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Hoosiers' income taxes going down a little, starting Jan. 1

By Brandon Smith

Posted December 30, 2022

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The tax cut package Indiana lawmakers approved in the 2022 session gradually lowers the individual income tax rate by about 10 percent. (Lauren Chapman / IPB News)

Hoosiers’ individual income taxes will go down a little, starting Jan. 1. That’s when the first step in a multi-year tax cut takes effect.

The tax cut package lawmakers approved in the 2022 session gradually lowers the income tax rate by about 10 percent, from 3.23 percent to 2.9 percent.

The first step happens in 2023, starting Jan. 1 – a cut down to 3.15 percent. What does that mean for your wallet? If you make $50,000 a year, it will save you about $40.

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This first cut is automatic. But the rest of them – scheduled to take place in 2025, 2027 and 2029 – aren’t. Sen. Ryan Mishler (R-Bremen) reminds people that those cuts will only happen if state revenues are growing by at least 2 percent a year.

“If we do have an economy that slows down, then they freeze," Mishler said. "So, they only keep going down if the economy grows.”

The income tax cuts will eventually cost the state about $1 billion a year in revenue.

Contact reporter Brandon at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.