Indiana would let some theft victims lower their taxable income

Eligible taxpayers could deduct qualifying theft losses from Indiana income. The theft must involve a retirement, investment, bank, or similar account owned directly by the person, or a sale of investments. The other party must induce the transaction and receive payment within 60 days. The theft must cause income to count toward federal adjusted income that would not have counted without it. For nonresidents, only losses from Indiana sources count if the related income would be included in Indiana income. This would apply to tax years beginning on or after January 1, 2024.

The Indiana Department of State Revenue would certify the allowable amount before a taxpayer could claim it. The deduction could not exceed the smaller of the eligible loss or the theft-related income included in Indiana income. The loss must meet a federal theft-loss rule as it stood in 2017 and must not have already reduced federal adjusted income. Applicants must provide requested information about the theft and may challenge the department's decision. Applications would be due by the last day to seek a refund for that tax year.

Taxpayers would account for insurance payments and other repayments when claiming a theft-loss deduction. This applies to people who claim the proposed theft-loss deduction. Only later repayments that would have reduced the original deduction must be added to Indiana income. A later repayment would count as Indiana income in the year the person receives it.