Senate Bill 233 – Business Personal Property Tax Exemption
Authored by Sen. Aaron Freeman (R-Indianapolis)

This bill increases, from $20,000 to $40,000, the acquisition cost threshold for the business personal property tax exemption.

Chamber Position:
Support

The Latest: Amended and passed by the Tax and Fiscal Policy Committee 12-0 on Tuesday.

Chamber Action/Commentary: The Indiana Chamber played a key role in promoting the legislation in 2015 that established a “de minimis” exemption for personal property tax filing. This week, we made our support clear for an adjustment to the threshold when it was heard in committee. The basic rationale for the original exemption was that the costs incurred by a taxpayer in preparing a return exceeded the amount of tax owed for a substantial number of taxpayers.

The initial $20,000 threshold relieved about half of all business personal property owners from having to file a return. As the issue has been re-examined, it turns out that the $20,000 threshold isn’t sufficient to fulfill the original objective – to exempt those who are paying more to have a return filed than what they end up owing in tax.

By raising the threshold to $40,000, the exemption will now cover an additional 28,300 returns. These newly covered filers are paying, on average, only $145 in tax per return. Most of these taxpayers still pay more than $145 to their accountant. This exemption change will bring the threshold closer to that desired sweet spot. Because these returns collectively only generate a nominal amount of tax revenue (about $4 million as a cumulative statewide total), the revenue loss to individual units of government will be negligible.

The sensibleness of this measure is so evident that the bill received broad bipartisan support and several committee members asked to have themselves added as co-authors on the bill. The Chamber is pleased to be part of this effort to take a little burden off a larger number of small businesses via this legislation.

Resource: Bill Waltz at (317) 264-6887 or email: [email protected]