Hoosiers will save well over $1 billion per year under new tax reforms passed by the state legislature Tuesday. Legislators voted to trim the income tax rate to 2.9%, and eliminate a pair of taxes on energy consumers. The House passed the bill 82-17, and the Senate passed it 50-0, an overwhelming message of support from the legislature for tax cuts.
The reform effort originated in the House of Representatives, and now heads to Governor Holcomb, who helped lead the fight to get income tax cuts passed, and is expected to sign it into law.
The state will be on a path to a 2.9% flat income tax rate, which would be the lowest in the nation under current law. The tax cuts will be implemented over seven years, using revenue benchmarks to keep them on track. Other states are currently working on reforms, including Kentucky, and Mississippi which are aiming at income tax elimination.
The utility receipts and utility services use tax will also be dropped, saving Indiana families and businesses added costs on their energy bills. This comes at an especially relevant time as energy costs skyrocket due to President Biden’s attacks on domestic energy production, and Russia’s more than “minor incursion” into Ukraine.
“Hoosier families and small businesses will get to keep more of their hard-earned dollars thanks to historic tax reform passed by Indiana Republicans,” said Americans for Tax Reform President Grover Norquist. “This tax reform legislation puts taxpayers first, and it will make Indiana more attractive for workers and investment moving forward. Speaker Huston, Governor Holcomb, Senate President Bray, lead sponsor Tim Brown, and all who voted in favor deserve credit, and support as they pursue more success in the future.”
House Republicans sparked the effort to cut taxes, passing the original version of HB 1002 earlier in session. This version cut the income tax rate to 3%. Governor Holcomb added his support for income tax cuts, and going to a 2.9% income tax rate, in recent weeks. With the Senate’s openness to reform, the opportunity for this significant achievement became a reality.
These are landmark tax cuts that will spark Indiana’s economy, making the state more attractive to families, businesses, and investment. Legislators can turn to eliminating the floor on personal property tax assessments, and corporate income tax reform, next session.
Indiana ranks well on business climate and regulatory environment, and will jump up the charts even more as this tax relief takes effect.