Final step of Indiana income tax cut effective Jan. 1

Money
(WISH Photo, file)

INDIANAPOLIS (AP) — Indiana’s personal income tax rate will drop slightly beginning New Year’s Day, completing a phased-in reduction that’s half of the 10 percent cut Republican Gov. Mike Pence pushed during his 2012 campaign.

The state income tax rate will become 3.23 percent for 2017, down from the 3.3 percent rate that’s been in place the past two years.

The Republican-dominated Legislature approved the reductions in a 2013 package that included corporate and inheritance tax cuts. The income tax rate had been 3.4 percent since the 1980s.

The changes mean someone with $50,000 in taxable income will see their state income tax bill drop by $35 for 2017.

Purdue University economist Larry DeBoer has estimated the income tax cuts amount to $265 million in taxpayer savings this state budget year.

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