Indiana Updates OBBBA Conformity, Offers Details on New Amnesty Program

Indiana Gov. Mike Braun has signed S.B. 243 and S.B. 212 to change the state’s conformity to several provisions of the Internal Revenue Code as amended by the One Big Beautiful Bill Act (OBBBA). Also, the Department of Revenue (DOR) has updated guidance related to an amnesty program that will be available for a limited time in 2026.

OBBBA Conformity

S.B. 243 and S.B. 212 update Indiana’s IRC conformity in overlapping ways, and both bills contain exceptions for some business and individual tax rules.  

S.B. 243

S.B. 243 aligns Indiana’s tax code with the IRC in effect as of January 1, 2026, bringing the state into general conformity with the OBBBA. Although the bill updated the conformity date after 2025, it also provides that absent specific exceptions, amendments made to the IRC before January 1, 2026 — including many OBBBA provisions — will also apply to tax years before 2026. Notable provisions from which the state has decoupled include:

• Section 163(j)(1), on business interest expense limitations;
• Section 168(k) and 168(n), on bonus depreciation; and
• Sections 174 and 174A, on research and experimentation (R&E) expenditures.

The updates mean Indiana will continue to decouple from the federal treatment of business interest expense, bonus depreciation, and R&E deductions. Indiana previously allowed interest expenses to be deducted in the current year, and because S.B. 243 did not change conformity, taxpayers should continue to adjust for the state’s decoupling from the federal limitation provisions under Section 163(j)(1).

In addition to continuing to decouple from Section 168(k), S.B. 243 also decouples Indiana from the new Section 168(n) bonus depreciation for qualified production property effective July 4, 2025. 

Before, Indiana was one of only a few states that allowed immediate deductions for both domestic and foreign R&E expenses. S.B. 243 continues the immediate expensing and specifies that any amounts deducted for federal purposes under section 70302(f)(2) of the OBBBA must be reflected as an addition in computing Indiana adjusted gross income.

The bill also modifies the Indiana code to match the updated reference to net controlled foreign corporation tested income (NCTI) (rather than global low-taxed intangible income, or GILTI).

S.B. 212

S.B. 212 updates the state’s definition of the IRC to mean the version in effect as of July 4, 2025, for only three specific provisions:

• Section 23, making the adoption tax credit partially refundable; 
• Section 168(e)(3)(B)(vi), eliminating the special five-year cost recovery period for investments in specific energy property constructed after December 31, 2024; and 
• Section 223(c)(2)(E), allowing a health plan to be treated as a high-deductible health plan without requiring a deductible for telehealth services.

Those changes, which affect individuals, pass-through entities, and corporations, are retroactive to January 1, 2025.

Amnesty Program

While the budget bill (H.B. 1001) passed in May 2025 established the tax amnesty program, S.B. 243 increased the covered tax periods by an additional year, so many tax liabilities owed for tax periods ended before January 1, 2024, will now be covered. To qualify, the taxes must be paid to the DOR or Motor Carrier Services, and the program gives taxpayers the chance to settle any qualifying liabilities without penalties, interest, or collection fees. The program will be open only between July 15 and September 9, 2026.

Taxpayers that participated in the state’s 2005 or 2015 amnesty programs are not eligible for this amnesty program.

A tax amnesty 2026 eligibility tool will be available on the DOR’s INTIME site beginning May 18, 2026. Eligible taxpayers wanting to participate must, between July 15 and September 9, 2026, arrange to pay liabilities in full before September 9, 2026, or set up a payment plan that must be paid in full by June 7, 2027. The DOR has said there will be no extensions, even for hardship, and that taxpayers that do not pay in full by the deadline will face penalties.

According to frequently asked questions on the DOR’s website, any eligible taxpayers that do not participate in the program will incur double penalties on amounts owed during the applicable period. 

Taxpayers in the appeals or protest stage before the 2026 amnesty program begins will be in a holding status. They will not face double penalties if they choose not to participate in the amnesty during the protest or appeal process but will be ineligible for the waiver of penalties, interest, and fees. Taxpayers that pay their liabilities during the amnesty period waive their right to appeal or protest those amounts.

Per BDO communication with the DOR, the voluntary disclosure agreement (VDA) program is still available to eligible non-filers, even during the amnesty period. Given that the VDA program provides a limited lookback period and includes all past periods (including tax periods ended in 2024 and later) but does not waive interest, non-filers eligible to pay taxes under either program should review the impact of each to make the most beneficial choice.