Indiana Approves Income Tax Reduction
May 14, 2013
Indiana Governor Mike Pence (R) last week signed into law the state’s 2014-15 two-year budget. The approved budget keeps spending increases below inflation and cuts the state’s single-rate income tax, the corporate income tax, and eliminates the inheritance tax:
|
Current |
2014 |
2015 |
2016 |
2017 |
|
|
Individual Income Tax |
3.4% |
3.4% |
3.3% |
3.3% |
3.23% |
|
Corporate Income Tax |
7.5% |
7.0% |
6.5% |
6.5% |
6.5% |
|
Inheritance Tax |
Repealed, retroactive to Jan. 1, 2013 |
Repealed |
Repealed |
Repealed |
Repealed |
The corporate tax reduction preserves one enacted in 2011, but the others are new. Indiana’s well-structured income tax – broad-based and low-rate – gets ever closer to Pennsylvania’s lowest-in-the-country rate of 3.07 percent. (Pence had initially sought a larger reduction but ultimately negotiated these rates with legislative leaders.) The inheritance tax was being phased out by 2022, and the budget accelerates that to, well, now.