Budget deal calls for five-percent income tax cut
Indiana taxpayers will see their personal income tax rate reduced by five percent over the next four years under a budget plan agreed to by state lawmakers.
Governor Mike Pence had sought a ten-percent cut as one of his signature campaign proposals, but lawmakers were initially cool to the idea.
The governor issued the following statement Thursday:
"Today Hoosier taxpayers won a great victory. The agreement reached between our administration and legislative leaders will be the largest state tax cut in Indiana history. The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms.
I am grateful for the leadership of Senate President Pro Tem David Long, Speaker Brian Bosma and other key fiscal leaders for working diligently with our administration to craft this historic package of tax relief. Their efforts demonstrate the commitment of the General Assembly to put taxpayers first."
Improved tax collection estimates earlier this month improved Pence's chances in the waning days of the session.
The tax rate cut will be phased in in two steps starting Jan. 1, 2015.
Republican House Speaker Brian Bosma said Wednesday that negotiations were continuing with the Senate and the governor's office on the size of the cut.
"There's so many things that we've accomplished this session, and I'll tell you probably the most satisfying is gonna be the tax cut we're gonna be enacting this year. We're looking to see if it's the largest comprehensive tax cut in state history. I'm not able to say that is yet, but we're looking, because we're talking about half billion dollars in tax cuts each year over a billion dollars in tax cuts this biennium that will literally touch every Hoosier, every business, every family and still keep the state in a very sustainable AAA bond rating position," said Bosma.
The budget plan also calls for repealing the inheritance tax retroactive to Jan. 1 of this year.
State lawmakers must approve the budget before wrapping up their 2013 session. They expect to adjourn Friday.
Statement from Senate President David Long:
"When fully implemented, this is the single largest tax cut in the history of our state," Long said. "We believe these tax cuts are responsible and will have a positive impact on every Hoosier taxpayer and provide a meaningful boost for the Hoosier economy. I appreciate the hard work of the House and Senate fiscal leaders in putting this tax package together and thank the Governor for his willingness to find common ground and embrace a winning tax cut package for all Hoosiers."
Statement from Speaker Bosma:
"Through hours of important discussions, we have reached a budget that reflects the goals that House Republicans set out to achieve this session. Our budget meets our goals of prioritizing education and road funding while maintaining strong fiscal reserves. In addition we integrated a conservative concept for state budgets of paying cash for projects and reducing the state's debt burden.
After meeting each of these goals and with a proven track record of fiscal integrity, we are in a positive fiscal environment to give Hoosiers the largest tax cut in the history of Indiana. This blend of tax relief will have a positive impact on Hoosiers across the state and will result in a tax cut for every Hoosier."