Below is a detailed look at the provisions in the Senate (SB 3) and House (HB 1001) legislation regarding the taxpayer rebates and more, as you will see. Of note: The Senate has included language to cap the gas tax, while the House has taken the opportunity to include provisions related to children and health.

Senate Bill 3: $9.55.6 – $1,002.4 million

  • Amends the gasoline use tax rate from the current1 7% to the lesser of 7% and $0.295 from the date of enactment to June 30, 2023.
  • Exempts residential retail utility customers from state gross retail tax on utility service billed between August 1, 2022 and March 1, 2023.2 Requires the utility to notify residential customers on their monthly bill of the exemption.
  • Freezes the gasoline excise tax and special fuel tax rates3 at the rates that were in effect on June 30, 2022 from the date of enactment to June 30, 2023. These rates were $0.32 and $0.53 per gallon 4
  • The annual index factor that the Department of Revenue calculates for the gasoline use tax and special fuel tax shall not be applied until June 30, 2023. The index factor that has been established by the department is 1.07450 for July 1, 2022 to June 30, 2023.
  • Appropriates $17.7 million from the general fund to counties and municipalities as a replacement for lost revenues due to the amendments to gasoline use tax, gasoline excise tax and special fuel tax rates.
  • Appropriates $215 million to the Capital Reserve Account. This is in addition to the $550 million appropriated in the FY 2022-23
  • Appropriates $400 million to the Pension Stabilization This is in addition to the $2.5 billion transfer of excess reserves scheduled for 2022.

1 IC 6-2.5-3.5-15 provides that before the 22nd of each month the Department of Revenue shall determine the gasoline use tax. The tax is calculated as the statewide average retail price of gasoline for the prior month (ending on the 15th) multiplied by 7% and rounded to the nearest one-tenth of one cent.

2 The Legislative Services Agency (LSA) estimates this will reduce sales tax revenues by approximately $275.8 million to $322.6 million in FY 2023.

3 LSA estimates this will reduce fuel tax revenues by approximately $47.1 million in FY 2023.

4 The Department of Revenue issued Departmental Notice # 43 which established the gasoline excise tax and special fuel tax rates at $0.33 and $0.55 per gallon respectively.

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House Bill 1001: $1,125.6 – 1,235.1 million

  • Amends automatic taxpayer refund to disburse an additional $225 per taxpayer.
  • Allows Indiana residents who did not submit a return to file an affidavit with the Department of Revenue to become eligible.
  • Exempts children’s diapers from state sales tax.[5]
  • Increases the dependent child exemption[6] amount from $1,500 to $1,600
  • Allows an increased exemption for a newborn child of $3,200.[7]
  • Allows a dependent child exemption amount of $3,000 for an adopted child.[8]
  • Augments the adoption tax credit to 20% of the federal adoption tax credit up to a maximum of $2,500 per eligible child.[9]
  • Adds: (1) donated breast milk, (2) noninvasive prenatal and routine carrier screening and (3) costs of labor and delivery to supplies and services covered by Medicaid and the Healthy Indiana Plan (HIP).[10]
  • Allows a local health department to use Safety PIN Grant funds to assist individuals seeking contraceptives.
  • Appropriates funds in addition to HEA 1001-2021 ($58.5M):
    • $2M to Real Alternatives, Inc.;
    • $10M to expand Nurse Family Partnership program;
    • $5.5M to the Safety PIN Grant Fund;
    • $1M to provide grants for newborn safety devices (baby boxes); and
    • $10M for the Child Care and Development Fund voucher program.
    • $30M augmentation to FSSA budget for Medicaid and HIP supplies and services as described above.

6 151(c)(1)(B) of the Internal Revenue Code (as effective January 1, 2004)7 LSA estimates this will reduce general fund revenue by approximately $9.7 million in FY 2023. It is also estimated that this will reduce revenues to local units by between $7 and $7.5 million in FY 2023.

8 LSA estimates this will reduce general fund revenues by between $4.4 and $5.3 million in FY 2023.

9 LSA estimates this will reduce general fund revenues by between $0.8 to $1 million in FY 2023.

10 LSA estimates this expenditure at approximately $1.2 million in FY 2023.

11 Governor Holcomb has yet to outline a specific method for the taxpayer refund. These estimates were generated by LSA for the House ATR plan.

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Governor & House: $1 billion

  • Refund $1 billion to taxpayers via $225 checks ($450 for joint filers).

Resource: David Ober at (317) 264-6887 or dober@indianachamber.com