The Journal Gazette
Friday, January 21, 2022 1:00 am

General Assembly

House approves $1.4 billion tax cut package

NIKI KELLY | The Journal Gazette

INDIANAPOLIS – The Indiana House on Thursday voted 68-25 to approve a $1.4 billion tax cut package that favors businesses while also giving some relief to individuals.

GOP House Speaker Todd Huston said there is a clear philosophical disagreement between Republicans and Democrats.

“Who do you think is a better steward of their money – us or taxpayers?” he said. 

Republicans focused on the individual income tax reduction, which would save a Hoosier making about $50,000 a year about $120 when fully phased in.

Democrats argued lawmakers should invest the money and fix problems facing the state – from textbook fees to lack of child care and higher education debt.

And Rep. Ed Delaney, D-Indianapolis, noted the package helps businesses more than Hoosier residents.

“We are going to lower the tax on augers but not on diapers,” he said of a business sales tax change included in the package. “That's about right – that's where (Republican) priorities are.”

The legislation now moves to the Senate, where the leadership has been more inclined to wait until next year to consider lowering taxes, when lawmakers will be crafting a new two-year state budget.

Senate President Pro Tem Rodric Bray said he has trepidation about it, noting “there are some headwinds out there that we don't know what those will look like over the next 12 to 24 months, not the least of which is inflationary pressure that we're really experiencing right now, workforce challenges, supply chains, things of that nature.”

Bray said he loves the idea of cutting taxes but “it's probably a little better to do in a budget year, so we can do it in a comprehensive way.”

House Bill 1002 would over several years:

• Exempt a minimum tax on business personal property for new equipment purchases. This is called the 30% depreciation floor, which means a company has to pay taxes on 30% of a piece of equipment's purchase price forever. The change will shift property taxes onto other taxpayers, including homeowners and farmers. The shift would be $10 million starting in 2024 and up to $100 million by 2037.

• Provide a state income tax credit for property taxes paid on existing business personal property starting in 2025. It would be applied only when the 30% depreciation floor is used. The cost to the state would be $347 million in 2025 and $384 million in 2026. By using a state credit, local units of government would continue to collect and use the revenue to provide services.

• Remove the double direct test currently applied in production sales tax exemptions, saving businesses between $86 million and $249 million a year.

• Repeal the utility receipts and utility services use taxes that Hoosiers pay as a percentage of their bills for gas, electric, water and other utilities. It would save about $220 million a year in 2024.

• Reduce the individual income tax rate from 3.23% to 3% – saving about $586 million in 2027. 

Four Democrats joined Republicans in supporting the bill. Area lawmakers all voted in support except for Rep. Phil GiaQuinta, D-Fort Wayne.

Share this article

Email story

Subscribe to our newsletters

* indicates required