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Hoosiers would see the percentage of their income the state takes for taxes continue to decrease under a bill progressing through the Indiana House of Representatives.
If the state hits revenue goals, Senate Bill 451 would continue lowering the adjusted gross income tax rate annually by 0.05% each tax year through 2032. Senate Tax and Fiscal Policy Chair Sen. Travis Holdman, R-Markle, saw his bill pass his committee unanimously Tuesday morning.
The tax rate in 2025 is 3.0%, and it is already slated to decrease to 2.95% in 2026 and to 2.9% in 2027. Under SB 451, the rate would continue to be phased down to 2.85% in tax year 2029, 2.8% in 2030, 2.75% in 2031 and 2.7% in 2032.
The bill, as written, “allows the legislature to review where state revenues are related to what was forecast and make some decisions to either start or stop the process of rate cuts,” said David Ober, Indiana Chamber’s vice president of taxation and public finance.
A Hoosier making about $70,000 (the state’s median household income) would see $35 less collected each year and a net savings of $735 from tax year 2025 to 2032.
The reduction is expected to bring in about $574.6 million less in state revenue from 2029-32. The state collected $8.1 billion in income tax revenue in 2024. Sales and income tax revenue account for more than 80% of state-collected revenue.
Indiana has one of the lowest income tax rates among the 43 states that haven’t eliminated their income taxes. North Dakota and Arizona have two of the lowest rates in the country with 2.5%, while California, New York and New Jersey each have rates over 10%.
Ober and Andrew Berger, president and CEO of the Indiana Manufacturers Association, both expressed support during public testimony.
The bill would impact about 500,000 businesses that would be paying individual income taxes due to its tax classification, Ober said. That would include sole proprietorships, partnerships, limited liability companies and S-corporations.
Gov. Mike Braun and the legislature’s ambitious plan to slash property tax collections might mean relief for some Hoosiers could be minimal.
“We talked a lot about property tax reform, and one of the things that we think would happen would be income tax increases at a local level to make up property tax relief differences,” Berger said.
Lawmakers have said they want to rebalance the state and local tax structure to provide taxpayer relief and put the onus on local government to raise and spend funds appropriately.
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Yet again, Indiana’s legislators don’t see a future for the state of Indiana worth investing money in.
Well they’ve got one thing right – they have no ability whatsoever to do what’s right with our tax dollars. State has been GOP-supermajority for decades and continues to crumble, but surely they’ll find a way to crumble even more efficiently with less tax revenue.
Even Indiana’s elected officials don’t believe we’re a place worth investing in. Think about it.
The magical thinking is that as the tax burden goes down, people will spend so much more money that revenues will increase. This is called trickle down economics, and it hasn’t worked for the last 40 years. Why should it work now.
You get what you pay for.
Indiana is low tax low service. It is not really an attractive place to live for many. And localities in the state are generally undesirable to graduates of institutions of higher learning. Perhaps Indiana is rated higher than Mississippi and West Virginia, but too much of the state is comparable to rock bottom locations. And with an overactive supermajority more interested in vengeance, meddling in personal private affairs, and micromanaging cities for which few have any understanding, this alone tends to stifle creativity and grossly diminish attractiveness.
Will localities be allowed to modify local tax structures without intrusive, overarching control measures from ill will minded uninformed in the Statehouse.
There’s so much discussion of property tax hikes/reform and cities/counties are scrambling to make ends meet. However, these leaders are bound and determined to lower income tax at a level that is imperceptible to most workers. This makes no sense. They simply want to claim they lowered taxes in the next election. It’s really sad.
I’m reminded of that old song “anything you can do, I can do better.” In this case, it’s “anything Mississippi can do, Indiana can do cheaper.”
We now know the value the Indiana Republican majority places on votes…$35 per year for households in the median income range. And at the same time, the income difference for those median households compared to neighboring states is far higher…
If they could do the math, the voters might get upset. But Indiana Republicans have seen to it that education is such that “doing the math” is not likely.
“Cut taxes” is not government policymaking. It is pandering, and as others point out, it is really low-level pandering…buying votes for $35 per household. Wasn’t it de Tocqueville who commented on legislators figuring out that they could use public funds to buy votes?
Government policymaking has to do with how we achieve goals like “build and maintain best in class public education K-college”, “build and maintain best in class public highways”, and “achieve and maintain best in class public health measures”. Except we Hoosiers keep electing people who don’t care about those goals.
Because outside the urban areas, Hoosiers don’t believe in themselves or Indiana. Or a future. They think the MAGAts are going to hand them a future, all bright and shiny. They don’t want to have to work for it…
And they are delusional…
America was a better place when people worked hard to make it a better place. We led the democracies of the world because we were the hardest working of them, and we shouldered our responsibility to a rules-based international system. Now, Trusk and Mumps and PJ Pance are strictly transactional.
When I was a teenager, I realized my parents’ goal was to try to make my life better than theirs. They sacrificed a lot to send me and my brothers and sisters to private, non-voucher funded Catholic schools. They taught us to dress properly, to speak properly, to drink alcohol appropriately, to be able to succeed in the corporate/professional world. I don’t see that with a lot of younger parents these days. They want to take their vacations, and play, and retire as soon as they can.