Indiana Teacher Appreciation Grant: Stipends, Eligibility, and Taxes

The Indiana Teacher Appreciation Grant now pays a flat $3,500, $5,000, or $7,500 to a small share of certified teachers rather than spreading a few hundred dollars across nearly everyone. Under the restructured program at Indiana Code 20-43-16, which took effect for the 2025–2026 school year, each school corporation or charter school can designate no more than 20 percent of its certified teachers as recipients, and those teachers must show meaningful improvement in student outcomes.¹

What the Grant Pays

The new law sets three fixed stipend amounts, each with its own criteria:¹

Recognition — $3,500. The baseline tier for a teacher who demonstrates high performance based on student outcomes.
Exemplary — $5,000. Requires high student-outcome performance plus one of two additional qualifiers: serving as a mentor or instructional leader who improves outcomes across multiple classrooms, or working in a high-need subject or geographic shortage area as determined by the Indiana Department of Education.
Exemplary Plus — $7,500. Requires high student-outcome performance, a mentoring or instructional leadership role, and work in a high-need or shortage area. All three must be met.

IDOE has indicated that only teachers in formal, district-supported mentoring programs count toward the Exemplary and Exemplary Plus designations. Informal advice doesn’t qualify. High-need areas include special education, English learner instruction, STEM fields, and any certified role that went unfilled for 90 or more days.

Who Qualifies

To receive any TAG stipend, a teacher must meet all of the following:¹

Have taught students in the school or district for at least one full school year before the grant distribution year.
Still be employed at the same school or district when the grant is distributed.
Be shown to have significantly improved student performance using national, state, or local assessment measures.
Be placed by the school corporation or charter school into one of the three stipend tiers.

The 20 percent cap is the gate most teachers won’t clear. A district with 200 certified teachers can designate at most 40 recipients in a year, no matter how many others meet the underlying criteria. IDOE has described “significant impact” as generally meaning more than one year of student growth achieved in one year’s time, with districts keeping some flexibility in defining the specifics. Qualifying assessments include national exams such as AP or IB tests, state assessments like ILEARN, and local tools such as common formative assessments tied to curriculum.

How Selection and Payment Work

Teachers do not apply individually. Everything runs through the district on a fixed calendar, and the first step is whether the district opts in at all. For the 2025–2026 school year the schedule is:

Early October: school corporations and charter schools notify IDOE whether they intend to participate.
Late October: IDOE shares each participating district’s grant allocation.
Late January: districts submit the names of selected teachers along with evidence showing how each one met the eligibility criteria.
April 15: IDOE distributes funds to school corporations.
Within 60 business days of receipt: districts pay the stipends to individual teachers.

If a district misses the early October notification window or chooses not to participate, no teacher in that district receives a stipend for the year. That is worth confirming with your district office before counting on anything else.

How the Stipend Is Taxed

A TAG stipend is taxable income. Because it is paid for teaching service, it does not qualify for any scholarship or fellowship exclusion.² Districts will likely withhold federal income tax at the flat 22 percent supplemental wage rate, which remains in effect for 2026.³ On a $3,500 Recognition stipend, that’s roughly $770 withheld for federal income tax before Social Security and Medicare taxes. On a $7,500 Exemplary Plus stipend, federal withholding alone is about $1,650. State income tax also applies. Your actual tax owed depends on your total income for the year, so the withholding may be more or less than your final liability.

What Changed From the Old Program

Before the 2025 overhaul, the TAG program operated under IC 20-43-10-3.5 and required schools to distribute stipends to all classroom teachers rated “effective” or “highly effective,” with highly effective teachers receiving at least 25 percent more than their effective-rated peers. Individual stipends often landed between $320 and $500 and reached roughly 90 percent of a district’s full-time educators.

The Indiana General Assembly replaced that approach through House Enrolled Act 1001 in 2025, creating a new chapter at IC 20-43-16. The old statute expired on June 30, 2025, and was formally repealed.⁴ The practical trade is that far fewer teachers receive anything, but those who do receive several times more. A teacher who previously got a $500 stipend would see about seven times that at the Recognition tier alone.

The old statute also tied eligibility directly to the state evaluation rating. The new program replaces that with measurable student-outcome evidence chosen in part by the district, which gives school corporations more latitude in picking recipients and means a strong evaluation rating alone no longer carries you to a stipend.

How to Position Yourself

Three steps make the biggest difference for a teacher hoping to be selected:

Confirm your district is participating. Opting out is a legitimate choice districts can make, and it ends the conversation for every teacher there.
Build a documented record of student growth using assessments your district recognizes. “Significant impact” is being read as more than a year of growth in a year, and the evidence needs to be something the district can submit to IDOE in January.
If you want to reach the $5,000 or $7,500 tiers, pursue a formal mentoring or instructional leadership role through a district-supported program, and consider whether your subject or location qualifies as high-need. Special education, English learner instruction, STEM, and any role that sat unfilled for 90 or more days are among the categories IDOE has flagged.

None of this guarantees a stipend in a given year, because the 20 percent cap means districts are choosing among qualified teachers, not simply certifying everyone who meets the criteria. But those are the levers the restructured program actually responds to.

1
Indiana State Budget Agency. House Enrolled Act 1001 – Indiana Code 20-43-16
2
Internal Revenue Service. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants
3
Internal Revenue Service. Publication 15 (2026), Circular E, Employer’s Tax Guide
4
Indiana General Assembly. Indiana Code 20-43-10-3.5 – Repealed