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Individual Income Tax 3.4% 3.4% 3.3% 3.3% 3.23% Corporate Income Tax 7.5% 7.0% 6.5% 6.5% 6.5% Inheritance Tax Repealed, retroactive to Jan. 1, 2013 Repealed Repealed Repealed Repealed The corporate tax reduction preserves one enacted in 2011, but the others are new.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.
