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Hoosier Employers Could Get $327 Million In Tax Relief

By Brandon Smith

Posted July 20, 2015

Indiana ended its fiscal year with three consecutive months of strong revenue collections. If that trend continues Hoosier employers could receive $327 million in tax relief.

The Great Recession drained Indiana's unemployment benefit reserve fund, forcing the state to take a more than $2 billion loan from the federal government.

As long as there's still money to pay back on that loan, Hoosier employers incur a tax penalty. This year, that penalty is $105 per employee; next year, it rises to $126. But Governor Mike Pence says he's exploring the potential to pay back the loan, in full, early.

"If revenues hold or exceed projections, given the magnitude of the reserves that we have, we think it may be possible this fall," Pence says.

State Budget Committee chair Luke Kenley says Indiana needs to be cautious – after all, he says, the state struggled to meet its revenue forecasts for most of the last fiscal year before rebounding the last few months.

"So we hope that this upturn has somewhat of a lasting quality and that gives me some optimism that this issue can be considered," Kenley says. "It certainly would be the right thing to do."

Kenley says Indiana's ability to pay off the loan will also depend on just what the price tag is, a figure that changes each month – current estimates say the state would have to pay about $250 million to avoid another year of tax penalties.

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