A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Plain English Breakdown

Checked against official source text during the last sync.

Changes to Local Income Taxes in Indiana

This bill changes local income tax rates in Indiana, allowing counties and cities more flexibility in setting these taxes.

What This Bill Does

• Allows a county to set up to a 0.7% rate for general revenue instead of the current 1.2%
• Reduces the fire protection and emergency medical services tax from 0.4% to 0.2%
• Sets a new limit of 0.2% for nonmunicipal civil taxing unit revenue
• Increases the maximum local income tax rate for certain cities and towns to 1.9%, up from 1.2%
• Eliminates yearly expiration dates for these rates, making them permanent unless changed again

Who It Names or Affects

• Counties in Indiana that set local income taxes
• Cities and towns with populations meeting certain thresholds
• Residents who pay local income tax

Terms To Know

Local Income Tax (LIT)

A tax on the income of people living in a specific city or county, used to fund local services.

Nonmunicipal civil taxing unit

An area that is not part of a city but still collects taxes for public services.

Limits and Unknowns

• The bill does not specify how the changes will affect overall tax revenue or local budgets.
• It's unclear if and when the governor might sign this bill into law after it passes both chambers.

Official Summary Text

A BILL FOR AN ACT to amend the Indiana Code concerning taxation.
Local income taxes.

Current Bill Text

A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Local income taxes.

Provides that within a county's total expenditure rate, the county may adopt: (1) up to a 0.7% rate (instead of a 1.2% rate) for county general purpose revenue; (2) up to a 0.2% rate (instead of a 0.4% rate) for fire protection and emergency medical services; (3) up to a 0.2% rate for nonmunicipal civil taxing unit general purpose revenue; and (4) up to a 1.9% rate (instead of a 1.2% rate) for certain cities and towns that are not eligible to adopt a municipal LIT rate. Eliminates provisions that expire local income tax rates each year. Authorizes a city or town to impose a municipal LIT rate up to 1.9% (instead of 1.2%). Modifies the population threshold required for a city or town to impose a municipal LIT rate. Modifies the formula used to determine distribution amounts of revenue from a tax rate imposed for fire protection and emergency medical services.