: Only immigrants with legal status and valid SSNs are eligible. This includes green card holders and work visa holders.
• Schedule IN-EIC: You must file Schedule IN-EIC with your Indiana tax return to claim the credit. You can find the official Schedule IN-EIC form and instructions on the Indiana Department of Revenue website.

Recent Legislative Context

• In 2023, Indiana lawmakers decided to keep the state EITC at 10% of the federal credit, rejecting a proposed increase to 12%.
• The credit was last increased from 9% to 10% in 2021.
• The EITC is meant to support working families, including immigrants who meet the federal EITC requirements.

Practical Implications for Immigrants

• Eligible Immigrants: If you have a valid SSN and qualify for the federal EITC, you can also claim the Indiana EITC.
• Ineligible Immigrants: If you file taxes using an ITIN (often used by undocumented immigrants), you are not eligible for the federal or Indiana EITC.
• Filing Tip: Double-check that you include Schedule IN-EIC with your state return to avoid missing out on the credit.

Child Tax Credit and Related Child Benefits in Indiana

Federal Child Tax Credit (CTC) in 2025

• The federal child tax credit for 2025 is $2,000 per eligible child.
• There are proposals to increase this to $2,500, but these would exclude families who file with ITINs or lack SSNs.
• Only children with valid SSNs qualify for the federal CTC, which affects many immigrant families.

Indiana State Child Tax Credit

• Indiana does not have its own separate child tax credit.
• However, the Indiana Earned Income Tax Credit increases with the number of qualifying children, so families with more children may receive a larger credit.

Impact on Immigrant Families

• With SSNs: Families with children who have valid SSNs can claim both the federal and Indiana EITC.
• With ITINs: Families who file with ITINs are excluded from both the federal child tax credit and the Indiana EITC, as the state credit is linked to federal eligibility.

Other Indiana State-Level Tax Benefits for Immigrants

ABLE 529A Account Credit

• This is a non-refundable credit equal to 20% of contributions to Indiana’s ABLE 529A savings plan, up to $500 per year.
• The ABLE plan helps people with disabilities save money for qualified expenses.
• To claim this credit, file Schedule IN-ABLE with your state tax return.

Adoption Credit

• Indiana offers a credit of up to 20% of the federal adoption credit, capped at $2,000 per child.
• You must have claimed the federal adoption credit to qualify for the state credit.
• Use the Adoption Credit Worksheet in the IT-40 booklet to claim this benefit.

Attainable Homeownership Tax Credit

• This credit is 50% of contributions to Habitat for Humanity of Indiana, up to $10,000 per year.
• It is non-refundable and supports affordable housing.
• Immigrants who donate to Habitat for Humanity or become homeowners through the program may benefit.

Physician Practice Ownership Credit

• Available to primary care physicians who own a practice established after December 31, 2023.
• The credit is limited to $20,000 per year for up to three years.
• While not directly aimed at immigrants, foreign-trained doctors who meet the criteria may qualify.

Employer Child Care Expenditure Credit

• This credit is for employers who invest in child care for their employees.
• While not claimed by individuals, immigrant employees may benefit if their employer participates.

Filing Procedures and Documentation

To claim any of these credits, immigrants must follow specific filing steps:

• Indiana State Tax Return: Use Form IT-40 for residents or IT-40PNR for part-year/nonresidents.
• Indiana Earned Income Tax Credit: Attach Schedule IN-EIC to your return.
• ABLE Account Credit: File Schedule IN-ABLE if you contributed to an ABLE account.
• Adoption Credit: Complete the Adoption Credit Worksheet in the IT-40 booklet.
• Homeownership Credit: Keep records of contributions to Habitat for Humanity of Indiana.

Documentation Tips:

• Keep copies of your federal EITC claim, proof of income, and any documents showing contributions to ABLE accounts or Habitat for Humanity.
• If you are claiming the adoption credit, keep all paperwork related to the adoption and the federal credit.

Key Stakeholders and Official Resources

• Indiana Department of Revenue (DOR): The main agency for state tax credits, forms, and instructions. Visit the Indiana DOR Tax Credits Page for up-to-date information.
• InvestABLE Indiana: For information on ABLE accounts and related credits.
• Habitat for Humanity of Indiana: For details on the homeownership credit and how to contribute.

Legislative Background

• Indiana’s EITC was created in 1999 and has been increased several times, most recently to 10% in 2021.
• The state’s flat income tax rate is 3% for all residents and nonresidents earning Indiana income in 2025.
• During the COVID-19 pandemic, federal tax credits were temporarily expanded, but these changes have ended, affecting many immigrant families.

Future Outlook and Pending Developments

• Federal proposals in 2025 may further limit immigrant access to the child tax credit and EITC, which could impact Indiana taxpayers who rely on these benefits.
• Indiana has not announced plans to increase the state EITC above 10% or create a separate child tax credit as of mid-2025.
• Immigrants and tax professionals should watch for new laws or changes that could affect eligibility in future years.

Summary Table: Key Tax Benefits for Immigrants in Indiana (2025)

Implications for Pending Applications and Next Steps

• For Immigrants Planning to File: If you are eligible for the Indiana Earned Income Tax Credit, make sure you have claimed the federal EITC and have a valid SSN. Gather all necessary documents before filing your state return.
• For Those with Pending Applications: If you are waiting for a decision on your immigration status or SSN, you may not be able to claim certain credits until your status is resolved. Keep records and consult with a tax professional if your situation changes before the filing deadline.
• For ITIN Filers: Unfortunately, you are not eligible for the Indiana EITC or federal child tax credit in 2025. However, you may still qualify for other credits, such as the ABLE account or homeownership credits, if you meet the requirements.

Practical Guidance and Takeaways

• Check Eligibility Early: Review your immigration status and SSN to determine which credits you can claim.
• Use Official Forms: Always use the latest forms from the Indiana Department of Revenue website to avoid mistakes.
• Keep Good Records: Save all documents related to your federal and state tax credits, contributions, and expenses.
• Stay Informed: Laws and eligibility rules can change. Visit the Indiana Department of Revenue’s tax credits page regularly for updates.
• Seek Help if Needed: If you are unsure about your eligibility or how to file, consider reaching out to a tax professional or a local immigrant support organization.

Conclusion

The 2025 tax year brings continued access to the Indiana Earned Income Tax Credit and other state-level tax benefits for immigrants with legal status and valid SSNs. While there are no new increases or separate state child tax credits, the existing credits can provide meaningful support for working immigrant families. However, those without SSNs, including ITIN filers, remain excluded from the most valuable credits due to federal restrictions. As reported by VisaVerge.com, staying updated on legislative changes and using the correct forms are key steps for immigrants to maximize their tax benefits in Indiana. By following the guidance above and keeping an eye on future developments, immigrant taxpayers can make the most of the credits available to them in 2025 and beyond.

Learn Today

Indiana Earned Income Tax Credit (EITC) → A refundable state tax credit equal to 10% of the federal EITC for eligible Indiana taxpayers.
Social Security Number (SSN) → A nine-digit number issued to legal residents for tax and social benefits identification.
Individual Taxpayer Identification Number (ITIN) → A tax processing number for undocumented immigrants not eligible for SSNs, limiting credit eligibility.
ABLE 529A Account Credit → A non-refundable Indiana credit of 20% on ABLE 529A plan contributions for people with disabilities.
Schedule IN-EIC → An Indiana tax form required to claim the Indiana Earned Income Tax Credit.

This Article in a Nutshell

Indiana’s 2025 tax updates maintain the EITC at 10% of the federal amount, benefiting immigrants with legal status and SSNs. Child tax credits remain federal only. ITIN filers are excluded from key credits. Proper filing and documentation are crucial for maximizing these tax benefits in Indiana.
— By VisaVerge.com