Some small business owners will see a drop in their state income tax rate in the fiscal year beginning July 1.

During this year’s session of the General Assembly, lawmakers voted to speed up the individual income tax rate reductions first approved a year ago. Under the plan signed into law by Gov. Eric Holcomb, it will decline from the current rate of 3.15% to 3.05% and continue to decline until it reaches 2.9% in 2027, two years earlier than originally planned.

That’s important because most small businesses are organized as pass-through entities, meaning any profits pass through the business to the owner, who pays taxes at the individual tax rate.