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Changes Made To Indiana Taxpayer Refund And Inheritance Tax

By Brandon Smith

Posted March 20, 2012

Legislation Governor Mitch Daniels signed Tuesday eliminates the state's inheritance tax and changes the automatic taxpayer refund.

Among the changes made to the state's taxpayer refund was an increase in the budget surplus necessary for the refund, meaning it will be harder to trigger in the future. This year's potential refund is largely unchanged with the exception that it will be distributed equally, rather than based on income levels. Governor Daniels says new estimates show the refund might be greater than previously thought.

"Something closer in the area of $70 an individual, $140 for a joint return," he says.

The refund will not be distributed in checks to taxpayers but in a credit on next year's taxes.

The governor also signed legislation that eliminates the state's inheritance tax, which is levied on people who inherit money or property. Daniels says the measure is a matter of justice for Hoosier citizens

"Never again, we hope, will a farm or a small business in our state have to change hands just because somebody can't afford the inheritance tax otherwise," he says.

The tax, when totally phased out over a ten year period, will end up costing the state an estimated $165 million a year. But supporters say the tax was driving older Hoosiers out of the state, so eliminating it will keep some of them here and help offset the cost.

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