STATEHOUSE (Jan. 20, 2022) – Indiana House Republicans today advanced a responsible and sweeping tax cut package that could put over $1.3 billion back in Hoosiers’ pockets, according to State Rep. Tim O’Brien (R-Evansville), co-author of House Bill 1002.
The state’s budget reserves are expected to hit a record $5 billion at the end of fiscal year 2022. O’Brien said if House Bill 1002 becomes law, it would be the largest tax cut in state history.
“Due to decades of strong leadership, Indiana finds itself in the enviable position of expecting $3.3 billion more in revenue over the biennium than what was projected,” O’Brien said. “Now we can do the right thing and return the money to the taxpayers with responsible cuts that will continue to grow our state’s economy.”
O’Brien 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.
About 4.3 million Hoosier taxpayers are set to receive a $125Â 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.
O’Brien 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.
“These tax cuts should encourage further expansion and investment by Hoosier businesses, which continue to create jobs and grow our state’s healthy economy,” O’Brien said. “Indiana must be competitive when it comes to attracting and retaining employers.”
O’Brien said Indiana has paid down well over $1 billion in debt over the last year alone.
