Individual Development Account Tax Credits Support Asset Building for Hoosier Families
IACED member and partner the Indiana Community Action Agency Association (INCAA) published a story in their newsletter on July 10, 2012 about Indiana’s Individual Development Account (IDA) tax credit as a way to support the savings of low-income Indiana residents. This helpful information is summarized here.
IDAs are matched savings accounts that help people with modest means to save towards the purchase of a lifelong financial asset, such as a home. In Indiana, IDA funds are available to qualifying residents for the purchase or rehabilitation of a home, furthering educational opportunities, or starting or expanding a small business.
Individual participants may receive matching funds for their IDA account from the State of Indiana through the Indiana Housing and Community Development Authority. IDAs are available for Indiana residents who are below 175% of the Federal Poverty Guidelines.
Besides an appropriation from the Indiana General Assembly and federal grant funds, one of the ways Indiana generates revenue to match the savings of participating low-income Hoosiers is via the sale of the IDA tax credits.
The Indiana Housing and Community Development Authority recently announced the availability of $100,000 in IDA tax credits for purchase by individuals or companies to support IDA programs across the state.
By investing in the IDA tax credit program, contributors receive 50 cents back on each dollar contributed in the form of a credit which is then subtracted from their state income tax or bank fee liability. Purchasers are able to deduct the full amount of the contribution from their federal income tax return.
Individuals and companies purchasing IDA tax credits have the opportunity to directly invest in Indiana communities because their investment in the tax credits allows local program providers to utilize the funds to create new or grow existing IDA accounts. Any investors wishing to purchase IDA tax credits or any individuals wishing to apply for an Individual Development Account should contact Jackie Troy at JTroy@ihcda.in.gov.