SB 161

                                             *ES0161.1*
                                                           February 12, 2026
              ENGROSSED
           SENATE BILL No. 161
                 _____
  DIGEST OF SB 161 (Updated February 11, 2026 12:53 pm - DI 110)
Citations Affected: IC 6-3.1; IC 20-53; IC 22-4.1.
Synopsis: Education matters. Requires the Indiana department of
education to elect to participate as a covered state in the federal tax
credit scholarship program for elementary and secondary education
under Section 25F of the Internal Revenue Code (enacted in Public
Law 119-21, commonly known as the One Big Beautiful Bill Act of
2025). Makes conforming changes to the school scholarship tax credit
in current law. Requires the governor and the department of workforce
development, in consultation with the commission for higher
education, to: (1) establish a process to identify eligible workforce
training programs; (2) establish a process for institutions and programs
to apply for recognition as an eligible workforce training program; (3)
coordinate certain workforce training matters; and (4) require eligible
workforce training programs to provide certain datasets to the
department. Provides that the department of workforce development
must maintain alignment with federal rules governing workforce Pell
grants.
Effective: Upon passage; July 1, 2026; January 1, 2027.
            Raatz, Rogers, Garten
       (HOUSE SPONSORS — BEHNING, MCGUIRE, DAVIS)
   January 5, 2026, read first time and referred to Committee on Education and Career
Development.
   January 15, 2026, amended, reported favorably — Do Pass; reassigned to Committee on
Tax and Fiscal Policy.
   January 20, 2026, reported favorably — Do Pass.
   January 22, 2026, read second time, amended, ordered engrossed.
   January 23, 2026, engrossed.
   January 26, 2026, read third time, passed. Yeas 42, nays 2.
                                 HOUSE ACTION
   January 28, 2026, read first time and referred to Committee on Education.
   February 12, 2026, amended, reported — Do Pass. Referred to Committee on Ways and
Means pursuant to Rule 126.3.
ES 161—LS 6719/DI 143
                                                                           February 12, 2026
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
 Constitution) is being amended, the text of the existing provision will appear in this style type,
 additions will appear in this style type, and deletions will appear in this style type.
   Additions: Whenever a new statutory provision is being enacted (or a new constitutional
 provision adopted), the text of the new provision will appear in this style type. Also, the
 word NEW will appear in that style type in the introductory clause of each SECTION that adds
 a new provision to the Indiana Code or the Indiana Constitution.
  Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
 between statutes enacted by the 2025 Regular Session of the General Assembly.
                      ENGROSSED
                   SENATE BILL No. 161
    A BILL FOR AN ACT to amend the Indiana Code concerning
 education.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 6-3.1-30.5-3, AS AMENDED BY P.L.92-2011,
2 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2027]: Sec. 3. As used in this chapter, "scholarship
4 granting organization" refers to:
5      (1) an organization that:
6(1) (A) is exempt from federal income taxation under Section
7501(c)(3) of the Internal Revenue Code; and
8(2) (B) conducts a school scholarship program without limiting
9the availability of scholarships to students of only one (1)
10participating school (as defined in IC 20-51-1-6); or
11      (2) an organization that:
12(A) meets the requirements described in subdivision (1);
13and
14(B) is included on the list submitted to the Secretary of the
15Treasury of the United States for the taxable year under
16IC 20-53-1.
17    SECTION 2. IC 20-53 IS ADDED TO THE INDIANA CODE AS
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                                   2
1 A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE UPON
2 PASSAGE]:
3    ARTICLE 53. STATE PARTICIPATION IN FEDERAL TAX
4 CREDIT SCHOLARSHIP PROGRAM
5    Chapter 1. State List of Scholarship Granting Organizations
6    Sec. 1. The department is authorized to and shall as early as
7 practicable elect to participate as a covered state in the federal tax
8 credit scholarship program for elementary and secondary
9 education under Section 25F of the Internal Revenue Code.
10    Sec. 2. (a) The department shall identify qualified scholarship
11 granting organizations located in Indiana that meet the
12 requirements set forth in section 4 of this chapter.
13    (b) The department shall accept applications throughout the
14 year from scholarship granting organizations wishing to be
15 identified as a qualified scholarship granting organization under
16 subsection (a).
17    Sec. 3. (a) Not later than the first day of January each year, the
18 department shall submit to the Secretary of the Treasury of the
19 United States the list of qualified scholarship granting
20 organizations identified under section 2(a) of this chapter that are
21 located in Indiana and publish the list submitted under this
22 subsection on its website.
23    (b) The department shall on each list submitted under
24 subsection (a) certify its authority to do so as required under
25 Section 25F(g)(2) of the Internal Revenue Code.
26    Sec. 4. (a) A scholarship granting organization shall be included
27 on the list of qualified scholarship granting organizations
28 submitted by the department to the Secretary of the Treasury of
29 the United States under this chapter, if the organization:
30      (1) is a nonprofit organization with the primary purpose of
31      providing scholarships to students; and
32      (2) meets the requirements described in Section 25F(c)(5) of
33      the Internal Revenue Code.
34    (b) A scholarship granting organization (as defined in
35 IC 6-3.1-30.5-3(1)) for purposes of the tax credit under
36 IC 6-3.1-30.5 is eligible to be included on the list of qualified
37 scholarship granting organizations under this chapter, if the
38 scholarship granting organization meets the requirements under
39 subsection (a). Each year the department shall provide to the
40 department of state revenue a list of the scholarship granting
41 organizations (as defined in IC 6-3.1-30.5-3(1)) that are also
42 included on the list of qualified scholarship granting organizations
 ES 161—LS 6719/DI 143
                                   3
1 submitted by the department to the Secretary of the Treasury of
2 the United States under this chapter.
3     SECTION 3. IC 22-4.1-4-16 IS ADDED TO THE INDIANA CODE
4 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
5 1, 2026]: Sec. 16. (a) As used in this section, "high skill, high wage,
6 or in demand industry sectors or occupations" means sectors or
7 occupations identified by the state pursuant to the Carl D. Perkins
8 Career and Technical Education Act of 2006 (20 U.S.C. 2301 et
9 seq.) and applicable state and local workforce development
10 processes.
11     (b) The governor and the department, in consultation with the
12 commission for higher education (established by IC 21-18-2-1)
13 shall do the following:
14(1) Establish a process to identify eligible workforce training
15programs that prepare students for high skill, high wage, or
16in demand industry sectors or occupations for workforce Pell
17grants.
18(2) Establish a process for institutions and programs to:
19(A) apply for recognition as an eligible workforce training
20program;
21(B) be approved for workforce Pell grants; and
22(C) appeal denials of workforce Pell grants.
23(3) Coordinate certification and oversight of eligible
24workforce training programs with:
25(A) workforce focused agencies;
26(B) workforce related programs; and
27(C) state and federal programs.
28(4) Require eligible workforce training programs to provide
29data required under applicable federal workforce Pell grant
30regulations, including:
31(A) program completion rates;
32(B) job placement rates; and
33(C) graduate earnings.
34     (c) The department shall ensure that the implementation of this
35 section does not impose requirements more restrictive than, or
36 inconsistent with, any applicable federal rules governing the
37 workforce Pell grant program.
38     SECTION 4. An emergency is declared for this act.
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                               4
                   COMMITTEE REPORT
Mr. President: The Senate Committee on Education and Career
Development, to which was referred Senate Bill No. 161, has had the
same under consideration and begs leave to report the same back to the
Senate with the recommendation that said bill be AMENDED as
follows:
Page 1, line 10, delete "and" and insert "or".
Page 3, line 3, delete "December" and insert "January".
Page 3, line 12, delete "is eligible to" and insert "shall".
Page 3, delete lines 31 through 42.
Page 4, delete lines 1 through 42, begin a new paragraph and insert:
"SECTION 5. IC 22-4.1-4-16 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 16. (a) As used in this section,
"High skill, high wage, or in demand industry sectors or
occupations" means sectors or occupations identified by the state
pursuant to the Carl D. Perkins Career and Technical Education
Act of 2006 (20 U.S.C. 2301 et seq.) and applicable state and local
workforce development processes.
(b) The department, in consultation with the commission for
higher education (established under IC 21-18-2-1) shall do the
following:
  (1) Establish a process to identify and approve eligible
  workforce training programs that prepare students for high
  skill, high wage, or in demand industry sectors or occupations
  for workforce Pell grants.
  (2) Establish a process for institutions and programs to:
     (A) apply for recognition as an eligible workforce training
     program;
     (B) be approved for workforce Pell grants; and
     (C) appeal denials of workforce Pell grants.
  (3) Coordinate certification and oversight of eligible
  workforce training programs with:
     (A) workforce focused agencies;
     (B) workforce related programs; and
     (C) state and federal programs.
  (4) Require eligible workforce training programs to provide
  data required under applicable federal workforce Pell grant
  regulations, including:
     (A) program completion rates;
     (B) job placement rates; and
     (C) graduate earnings.
ES 161—LS 6719/DI 143
                              5
   (c) The department shall ensure that the implementation of this
section does not impose requirements more restrictive than, or
inconsistent with, any applicable federal rules governing the
workforce Pell grant program.".
   Page 5, delete lines 1 through 26.
   Renumber all SECTIONS consecutively.
and when so amended that said bill do pass and be reassigned to the
Senate Committee on Tax and Fiscal Policy.
   (Reference is to SB 161 as introduced.)
                                            RAATZ, Chairperson
Committee Vote: Yeas 10, Nays 3.
                          _____
                  COMMITTEE REPORT
   Mr. President: The Senate Committee on Tax and Fiscal Policy, to
which was referred Senate Bill No. 161, has had the same under
consideration and begs leave to report the same back to the Senate with
the recommendation that said bill DO PASS.
   (Reference is to SB 161 as printed January 16, 2026.)
                                         HOLDMAN, Chairperson
Committee Vote: Yeas 9, Nays 1
                          _____
                     SENATE MOTION
Mr. President: I move that Senate Bill 161 be amended to read as
follows:
Page 3, line 39, delete "The department," and insert "The governor
and the department,".
Page 3, line 42, delete "and approve".
   (Reference is to SB 161 as printed January 21, 2026.)
                                                          RAATZ
ES 161—LS 6719/DI 143
                              6
                  COMMITTEE REPORT
Mr. Speaker: Your Committee on Education, to which was referred
Senate Bill 161, has had the same under consideration and begs leave
to report the same back to the House with the recommendation that said
bill be amended as follows:
Page 1, delete line 17.
Page 2, delete lines 1 through 27.
Page 3, line 33, delete ""High" and insert ""high".
Page 3, line 40, delete "under" and insert "by".
Renumber all SECTIONS consecutively.
and when so amended that said bill do pass.
   (Reference is to SB 161 as reprinted January 23, 2026.)
                                                      BEHNING
Committee Vote: yeas 7, nays 4.
ES 161—LS 6719/DI 143