SB 213

                                               *SB0213.2*
                                                                       Reprinted
                                                                January 23, 2026
           SENATE BILL No. 213
                 _____
   DIGEST OF SB 213 (Updated January 22, 2026 3:26 pm - DI 120)
Citations Affected: IC 6-3.
Synopsis: Income tax deduction for theft loss. Provides an income tax
deduction for theft losses that result from certain financial transactions
induced by third parties and that cause the individual to incur federal
gross income as a result of the theft. Requires the department of state
revenue to first certify the theft loss deduction before a taxpayer may
claim the deduction in a taxable year.
Effective: January 1, 2024 (retroactive).
             Holdman, Qaddoura,
              Randolph Lonnie M
   January 8, 2026, read first time and referred to Committee on Tax and Fiscal Policy.
   January 20, 2026, amended, reported favorably — Do Pass.
   January 22, 2026, read second time, amended, ordered engrossed.
SB 213—LS 6595/DI 120
                                                                                    Reprinted
                                                                             January 23, 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.
                   SENATE BILL No. 213
    A BILL FOR AN ACT to amend the Indiana Code concerning
 taxation.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 6-3-2-15.5 IS ADDED TO THE INDIANA CODE
2 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2024 (RETROACTIVE)]: Sec. 15.5. (a) For purposes
4 of this section, "qualifying account" means any of the following
5 owned directly by an individual, either as a sole owner or jointly
6 with one (1) or more individuals:
7      (1) A retirement plan described in 4 U.S.C. 114(b)(1).
8      (2) A securities or commodities account.
9      (3) A savings or checking account.
10      (4) Any account substantially similar to an account described
11      in subdivision (2) or (3).
12 If an account listed in subdivisions (1) through (4) is owned in
13 whole or in part by a person or entity other than an individual, the
14 account is a qualifying account only to the extent it is owned
15 directly by an individual.
16    (b) For purposes of this section, "taxpayer" means an individual
17 subject to taxation under this article.
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1     (c) For purposes of this section, "theft" means:
2(1) an event for which a taxpayer would have been permitted
3a deduction as a theft loss under Section 165(c) of the Internal
4Revenue Code (as in effect on January 1, 2017); and
5(2) the event was either:
6(A) a distribution from the taxpayer's qualifying account;
7or
8(B) a sale, exchange, or liquidation of the taxpayer's stocks,
9bonds, certificates of deposit, or similar instruments,
10regardless of whether these were held in a qualifying
11account;
12followed by a payment to another individual or entity within
13sixty (60) days of the distribution, sale, exchange, or
14liquidation, and for which the distribution, sale, exchange, or
15liquidation was induced by the individual or entity.
16     (d) For purposes of this section, "theft loss" means the amount
17 that an individual:
18(1) would have been permitted to deduct under Section 165(c)
19of the Internal Revenue Code (as in effect on January 1, 2017)
20as the result of a theft, reduced as provided under Section
21165(h)(1) and Section 165(h)(2) of the Internal Revenue Code
22(as in effect on January 1, 2017); and
23(2) was not permitted to deduct in determining the
24individual's federal adjusted gross income under Section 62 of
25the Internal Revenue Code.
26 For an individual who is not a resident of Indiana, the theft loss
27 amount shall only be the portion of the loss derived from Indiana
28 sources and only if the income resulting from the theft would have
29 been included in the taxpayer's Indiana adjusted gross income.
30     (e) For taxable years beginning after December 31, 2023, a
31 taxpayer is entitled to a deduction from the taxpayer's adjusted
32 gross income for a taxable year if the taxpayer:
33(1) incurred a loss as the result of a theft during the taxable
34year; and
35(2) as a result of the theft, had federal gross income for the
36taxable year that would not have been included in the
37taxpayer's federal adjusted gross income for the taxable year
38under Section 62 of the Internal Revenue Code if the theft had
39not occurred or been induced.
40     (f) The amount of the deduction for a taxable year is the lesser
41 of:
42(1) the amount of the theft loss; or
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1      (2) the amount reported in the taxpayer's adjusted gross
2      income under IC 6-3-1-3.5(a) for the taxable year that
3      resulted from the theft or inducement of theft.
4    (g) A taxpayer wishing to claim a deduction under this section
5 must first apply to the department for certification of the
6 deduction and provide all information requested by the
7 department relating to the theft to the department prior to
8 claiming the deduction under this section. The following apply:
9      (1) Upon receipt of a taxpayer's application, the department
10      shall determine the amount of the deduction for theft losses
11      that are allowable, if any, under this section and provide
12      notice of the determination and certification to the taxpayer.
13      (2) A taxpayer may claim the deduction on the taxpayer's
14      state tax return or returns only after the department's
15      determination and only up to the amount certified by the
16      department as an allowable deduction.
17      (3) If a taxpayer disagrees with the department's
18      determination of a theft loss deduction, the taxpayer may
19      protest the determination of the loss in the same manner and
20      under the same time periods as a refund denial under
21      IC 6-8.1-9-1.
22      (4) An application under this section must be filed on or
23      before the date of the last day that a refund for the taxable
24      year can be filed under IC 6-8.1-9-1. An application under this
25      section shall be treated as an approved extension of the period
26      for a refund claim that expires thirty (30) days after the
27      department's determination under this subsection, including
28      any protest and appeal. An extension under this subsection is
29      only for the amount of refund that results from a deduction
30      under this section.
31    (h) For purposes of this section:
32      (1) any amounts that an individual received as insurance
33      payments, reimbursement, or other similar payments in
34      recovery for a theft loss during the taxable year are not
35      deductible under this section; and
36      (2) to the extent that amounts in subdivision (1) are received
37      in a subsequent taxable year, the individual shall report the
38      amount received as an addition in determining adjusted gross
39      income under IC 6-3-1-3.5(a) for purposes of adjusted gross
40      income tax in the year in which the amount is received, but
41      only to the extent that the deduction under this section would
42      have been reduced in the taxable year of the theft had the
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1recovery amount been received in the taxable year of the
2theft. Any recovery required to be included in Indiana
3adjusted gross income as a result of this section shall not be an
4addback for purposes of section 2.5 or 2.6 of this chapter.
5    (i) If a taxpayer claims a deduction under this section for a
6 taxable year beginning before January 1, 2026, the taxpayer claims
7 a refund as a result of the deduction, and interest is due on the
8 refund under IC 6-8.1-9-2(d), then the amount of interest due on
9 the refund shall be computed from the latest of:
10(1) April 15, 2026;
11(2) the date the department issues the determination under
12subsection (g); or
13(3) the date determined under IC 6-8.1-9-2(d).
14    SECTION 2. An emergency is declared for this act.
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                              5
                  COMMITTEE REPORT
   Mr. President: The Senate Committee on Tax and Fiscal Policy, to
which was referred Senate Bill No. 213, 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 1, delete "IC 6-3-2-30" and insert "IC 6-3-2-15.5".
   Page 1, line 3, delete "30." and insert "15.5.".
   Page 2, delete lines 16 through 25, begin a new paragraph and
insert:
   "(d) For purposes of this section, "theft loss" means the amount
that an individual:
  (1) would have been permitted to deduct under Section 165(c)
  of the Internal Revenue Code (as in effect on January 1, 2017)
  as the result of a theft, reduced as provided under Section
  168(h)(1) and Section 168(h)(2) of the Internal Revenue Code
  (as in effect on January 1, 2017); and
  (2) was not permitted to deduct in determining the
  individual's federal adjusted gross income under Section 62 of
  the Internal Revenue Code.
For an individual who is not a resident of Indiana, the theft loss
amount shall only be the portion of the loss derived from Indiana
sources and only if the income resulting from the theft would have
been included in the taxpayer's Indiana adjusted gross income.".
   Page 3, between lines 17 and 18, begin a new line block indented
and insert:
  "(4) An application under this section must be filed on or
  before the date of the last day that a refund for the taxable
  year can be filed under IC 6-8.1-9-1. An application under this
  section shall be treated as an approved extension of the period
  for a refund claim that expires thirty (30) days after the
  department's determination under this subsection, including
  any protest and appeal. An extension under this subsection is
  only for the amount of refund that results from a deduction
  under this section.".
and when so amended that said bill do pass.
   (Reference is to SB 213 as introduced.)
                                         HOLDMAN, Chairperson
Committee Vote: Yeas 12, Nays 0.
SB 213—LS 6595/DI 120
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                     SENATE MOTION
Mr. President: I move that Senate Bill 213 be amended to read as
follows:
Page 2, line 21, delete "168(h)(1) and Section 168(h)(2)" and insert
"165(h)(1) and Section 165(h)(2)".
   (Reference is to SB 213 as printed January 21, 2026.)
                                                      HOLDMAN
SB 213—LS 6595/DI 120