The prospects for major Indiana tax cuts dimmed further Tuesday as a leading state senator said he and other senators are “entrenched” on first paying down state debts.
The Senate tax committee stripped out provisions from a House-endorsed bill that potentially cut more than $1 billion a year in various business and individual income taxes.
Republican Senate leaders have consistently said they are worried about uncertainty in the economy and want to prioritize paying off the state’s future pension obligations.
Senate tax committee Chairman Travis Holdman said Senate Republicans were “pretty entrenched” on the debt issue.
Key parts of the House Republican plan would cut Indiana’s current individual income tax rate of 3.23% over the next four years to 3%.
That would ultimately reduce state tax collections by an estimated $500 million a year when fully implemented in 2026. The plan also proposes cuts to several business taxes, potentially worth $700 million to $850 million a year.
House Ways and Means Chairman Tim Brown indicated the House would continue pushing for tax cuts before this year’s legislative session ends in early March as the state has seen a big jump in tax collections helped by federal COVID-19 relief funding.
“This isn’t our money,” Brown said. “It’s the citizens’ money.”