Schedule 6 (IT-40), officially titled “Offset Credits,” is a critical tax form for Indiana residents who want to reduce their 2026 tax bill. Unlike Schedule 5, which handles refundable credits (money you can get back even if you don’t owe taxes), Schedule 6 deals exclusively with “non-refundable” credits. This means these credits can only be used to lower the tax you actually owe to zero; they cannot generate a refund on their own. This form is used to claim tax breaks for things like donating to colleges, paying taxes to other states, or investing in community revitalization. Essentially, it is a worksheet that gathers all your eligible non-refundable deductions in one place so you can subtract them from your total state and county tax liability. If you have paid local taxes outside Indiana or contributed to specific state-approved economic or educational causes, this is the mandatory form you must file to get credit for those expenses.
How To File Schedule 6 (IT-40)?
Schedule 6 is an attachment to your main Indiana tax return (Form IT-40). You cannot submit it by itself. Once you have filled out the lines relevant to your situation, you must calculate the total and transfer that final number to Line 13 of your Form IT-40. When you mail or electronically file your taxes, you must include this completed schedule along with any other required supporting documents (like Schedule CC-40 or other state returns) to prove you are eligible for the credits you are claiming.
How To Complete Schedule 6 (IT-40)?
Line 1: Credit For Local Taxes Paid Outside Indiana
Enter the amount of local income taxes you paid to a locality outside of Indiana. This credit helps prevent you from being taxed twice on the same income at the local level.
Line 2: Community Revitalization Enhancement District Credit
If you made an eligible investment in a Community Revitalization Enhancement District, enter the credit amount here.
Line 3: Other Local Credits
This section is for miscellaneous local credits. For each credit, enter the Credit Name, the specific Code Number (found in the instructions), and the Amount.
- Important Limitation: The total of Lines 1 through 3 cannot be more than the amount of county tax you owe (shown on Form IT-40, Line 9).
Line 4: College Credit
If you made a donation to an Indiana college or university, you may be eligible for a credit. Complete Schedule CC-40 first, then enter the calculated amount here and attach Schedule CC-40 to your return.
Line 5: Credit For Taxes Paid To Other States
If you paid income tax to another state on income that is also taxed by Indiana, report that credit here. You must enclose a copy of the other state’s tax return as proof.
Line 6: Other Credits
This section is for other specific state credits (like the Neighborhood Assistance Credit or Research Expense Credit). For each one, list the Credit Name, the Code Number, and the Amount. You can use lines 6a through 6d to list multiple credits.
Line 7: Other Certified Credits (Schedule IN-OCC)
If you have credits reported on Schedule IN-OCC, enter the total from Line 8 of that schedule here. You must enclose Schedule IN-OCC with your return.
- Important Limitation: The total of Lines 4 through 7 cannot be more than the state adjusted gross income tax you owe (shown on Form IT-40, Line 8).
Line 8: Total Offset Credits
Add the amounts from Lines 1 through 7 together. Enter this grand total in the box on Line 8. Finally, transfer this total figure to Line 13 of your main Form IT-40.