Governor Holcomb is taking a wait-and-see approach to House Republicans’ plans for a tax cut.
Hoosiers will receive a one-time income tax cut next year under the state’s automatic tax rebate law. Speaker Todd Huston says Republicans will propose an income tax cut, though he says they’re still deciding whether to cut the tax rate or give Hoosiers a credit on their return.
Holcomb says it’s a great statement that Indiana is in a position to even discuss cutting taxes. The state surplus swelled to nearly four-billion dollars in the fiscal year which ended June 30, triggering the automatic rebate for just the second time in its 10-year history. In the first four months of the new fiscal year, the state is already nearly 600-million dollars ahead of the projections in the new two-year state budget.
But Holcomb says he needs to see the specifics of the size and method of the proposed cut, and what next week’s updated revenue forecast looks like. And he says he doesn’t want to hamstring the next state budget in 2023. He notes a special commission is reviewing how Indiana can improve public health, beyond COVID. That panel will deliver its recommendations at the end of next year, and Holcomb says those proposals could include some big-ticket spending plans.
Senate Republicans have also been wary of the tax cut plan, warning the federal pandemic relief payments may be distorting consumer spending patterns.
Indiana’s 3.23% income tax rate has been in effect since 2017, and is the lowest in 34 years.
