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Prospects for Indiana tax cuts boosted by governor’s support

eric_holcomb-zach_herndon.jpg

Indiana legislators pushing for significant tax cuts are now getting some support from Gov. Eric Holcomb.

The governor has sided for months with state Senate Republican leaders reluctant to embrace major tax cuts, citing uncertainty about the economy despite recent big growth in state tax collections that led House Republicans to push a plan for broad business and individual tax cuts.

But Holcomb said Wednesday he now believed the state’s individual income tax rate could be cut while maintaining enough state revenue for additional spending needs in the next state budget to be adopted in 2023. He didn’t detail any possible cuts.

“We’ve done the modeling, we’ve had a couple months,” Holcomb said. “We’ve watched our revenue grow we and I know what’s potentially in in the pipeline right now.”

A Senate committee last week stripped from a bill the tax cut package potentially totaling more than $1 billion a year that the House approved last month. The Senate is expected to vote on the bill next week, likely setting up negotiations in the final weeks of the legislative session.

Key parts of the House Republican plan would cut Indiana’s current individual income tax rate of 3.23% to 3% over the next four years.

That would ultimately reduce state tax collections by an estimated $500 million a year when fully implemented in 2026. The plan also proposes cuts to several business taxes, potentially worth $700 million to $850 million a year.

 

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