INDIANAPOLIS, IN – On the last day of the legislative session this week, the Indiana state Senate passed House Bill 1002, which includes a $1.1 billion income tax cut, which has the potential once implemented to reduce Indiana’s income tax rate over the course of the next seven years from 3.23 percent to 2.9 percent.
Once completely phased in, this new tax rate – which would be one of the lowest flat income rates in the United States – would save a Hoosier earning $29,777 approximately $100 per year, and $165 per year for someone earning $50,000.
However, there is a catch – the tax cut going completely in effect within the aforementioned seven year time span is largely dependent on whether or not Indiana’s state revenue growth reaches two percent after the initial phase of the tax cut is carried out in 2023. But experts say that threshold it typically met unless there is a nationwide financial crisis, as there was during the worst of the COVID-19 pandemic in 2020.
The bill passed by the Senate this week would also cut out state utility taxes that all Indiana residents and businesses pay – which are currently set at 1.4 percent – which would provide an annual savings of $220 million. But this relief would only amount an approximate savings of $4 to $5 per month for the average household; only large businesses that utilize great deals of energy would experience significant savings.
The bill also requires large revenues – between $2.5 billion and $5 billion – to help pay off excessive teacher pension debt.
The Senate unanimously approved House Bill 1002 this week; previously, it had passed in the House by an 82-17 vote. The bill is now headed for the desk of Governor Eric Holcomb, who is expected to sign it into law after having expressed support for it in the past.