Indiana 2025 Regular Session

Indiana House Bill HB1345 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	Introduced Version
3	3	HOUSE BILL No. 1345
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3-2-1; IC 6-3.6-2-2.
7	7	Synopsis: Income tax replacement. Eliminates the state adjusted gross
8	8	income tax by reducing the rate to zero. Provides that the reduction in
9	9	revenue resulting from the elimination of the state adjusted gross
10	10	income tax must be offset by adjustments to the state gross retail tax.
11	11	Provides that in calculating the local income tax (LIT), which is
12	12	imposed based on a local taxpayer's state adjusted gross income, the
13	13	calculation of a taxpayer's state adjusted gross income for LIT purposes
14	14	shall be calculated under the adjusted gross income tax provisions as
15	15	if those provisions, and the most recent adjusted gross income tax rate
16	16	before its elimination, were still in effect.
17	17	Effective: July 1, 2025.
18	18	Borders
19	19	January 13, 2025, read first time and referred to Committee on Ways and Means.
20	20	2025 IN 1345—LS 6984/DI 134 Introduced
21	21	First Regular Session of the 124th General Assembly (2025)
22	22	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
23	23	Constitution) is being amended, the text of the existing provision will appear in this style type,
24	24	additions will appear in this style type, and deletions will appear in this style type.
25	25	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
26	26	provision adopted), the text of the new provision will appear in this style type. Also, the
27	27	word NEW will appear in that style type in the introductory clause of each SECTION that adds
28	28	a new provision to the Indiana Code or the Indiana Constitution.
29	29	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
30	30	between statutes enacted by the 2024 Regular Session of the General Assembly.
31	31	HOUSE BILL No. 1345
32	32	A BILL FOR AN ACT to amend the Indiana Code concerning
33	33	taxation.
34	34	Be it enacted by the General Assembly of the State of Indiana:
35	35	1 SECTION 1. IC 6-3-2-1, AS AMENDED BY P.L.201-2023,
36	36	2 SECTION 95, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
37	37	3 JULY 1, 2025]: Sec. 1. (a) Each taxable year, a tax at the following rate
38	38	4 of adjusted gross income is imposed upon the adjusted gross income of
39	39	5 every resident person, and on that part of the adjusted gross income
40	40	6 derived from sources within Indiana of every nonresident person:
41	41	7 (1) For taxable years beginning before January 1, 2015, three and
42	42	8 four-tenths percent (3.4%).
43	43	9 (2) For taxable years beginning after December 31, 2014, and
44	44	10 before January 1, 2017, three and three-tenths percent (3.3%).
45	45	11 (3) For taxable years beginning after December 31, 2016, and
46	46	12 before January 1, 2023, three and twenty-three hundredths percent
47	47	13 (3.23%).
48	48	14 (4) For taxable years beginning after December 31, 2022, and
49	49	15 before January 1, 2024, three and fifteen hundredths percent
50	50	16 (3.15%).
51	51	17 (5) For taxable years beginning after December 31, 2023, and
52	52	2025 IN 1345—LS 6984/DI 134 2
53	53	1 before January 1, 2025, three and five-hundredths percent
54	54	2 (3.05%).
55	55	3 (6) For taxable years beginning after December 31, 2024, and
56	56	4 before January 1, 2026, three percent (3%).
57	57	5 (7) For taxable years beginning after December 31, 2025, and
58	58	6 before January 1, 2027, two and ninety-five hundredths percent
59	59	7 (2.95%). zero percent (0%).
60	60	8 (8) For taxable years beginning after December 31, 2026, two and
61	61	9 nine-tenths percent (2.9%).
62	62	10 (b) Except as provided in section 1.5 of this chapter (before its
63	63	11 expiration), each taxable year, a tax at the following rate of adjusted
64	64	12 gross income is imposed on that part of the adjusted gross income
65	65	13 derived from sources within Indiana of every corporation:
66	66	14 (1) Before July 1, 2012, eight and five-tenths percent (8.5%).
67	67	15 (2) After June 30, 2012, and before July 1, 2013, eight percent
68	68	16 (8.0%).
69	69	17 (3) After June 30, 2013, and before July 1, 2014, seven and
70	70	18 five-tenths percent (7.5%).
71	71	19 (4) After June 30, 2014, and before July 1, 2015, seven percent
72	72	20 (7.0%).
73	73	21 (5) After June 30, 2015, and before July 1, 2016, six and
74	74	22 five-tenths percent (6.5%).
75	75	23 (6) After June 30, 2016, and before July 1, 2017, six and
76	76	24 twenty-five hundredths percent (6.25%).
77	77	25 (7) After June 30, 2017, and before July 1, 2018, six percent
78	78	26 (6.0%).
79	79	27 (8) After June 30, 2018, and before July 1, 2019, five and
80	80	28 seventy-five hundredths percent (5.75%).
81	81	29 (9) After June 30, 2019, and before July 1, 2020, five and
82	82	30 five-tenths percent (5.5%).
83	83	31 (10) After June 30, 2020, and before July 1, 2021, five and
84	84	32 twenty-five hundredths percent (5.25%).
85	85	33 (11) After June 30, 2021, and before July 1, 2026, four and
86	86	34 nine-tenths percent (4.9%).
87	87	35 (12) After June 30, 2026, zero percent (0%).
88	88	36 (c) If for any taxable year a taxpayer is subject to different tax rates
89	89	37 under subsection (b), the taxpayer's tax rate for that taxable year is the
90	90	38 rate determined in the last STEP of the following STEPS:
91	91	39 STEP ONE: Multiply the number of days in the taxpayer's taxable
92	92	40 year that precede the day the rate changed by the rate in effect
93	93	41 before the rate change.
94	94	42 STEP TWO: Multiply the number of days in the taxpayer's
95	95	2025 IN 1345—LS 6984/DI 134 3
96	96	1 taxable year that follow the day before the rate changed by the
97	97	2 rate in effect after the rate change.
98	98	3 STEP THREE: Divide the sum of the amounts determined under
99	99	4 STEPS ONE and TWO by the number of days in the taxpayer's
100	100	5 tax period.
101	101	6 However, the rate determined under this subsection shall be rounded
102	102	7 to the nearest one-hundredth of one percent (0.01%).
103	103	8 (d) The reduction in revenue resulting from the elimination of
104	104	9 the state income tax under subsection (a)(7) and subsection (b)(12)
105	105	10 must be offset by adjustments to the state gross retail tax under
106	106	11 IC 6-2.5-2.
107	107	12 SECTION 2. IC 6-3.6-2-2, AS AMENDED BY P.L.239-2017,
108	108	13 SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
109	109	14 JULY 1, 2025]: Sec. 2. "Adjusted gross income" has the meaning set
110	110	15 forth in IC 6-3-1-3.5 and shall be calculated under IC 6-3 as if the
111	111	16 rate under IC 6-3-2-1(a)(6) were still in effect. However:
112	112	17 (1) except as provided in subdivision (3), in the case of a local
113	113	18 taxpayer who is not treated as a resident local taxpayer of a
114	114	19 county, the term includes only adjusted gross income derived
115	115	20 from the taxpayer's principal place of business or employment;
116	116	21 (2) in the case of a resident local taxpayer of Perry County, the
117	117	22 term does not include adjusted gross income described in
118	118	23 IC 6-3.6-8-7; and
119	119	24 (3) in the case of a local taxpayer described in section 13(3) of
120	120	25 this chapter, the term includes only that part of the individual's
121	121	26 total income that:
122	122	27 (A) is apportioned to Indiana under IC 6-3-2-2.7 or
123	123	28 IC 6-3-2-3.2; and
124	124	29 (B) is paid to the individual as compensation for services
125	125	30 rendered in the county as a team member or race team
126	126	31 member.
127	127	2025 IN 1345—LS 6984/DI 134