LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7007 NOTE PREPARED: Feb 11, 2025
BILL NUMBER: SB 304 BILL AMENDED: Feb 11, 2025
SUBJECT: Food and Beverage Taxes.
FIRST AUTHOR: Sen. Zay BILL STATUS: CR Adopted - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: (Amended) Cities of Marion and Richmond: This bill authorizes the city of
Marion and the city of Richmond respectively to impose a food and beverage tax of not more than 1% of the
gross retail income received from a taxable transaction.
Town of Shipshewana: It also allows the fiscal body of the town of Shipshewana to increase its food and
beverage tax.
Food and Beverage Tax Expiration: The bill specifies that the provisions authorizing the imposition of a
food and beverage tax and the increase to a food and beverage tax expire January 1, 2047.
Wayne County: It also repeals the Indiana Code chapter authorizing the imposition of food and beverage
taxes in Wayne County.
Effective Date: July 1, 2025.
Explanation of State Expenditures: (Revised) Cities of Marion, Richmond, and Town of Shipshewana: The
food and beverage tax would be collected and remitted to the Department of State Revenue (DOR) in the
same manner as the state Sales Tax. The DOR should be able to implement the bill’s requirements within
existing levels of staff and resources.
Explanation of State Revenues:
Explanation of Local Expenditures: (Revised) Cities of Marion and Richmond: The cities could potentially
incur a one-time increase in costs if it holds an additional public hearing to discuss a proposed ordinance to
impose a food and beverage tax.
If the cities impose a food and beverage tax, their fiscal officers would establish a food and beverage tax
receipts fund, in which all revenue from the tax would be deposited. Money in this fund may only be used
for the purposes outlined in the bill for each city respectively.
SB 304 1 Explanation of Local Revenues: (Revised) City of Marion: The bill authorizes the city of Marion to impose
a food and beverage tax at a rate not to exceed 1% of gross retail income from food and beverage transactions
in the city. If the city adopts an ordinance to impose the tax in July 2025, the tax could go into effect as early
as September 1, 2025, and collections would likely begin in October 2025. The following table shows the
estimated potential revenue for CY 2025 through CY 2027.
Estimated Potential City of Marion Food and Beverage Tax Revenue, 1%
CY 2025 CY 2026 CY 2027
$210,000 $846,000 $859,000
These estimates are based on sales data for the food services industry in Grant County, as published in the
2017 Economic Census, and actual revenue of counties that currently collect food and beverage taxes. A
portion of the county total was allocated to the city of Marion based on the city's estimated share of the food
and beverage industry in the county. The Marion food and beverage tax expires on January 1, 2047.
City of Richmond: The bill authorizes the city of Richmond to impose a food and beverage tax at a rate not
to exceed 1% of gross retail income from food and beverage transactions in the city. If the city adopts an
ordinance to impose the tax in July 2025, the tax would be effective in September 2025, and collections
would likely begin in October 2025. The following table shows the estimated potential revenue for CY 2025
through CY 2027.
Estimated Potential City of Richmond Food and Beverage Tax Revenue, 1%
CY 2025 CY 2026 CY 2027
$224,000 $900,000 $910,000
These estimates are based on employment data for the food services industry in Wayne County, as reported
in the 2023 Quarterly Census of Employment and Wages, and data from counties that currently impose food
and beverage taxes. A portion of the county total was allocated to Richmond based on the city's estimated
share of the food and beverage industry in the county. The Richmond food and beverage tax expires on
January 1, 2047.
Town of Shipshewana: This bill allows Shipshewana to increase the rate of the tax from 1% to 2%. The
effective date of the rate increase will depend on when the town adopts an ordinance to increase the rate. If
an ordinance is adopted in July 2025, the new rate would go into effect in September 2025. The table below
shows the estimated revenue increase for CY 2025 through CY 2027, assuming the town adopts a 2% rate
in July 2025. Actual revenues may be lower than the estimated amounts listed to the extent that consumer
demand for prepared food or beverages decreases due to the price increase from the tax.
Estimated Shipshewana Food and Beverage Tax Revenue Increase
CY 2025 CY 2026 CY 2027
$41,000 $166,000 $169,000
SB 304 2 These estimates are based actual revenue the town of Shipshewana currently collects for food and beverage
taxes and estimated economic growth for the listed calendar years.
Wayne County: The bill repeals the chapter allowing Wayne County to impose a local food and beverage tax.
This tax was not imposed and thus no collections for this tax were received.
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: City of Marion, City of Richmond, Town of Shipshewana, Wayne County.
Information Sources: Legislative Services Agency, Indiana Handbook of Taxes, Revenues, and
Appropriations, FY 2024. OFMA Quarterly Census of Employment and Wages Data.
Fiscal Analyst: Abdulrahman Abdulkadri, 317-232-9852.
SB 304 3