If House Bill 1002 becomes law, it would be the largest tax cut in state history
INDIANAPOLIS - Indiana House Republicans Thursday advanced a responsible and sweeping tax cut package that could put over $1.3 billion back in Hoosiers' pockets, according to State Reps. Randy Lyness (R-West Harrison) and Cindy Ziemke (R-Batesville).
The state's budget reserves are expected to hit a record $5 billion at the end of fiscal year 2022. Lyness said if House Bill 1002 becomes law, it would be the largest tax cut in state history.
"This is a responsible tax cut package that makes sure we’re not growing our government but instead prioritizing hardworking Hoosiers," Lyness said. "These tax relief will also benefit our existing businesses by helping them grow, and also attract jobs and new industry to our state."
Ziemke said the bill would deliver direct relief to working Hoosiers by phasing down Indiana’s individual income tax from 3.23% today to 3% by 2026. If passed, Hoosiers would also pay less on their utility bills with the elimination of the 1.4% Utility Receipts Tax, which would take effect in July. Currently, individuals and businesses pay the Utility Receipts Tax on their monthly electric, natural gas, water, steam, sewage and telecommunications bills.
"Indiana entered 2021 cautiously optimistic, and thanks to years of conservative budgeting and living within our means, our economy continues to outpace expectations," Ziemke said. "These tax cuts put money back where it belongs – in the hands of Hoosier taxpayers."
About 4.3 million Hoosier taxpayers are set to receive a $125 refund after they file their taxes in 2022 due to higher-than-expected state revenue numbers during the 2021 fiscal year. House Bill 1002 would help streamline this process and ensure about another 900,000 taxpayers also receive a refund.
The bill would also encourage new investments by lowering Indiana’s business personal property taxes while ensuring homeowners and schools aren’t negatively impacted by the reduction in revenue. Specifically, the bill eliminates the 30% depreciation floor for newly purchased business personal property starting in January and creates a state income tax credit to offset a portion of the personal property taxes paid on existing equipment. Under current law, businesses pay a tax based on a minimum of 30% of the original purchase price of their business personal property, regardless of the age or the true tax value of the equipment. House Bill 1002 would also exempt more manufacturing and agricultural production inputs from the 7% state sales tax to avoid sales tax pyramiding.
According to Ziemke, Indiana has paid down well over $1 billion in debt over the last year alone.
Visit iga.in.gov for more information on House Bill 1002, which now moves to the Indiana Senate for further consideration.