"the credit is not based on 'taxes paid'; it's based on the tax liability"
Not exactly. The amount of the Indiana "other state" credit is the lesser of (1) the tax actually paid to the other state, (2) 3.4% (the Indiana adjusted gross income tax rate) of the income from the other state that is taxed by Indiana, or (3) the tax due to Indiana.
https://www.in.gov/dor/files/reference/ib07.pdf
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
