INDIANAPOLIS – With a $200 tax refund on the way for many Hoosiers, financial advisors say they recommend using the money for living expenses.

Hoosiers could start to receive the refund as soon as next week, according to the state auditor’s office. The refund, which is being paid for with $1 billion from the state’s $6.1 billion surplus, is meant to provide financial relief from inflation.

Gov. Eric Holcomb had originally proposed a $225 tax refund, but that was lowered to $200 dollars per taxpayer to allow Hoosiers who are on Social Security or disability and don’t file taxes to also receive the refund.

The plan received bipartisan support and was signed into law late Friday night by Holcomb.

On Friday – the last day of the special legislative session – House Speaker Todd Huston (R-Fishers) said he was “thrilled” about the plan’s passage, though Democrats wanted to see more money given back.

“We were able to get across the finish line a bill that returns a billion dollars back to Hoosiers, and that was huge,” Huston said.

“I had an amendment that would have taken that [refund] to $325,” said State Rep. Cherrish Pryor (D-Indianapolis). “We have adequate money in the budget.”

Under the financial relief package, each Hoosier taxpayer will receive a $200 refund. Married couples filing jointly will receive $400 dollars.

Those who are on Social Security or disability and don’t file taxes can apply for the rebate in 2023.

The new law also caps the state’s gas sales tax at 29.5 cents per gallon through June 2023 and sets aside $1 billion to pay down teacher pension debt.

Andy Mattingly of Forum Credit Union recommends spending the refund on basic necessities, such as gas or groceries.

“Put it in a savings account and see where your greatest need’s going to be,” said Andy Mattingly of Forum Credit Union. “You’ve probably got your kids back in school, so maybe use some credit for that. So maybe you want to use that to pay down your credit card balance. Maybe you have something that’s coming up that you know that you’re going to have to spend money on.”

Mattingly urges Hoosiers not to use the $200 refund for non-essential spending.

“Be thoughtful about it, and don’t make an immediate decision and go out and have a big dinner or buy a new wardrobe,” Mattingly said. “That’s probably not a good way or a good thing to do with it.”

State Senate Republicans initially raised concerns that the refund would worsen inflation, but some economists say that’s not likely. Kyle Anderson of the IU Kelley School of Business anticipates the impact on Indiana’s economy will be minimal.

“It’s not a huge sum of money by kind of statewide standards, but it certainly will help some families,” Anderson said.

According to state officials, many Hoosiers will receive the tax refund via direct deposit. If you are waiting on a paper check, you’ll receive the $200 payment along with the $125 refund that has already been issued.