INDIANAPOLIS – Republican Indiana lawmakers have reached a deal on a plan to cut some taxes, according to House Speaker Todd Huston.
The bill passed the Senate 50-0 and the House 82-17.
It includes the elimination of the utility receipts tax and an income tax cut from 3.23% to 2.9% over a period of seven years — if certain conditions are met. The first tax decrease from 3.23% to 3.15% would be automatic in 2023.
Here’s what would need to happen for the rest of the income tax cut to take effect:
- 2025: Income tax declines to 3.1% IF the state’s revenue growth is at least 2% year-over-year
- 2027: Income tax drops to 3% IF revenue grows at least 2% AND the state can pay off the pre-1996 teacher retirement fund (teacher pension debt)
- 2029: 2.9% IF revenue growth is at least 2%
The bill will not include any changes to the business personal property tax, which Gov. Eric Holcomb wanted to cut.
Still, the bill may include “triggers” that would pause the tax cut if the state’s revenues fall below a certain level, Huston said.
“I think people will feel it in these times with all the inflation in prices,” Huston said. “The cut to the URT, the income tax cuts, I think it’s important. And look, we’ll see where the state is a year from now and see what we can do then.”
Meanwhile, Democrats want the income tax cut to go into effect more quickly – over four years instead of seven.
Democrats also called for a suspension of the state’s gas tax – at least through July – amid the surge in gas prices. That is NOT part of the bill.
According to the Indiana Department of Transportation, Indiana’s gasoline tax totals 32 cents per gallon.
“We believe that will actually provide meaningful relief to Hoosier motorists, and they need it now,” said State Sen. Tim Lanane (D-Anderson). “And we’re just fortunate that Indiana is in a position that we can do this.”
According to Lanane and State Rep. Greg Porter (D-Indianapolis), the Democrats’ gas tax proposal would cost the state $300 million. But, they argue, the state’s surplus can be used to cover those lost funds.
Governor Eric Holcomb released a statement on the conclusion of the 2022 legislative session:
“I’m pleased our agenda items have passed and more importantly that taxpayers will feel the benefits of tax cuts, elimination and refunds. We’ll get to work with the new tools we’ve obtained, and I’ll immediately turn my attention to the careful review of all remaining legislation soon to arrive on my desk.”
“We are fortunate that Indiana is in a healthy financial position where we can pay down our existing debt and put Hoosiers’ hard-earned money back in their pockets. Paying down our existing debt ultimately ensures we are keeping our promises to retired teachers and frees up money in the future, which will afford our state some transformational opportunities. In addition, Hoosiers will benefit directly from cutting our state’s income tax and from repealing the utility receipts tax, which will help combat rising utility costs.
“All along, Senate Republicans have been practicing caution and fiscal prudence as we considered the exciting options before us. Between making both an impressive payment on our pension debt and providing fiscally responsible triggers that enable the lowering of Indiana’s income tax moving forward, we believe we have landed in a great spot for the people of Indiana and the wellbeing of our state as a whole.”
Senate Democratic leader Greg Taylor released the following remarks:
“This session has been a whirlwind of partisan culture wars and wasted time discussing bad policies, but I’m pleased with the work from my caucus and applaud their commitment to prioritizing quality-of-life legislation for Hoosiers. I also want to applaud Hoosiers throughout the state for their active engagement at the Statehouse this session.
“Because of the voices of teachers and community members, we were able to kill both Senate Bill (SB) 167 and House Bill (HB) 1134—protecting our teachers, schools and students from government censorship. We also defeated language targeting librarians and teachers for offering certain books and materials to students.
“I’m extremely grateful that we were able to kill anti-public transportation language as well. I spoke against two amendments targeting public transportation this session and was happy to see them both successfully defeated.
“While my caucus was not in favor of tax cuts for wealthy corporations, I am pleased that language in HB 1002 was scaled back and that business personal property taxes were left alone. I do wish that my colleague, Sen. Lanane, would have found success in his joint effort with Rep. Porter to remove the excise gas tax for Hoosiers as well. This would have helped residents who are paying extreme gas prices right now, and I’m disappointed that provision was not accepted.
“I’m also disappointed by the shameful vote to block our poorest residents from receiving additional federal SNAP benefits after April as well as tonight’s vote to advance permitless carry language against the wishes of Hoosiers and law enforcement. Both of these bills will harm Hoosiers.
“The effort to ban our trans girls from playing school sports under HB 1041, is also disgraceful, and I look forward to the promised ACLU lawsuit against this hateful proposal.
“Ultimately, this session saw too much time focused on divisive and regressive topics—topics that didn’t move our state forward. It’s a shame that we had to put so much energy toward fighting bad policy when there was so much other important work we could have been doing.
“I am grateful that several members of my caucus were able to get bills passed out of the Senate this session, and that my colleague Sen. Lanane and I both had important proposals signed into law. Sen. Qaddoura also had important language cutting taxes for Hoosier seniors amended into another bill that’s headed to the Governor’s desk. This was a hard session, but I’m pleased with the victories from my caucus and the civic engagement from our Hoosier communities.”