Indiana · 2026 session
SB 243 changesVarious tax matters.
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What changed
+164 / −354 words · LargeConfidence: high
This enrolled version of SB 243 strips out extensive provisions that were added during the legislative process, fundamentally narrowing the bill's scope. The most significant removals include a complete penny-phaseout framework that would have required state agencies and businesses to round cash transactions to five-cent increments starting in 2027, multiple temporary federal tax conformity provisions for 2026 (including deductions for tips, overtime compensation, and vehicle loan interest tied to federal legislation), aircraft property tax credit modifications, and detailed sales tax rounding rules for cash transactions. The bill also removes proposed updates to Indiana's Internal Revenue Code conformity date from January 1, 2023 to January 1, 2026. Only an emergency clause for immediate effectiveness upon passage was added, suggesting the final enrolled version retains primarily non-controversial provisions from earlier drafts while eliminating the more substantial policy changes that were introduced through committee amendments.
Change log
PREAMBLE >cont.
removedhigh confidenceSummary of bill purposes removed from preamble
The bill's descriptive summary and printing code instructions have been removed from the preamble. The removed text described the bill as making various changes to cigarette tax, petroleum severance tax, alcoholic beverage excise tax, trust fund tax liability, adoption tax credit, pass-through entity tax, tax amnesty, estimated tax penalties, and aircraft license excise tax. The procedural printing code explaining how amendments, additions, and conflict reconciliations would be displayed was also eliminated.
APPENDIX >cont.
removedhigh confidenceRemoval of procedural language and proposed IRC conformity date update
This section was removed from the bill. It contained procedural committee language and a House motion proposing to update Indiana's conformity to the federal Internal Revenue Code from the January 1, 2023 version to the January 1, 2026 version. The proposed amendment would have made this IRC conformity update retroactively effective to January 1, 2026.
APPENDIX
removedhigh confidenceRemoval of emergency declaration, committee report, and penny-phaseout provisions
This section was entirely removed from the bill. The removed text included an emergency declaration, a committee report with amendments, and substantive provisions creating a new penny-phaseout article (IC 5-36.5) that would have required state and local units to round cash payments (taxes, fines, fees) to the nearest five cents for amounts ending in certain digits, and to zero for amounts under five cents. The removed provisions would have taken effect January 1, 2027.
APPENDIX >cont.
removedhigh confidenceDefinition of 'gross retail income' for sales tax purposes removed
This section previously defined 'gross retail income' as the total consideration (cash, credit, property, services) received for sales, leases, or rentals of tangible personal property, with specific exclusions listed. The definition detailed what could not be deducted (seller's costs, materials, labor, taxes, transportation, service charges, delivery charges) and included special treatment for third-party price reductions when certain conditions were met. The entire definition has been removed from this location in the statute.
APPENDIX >cont.
removedhigh confidenceTechnical/conforming change
This section removes continuation text from an appendix that defines exclusions from 'gross retail income' for sales tax purposes. The removed text details various charges that do not count toward gross retail income (delivery charges, trade-ins, finance charges, discounts, taxes, installation, telecom fees, postage, food service charges) and special rules for fuel, kerosene, and cigarette sales. Without access to the full context of the bill's structure, this appears to be a formatting or organizational change rather than a substantive policy modification.
APPENDIX >cont.
removedhigh confidenceTechnical/conforming change
This section contains continuation text from a prior section defining gross retail income for consumable materials, vapor products, and closed system cartridges, plus a cross-reference to another amendment. The removal appears to be a formatting or organizational adjustment rather than a substantive change to the underlying tax provisions.
APPENDIX >cont.
removedhigh confidenceCash transaction tax rounding rules and tip income deduction provisions removed
This section deletion removes detailed rules governing how retail merchants must round sales tax in cash transactions, including provisions requiring rounding to the nearest five-cent increment and rounding amounts under five cents down to zero. The removal also eliminates two newly added income tax deduction provisions: one that would have allowed taxpayers to deduct qualified tips matching federal deductions under Section 224 of the Internal Revenue Code (added by the One Big Beautiful Bill Act, 2025), applicable only to the 2026 tax year, and another provision (Sec. 32) whose content is not shown but was also being added retroactively effective January 1, 2026.
APPENDIX >cont.
removedhigh confidenceDeleted provisions for overtime compensation deduction, vehicle loan interest deduction, aircraft exemptions, and aircraft property tax credits
This section removes multiple tax provisions. It eliminates a temporary (2026 tax year) deduction conforming to federal law for overtime compensation and qualified passenger vehicle loan interest. It also removes changes to aircraft exemptions for non-resident-based aircraft and modifications to property tax credits for aircraft owners entitled to certain deductions under IC 6-1.1-12-13, IC 6-1.1-12-14, and IC 6-1.1-51-10.
APPENDIX >cont.
removedhigh confidenceEntire appendix section removed, including aircraft tax credit provisions and business cash-rounding requirements
This section deletes multiple provisions previously added to the bill. The removed text includes detailed procedures for aircraft property tax credits (IC 6-1.1-51-10) and an entire new chapter (IC 23-15-13) that would have required business entities to round cash transactions to the nearest five-cent increment starting January 1, 2027. The rounding requirement would have applied to most business types but excluded retail transactions subject to sales tax.
APPENDIX >cont.
removedhigh confidenceEffective date transition rules for cash transaction tax changes repealed
The bill removes an entire section that established transition rules for implementing changes to retail sales tax treatment of cash transactions effective January 1, 2027. This section previously specified when retail transactions would be considered to have occurred before or after the effective date based on delivery timing and payment timing, and was itself set to expire January 1, 2030. The removal also eliminates the applicability provisions for IC 6-2.5-2-2, IC 5-36.5, and IC 23-15-13 related to cash transactions after December 31, 2026.
APPENDIX >cont.
removedhigh confidenceExtensive tax computation and rounding provisions deleted
This section removes detailed provisions governing how state and local taxes are computed and rounded. The deleted text established separate computational rules for transaction-based taxes collected as an agent versus withholding taxes, specified when rounding applies to individual versus aggregate tax amounts, and addressed how rounding works when multiple taxes appear on a single form versus separate forms. The removal eliminates the framework distinguishing between computing taxes on total transaction amounts before rounding versus computing them without rounding depending on the tax type.
APPENDIX >cont.
removedhigh confidenceTechnical amendments removing conforming language for federal tip and overtime deductions
This section removes various technical amendments that were previously made to the bill. The deletions eliminate references to conforming with Sections 224 and 225 of the Internal Revenue Code (related to the 'Beautiful Bill Act, 2025') and remove detailed calculation formulas for how qualified tips and qualified overtime compensation deductions would be apportioned when taxpayers have both included and excluded amounts in their adjusted gross income. The removed formulas would have specified how to calculate deductions when tips or overtime compensation are partially included in state versus federal adjusted gross income.
APPENDIX >cont.
removedhigh confidenceTechnical/conforming change
This appendix section is removed. It contained legislative drafting instructions (page and line edits, insertions, deletions, and section renumbering directives) that were part of the bill's formatting apparatus rather than substantive law.
APPENDIX >cont.
removedhigh confidenceEntire appendix continuation section removed (IRC conformity dates and rules)
This section is removed in its entirety. The BEFORE text contained provisions specifying how Indiana conforms to Internal Revenue Code regulations and federal statutes, with multiple references to conformity dates (January 1, 2023, and January 1, 2026). It also addressed amendments to the IRC affecting various types of income and taxable income definitions, plus special treatment of certain 2010 tax relief provisions. No replacement text is provided.
APPENDIX >cont.
removedhigh confidenceTechnical/conforming change
This section removes appendix material that appears to contain legislative amendment instructions and motion language rather than statutory text. The removed content includes references to IRC sections, effective date instructions, page deletion directions, and renumbering commands, which are procedural materials typically not retained in final codified law.
APPENDIX >cont.
removedhigh confidenceAmendments regarding sales tax rounding methods and transaction amount adjustments removed
This section removes proposed amendments that would have modified rounding rules for transactions. The removed amendments provided three options for rounding transaction amounts to five-cent increments, including downward rounding, upward rounding, or rounding to the nearest five cents using specific rules for different decimal values. The amendments also would have changed mandatory 'must' language to permissive 'may' language and expanded rounding options to allow both downward and upward rounding to zero or five cents.
SECTION 113
addedhigh confidenceEmergency declaration added for immediate effect upon passage
This section declares an emergency for the act, allowing it to take effect immediately upon passage rather than following the standard effective date. The emergency clause overrides normal timing provisions for when legislation becomes operative. This section includes signature lines for legislative leadership and the Governor.
PREAMBLE
modifiedhigh confidenceBill digest and legislative history replaced with standard enrolled act formatting
The preamble has been completely replaced as the bill moves from engrossed to enrolled status. The original version contained the detailed bill digest listing all citations affected, a synopsis of substantive provisions (including conformity with federal law, penny phaseout, gambling withholding, ABLE accounts, research expenditures, department procedures, tax warrants, RAR adjustments, and sales tax enforcement), effective dates, sponsors, and complete legislative history through both chambers. The new version contains only standard enrolled act formatting instructions and the formal enactment clause.
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