Bill Addition Would Cut Income Taxes While Gas, Cig Taxes Rise

Jan 29, 2016

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Income taxes might go down to soften the blow of pushing Indiana’s gas and cigarette taxes up.

A House committee has resurrected Governor Pence's proposed 10-percent tax cut from three years ago.

Pence had to settle for 5-percent then, but Republicans have added the other half as a sweetener to the bill that raises other taxes to pay for road repairs.

House Speaker Brian Bosma (R-Indianapolis) says the state can afford the full 10-percent tax cut now – three years ago, legislative Republicans had higher priorities.

“The point of discussion three years ago was the need to permanently repeal our state’s inheritance tax, which was the ultimate compromise – to repeal the inheritance tax and do half of the governor’s requested tax cut,” Bosma says.

Indiana's income tax rate is currently 3.3-percent and will go down to 3.23-percent next year.

Here's what the original bill (2013) says:

"Reduces the adjusted gross income tax rate on noncorporate taxpayers to: (1) 3.3% for taxable years beginning after 2014 and before 2017; and (2) to 3.23% for taxable years beginning after 2016."

House Republicans' proposal would phase in additional cuts beginning in 2019, bottoming out at 3.06-percent six years later.

Hoosiers making $50,000 a year would see their tax bill cut by $85.

The Ways and Means Committee approved the proposal on a party-line vote.

Rep. Greg Porter (D-Indianapolis), the committee's top Democrat, dismisses the tax cut as a gimmick to make the bill's tax hikes easier to swallow.

“You look at it a wash. I guess it’s for those individuals that said they would not vote for a tax increase,” Porter says. “They’re trying to create an atmosphere that they can vote for a tax cut.”

The full House will vote Tuesday or Wednesday.

The Indiana Senate is separately considering Pence's road plan, which uses bonds and money from the state surplus for a four-year funding boost.