HB 1002 – Various Tax Matters
Authored by Rep. Tim Brown (R-Crawfordsville) and Rep. Dan Leonard (R-Huntington)
Repeals a provision that would require the budget agency to transfer the amount of combined excess reserves that exceed $2,500,000,000 in calendar year 2022 to the pre-1996 account of the Indiana state teachers’ retirement fund. Amends provisions that provide for an automatic taxpayer refund if sufficient excess reserves are available to: (1) clarify the tax return filing requirement for a refund; (2) require that refunds be distributed before May 1 of the calendar year immediately following the year in which a determination is made that the state has excess reserves; (3) remove provisions that require a taxpayer to have adjusted gross income tax liability in order to qualify for the refund; and (4) remove provisions that require the refund to be made in the form of a refundable tax credit. Provides that the minimum valuation limitation applicable to the total amount of a taxpayer’s assessable depreciable personal property in a taxing district is 30% of the adjusted cost of the depreciable personal property purchased before January 2, 2022. Provides an exemption from the 30% minimum valuation limitation for new depreciable personal property purchased after January 1, 2022. Requires the Department of Local Government Finance to develop or amend forms for property taxation of assessable depreciable personal property. Repeals the utility receipts and utility services use taxes. Provides a state income tax credit for property taxes paid on certain business personal property. Specifies a formula for determining the amount of the credit. Removes the double direct test currently applied in production sales tax exemptions. Phases down the individual adjusted gross income tax rate from 3.23% in 2022 to 3% in 2026 and thereafter.
Chamber position: Support
The latest: Governor Eric Holcomb unveiled his 2022 legislative agenda Monday, highlighted by a goal to eliminate the 30% depreciation floor on business personal property tax on newly acquired equipment. This indeed would enable Indiana to better compete with neighboring states (which don’t tax personal property at all). The measure is now part of HB 1002.
Indiana Chamber action/commentary: Our overall view is that this is a great bill for the business community. Specifically, these business personal property tax changes have all been forwarded by the Indiana Chamber for a number of years. The phasing out of the depreciation floor by exempting newly acquired property has been a specific proposal of the Chamber’s for several years and part of varied efforts to reduce personal property tax for two decades.
Governor Holcomb and HB1002 are right on target with their priorities and we’re pleased to support them. The 30% depreciation floor, in particular, has been one aspect of Indiana’s tax code that’s hampered businesses many years. The collection of measures in HB 1002 will enhance business development and investment across the board.
With gradual phase out of the 30% depreciation floor, as businesses acquire new equipment over the next several years, impact on local property tax revenues will likewise be gradual – and marginal. We support providing a means to replace any lost revenues if that proves necessary to assist local governments and allow transition to this better, more competitive tax policy.
Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com
