Senate Republicans Champion No Tax on Tips, No Tax on Overtime

The proposal is heading to the full Senate for further consideration.

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INDIANAPOLIS - On Tuesday, Senate Republicans voted in favor of implementing tax cuts for working Hoosiers today, said Senate President Pro Tem Rodric Bray (R-Martinsville).

Authored by State Sen. Travis Holdman (R-Markle), chair of the Senate Committee on Tax and Fiscal Policy, Senate Bill 243 would couple Indiana's tax code to federal tax code with regard to no tax on tips, no tax on overtime and no tax on loan interest for American-made vehicles passed in the One Big Beautiful Bill. This ensures Hoosiers eligible for those federal tax cuts will also benefit from the same tax cuts at the state level in tax year 2026.

"These state income tax cuts are a concrete way we can help hardworking Hoosiers keep more of their hard-earned money," Bray said. "These cuts come on the heels of our strong track record of cutting taxes. Statehouse Republicans have cut taxes more than 20 times in 10 years, the income tax rate dropped yet again on Jan. 1 of this year, and this year two-thirds of Hoosiers are expected to see a property tax bill lower than their 2025 bill following a historic property tax relief package resulting in $1.3 billion in property tax relief over the next three years."

As amended, SB 243 would enact these policies for tax year 2026, which Hoosiers will file in 2027.

SB 243 passed out of the committee with bipartisan support and now moves to the full Senate for further consideration.