February 17, 2019
Indiana reformed its local income taxes during the 2015 legislative session, and the new set-up took effect in 2017. The old income tax acronyms, CAGIT, COIT, EDIT, and LOIT, were no more. Now we have LIT, for local income tax, with a single rate and a collection of revenue buckets for various uses.
Three years into the new system, however, you still hear the old acronyms. The legacy of our local income tax history remains. It matters which counties had CAGIT, the county adjusted gross income tax. School districts receive some income tax revenue in counties that had CAGIT. Schools don’t receive LIT revenue in other counties. It matters which counties had COIT, the county option income tax. A local income tax council makes tax decisions for those counties. In other counties, the county council is the decision-maker.
The expenditure bucket under LIT that goes for public safety often is still called the public safety tax. The bucket for economic development often is still called EDIT, for economic development income tax. The official term for the general spending bucket remains “certified shares†even though the term “general expenditures†would be more descriptive.