How Low Will They Go? Indiana’s Income Tax May Get the Axe

January 4, 2023

How Low Will They Go? Indiana’s Income Tax May Get the Axe

The fruits of our labor from the last legislative session are beginning to flourish. Hoosiers will begin to see a gradual decrease in their individual income taxes starting this year. The $1 billion tax cut package that NFIB supported, and the governor signed, went into effect on January 1. Although Hoosier’s individual income taxes will only go down a little this year, it’s a first step in the seven-year tax cut plan that will have a bigger impact over time. The tax cut package lawmakers approved in the 2022 session gradually lowers the income tax rate by about 10 percent, from 3.23 percent to 2.9 percent. The first phase cuts the income tax down to 3.15 percent. Once fully implemented, Indiana will have one of the lowest income tax rates in the country. The state also waived its utility receipt tax. Some state senators are discussing the possibility of revamping Indiana’s tax structure to determine whether the state could eliminate individual and corporate income taxes. Proponents say it would enable Indiana to compete for businesses with places that have no income tax such as Tennessee, Florida, and Texas. Sen. Travis Holdman, a Republican from Markle who chairs the Senate Tax & Fiscal Policy Committee, said last week he planned to introduce a bill establishing a commission that would analyze how the state should reorganize its taxes once it fully funds the teacher’s pension plan. The pre-1996 teacher retirement fund is the state’s only outstanding debt. It has just over $8.8 billion left in unfunded liability and is expected to be paid off by 2030. It is estimated paying off this debt will free up an additional $1 billion in expenditures annually. While eliminating the individual income tax would alleviate this financial burden for residents and small businesses, it would also mean less revenue for the state. Opponents say eliminating the individual and corporate income taxes would depress future revenue that’s needed to invest in Hoosier’s quality of life. Others caution that the rapid growth in remote workers changes the landscape of recruiting and retaining employees which should be considered when reevaluating the state’s tax system. Some argue those who can move anywhere, and work remotely are prioritizing quality of life and public service factors over the state’s tax structure. The Senate proposal to reevaluate Indiana’s tax system comes as economists predict a mild recession in 2023 and lawmakers prepare to return to the Statehouse on Monday, January 9 to craft a two-year budget and consider funding increases for education, public health funding, workforce development programs and tax incentives. Referral: https://canadacryptocasino.com/

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Indiana

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