STATEHOUSE (Jan. 27, 2022) – Indiana House Republicans recently advanced a responsible and sweeping tax cut package that could put over $1.3 billion back in Hoosiers’ pockets, according to Hendricks County lawmakers who supported the legislation.
The state’s budget reserves are expected to hit a record $5 billion at the end of fiscal year 2022. State Rep. Greg Steuerwald (R-Avon) said if House Bill 1002 becomes law, it would be the largest tax cut in state history.
“Our state is in a strong financial position where we can return more money to Hoosier taxpayers, where it belongs,” Steuerwald said. “Instead of growing government, we can look at areas to cut and be responsible stewards of tax dollars.”
State Rep. Jeff Thompson (R-Lizton) said the bill would deliver direct relief to working Hoosiers by phasing down Indiana’s individual income tax from 3.23% today to 3% by 2026. If passed, Hoosiers would also pay less on their utility bills with the elimination of the 1.4% Utility Receipts Tax, which would take effect in July. Currently, individuals and businesses pay the Utility Receipts Tax on their monthly electric, natural gas, water, steam, sewage and telecommunications bills.
“High inflation is cutting into many Hoosiers’ budgets,” Thompson said. “Our reserves continue to outpace our expectations and this is a great time for the state to responsibly return money to the taxpayers who rightfully earned it.”
About 4.3 million Hoosier taxpayers are set to receive a $125 refund after they file their taxes in 2022 due to higher-than-expected state revenue numbers during the 2021 fiscal year. House Bill 1002 would help streamline this process and ensure about another 900,000 taxpayers also receive a refund.
State Rep. Bob Behning (R-Indianapolis) said the bill would also encourage new investments by lowering Indiana’s business personal property taxes while ensuring homeowners and schools aren’t negatively impacted by the reduction in revenue. Specifically, the bill eliminates the 30% depreciation floor for newly purchased business personal property starting in January and creates a state income tax credit to offset a portion of the personal property taxes paid on existing equipment. Under current law, businesses pay a tax based on a minimum of 30% of the original purchase price of their business personal property, regardless of the age or the true tax value of the equipment. House Bill 1002 would also exempt more manufacturing and agricultural production inputs from the 7% state sales tax to avoid sales tax pyramiding.
“Lowering Indiana’s business personal property tax would encourage small-business owners and entrepreneurs to grow or start their business right here in Indiana,” Behning said. “We want to ensure our state remains economically competitive because it means more jobs and opportunities for all Hoosiers.”
Behning said Indiana has paid down well over $1 billion in debt over the last year alone.