By CHRIS JETER
State Representative
State lawmakers recently wrapped up the 2022 legislative session, and much of the debate within the Statehouse these past few months centered on tax cuts and refunds. To cut, or not to cut – that was the question. In the end, Hoosier taxpayers won out over efforts to grow government.
Now in the hands of the governor to sign into law, Indiana is on the heels of enacting the largest tax cut in the state’s history.
The $1 billion tax-relief package will drop the state’s individual income tax from 3.23 percent to 2.9 percent over seven years. After fully phased in, Indiana will have one of the lowest income tax rates in the nation. Compare this to California at 13.3 percent, Hawaii at 11 percent and New Jersey at 10.75 percent.
As consumers and businesses pay utility bills on everything from electricity to natural gas and phones to water, a Utility Receipts Tax is collected. This tax will be eliminated, and in our efforts to continue paying down state debt, reserves will be used to make a one-time, $2.5 billion payment toward pre-’96 teacher pension obligations. Already, Indiana has paid down well over $1 billion in debt over the last year alone. Much like family budgeting, a state’s low-debt burden ensures our credit rating is the highest possible. With Indiana’s AAA credit rating, it signals to creditors we pay our debts and live within our means, and in turn, we save Hoosier tax dollars, which would otherwise be used on substantial interest payments.
Also like families, Indiana built up a savings to help protect the state against unforeseen economic downturns, like when COVID-19 hit. By the end of fiscal year 2022, which is June 30, the state’s budget reserves are expected to hit a record $5 billion. Higher than expected revenue collections triggered an automatic taxpayer refund, and Hoosiers can expect a $125 refund this spring as part of a combined refund of over $545 million. Another new law recently signed by the governor ensures the maximum number of Hoosiers qualify for the refund.
As a fiscal conservative, my focus remains on limited government spending, trimming waste and keeping taxes low. This tax-cut package is a strong reflection of my commitment to financial responsibility, and I’m looking forward to it becoming law. Indiana’s fiscal outlook remains very positive, and Hoosier taxpayers and businesses that endured the pandemic deserve refunds and permanent tax cuts.
After all, it is your money.
State Rep. Chris Jeter (R-Fishers) represents House District 88, which includes portions of Marion, Hamilton and Hancock counties.