LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6925 NOTE PREPARED: Jan 3, 2024
BILL NUMBER: SB 198 BILL AMENDED:
SUBJECT: Renter's Deduction.
FIRST AUTHOR: Sen. Taylor G BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: The bill increases the maximum renter's deduction for income tax purposes from
$3,000 to $6,000 per taxable year.
Effective Date: January 1, 2025.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR would incur some
administrative expenses relating to the revision of tax forms, instructions, and computer programs to reflect
the changes to the renter’s deduction. The DOR's current level of resources should be sufficient to implement
these changes.
Explanation of State Revenues: This bill increases the maximum renter’s deduction to $6,000. The
provision may decrease revenue into the General Fund by approximately $50 M beginning in FY 2026. The
revenue impact may decline slightly through FY 2028 as the individual income tax rate decreases through
tax year 2027. The estimate is based on individual adjusted gross income (AGI) tax returns filed for tax year
2021 and estimates of the amount of contract rent paid in Indiana from the American Community Survey.
In 2021, approximately 580,800 returns claimed the maximum deduction out of a total of about 665,500
returns claiming the deduction. The group of 580,800 returns claiming the maximum deduction was
distributed according to Indiana contract rent data published by the U.S. Census Bureau. A new renter’s
deduction amount was derived for those returns according to the rent distribution and the $6,000 maximum
deduction under the bill. The estimate accounts for the possibility that certain taxpayers will have insufficient
rent paid to claim the full deduction.
SB 198 1 Explanation of Local Expenditures:
Explanation of Local Revenues: The tax deduction will decrease taxable income, so counties imposing
local income taxes (LIT) may experience revenue loss. Based on the current average LIT rate of 1.67%, the
statewide revenue loss may be approximately $27.8 M beginning in FY 2026.
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: Local units that receive a local income tax distribution.
Information Sources: LSA Income Tax Database; U.S. Census Bureau, American Community Survey,
2022. ACS Indiana 1-Year Estimates Detailed Tables, Contract Rent.
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 198 2