Senate committee debates major rewrite of local income tax structure, aims to delay LIT changes for one year

The Senate Tax and Fiscal Policy Committee on Thursday held a lengthy hearing on Senate Bill 238, a package of changes that would alter how Indiana’s local income tax (LIT) is distributed and delay the law’s full implementation by one year.

Senator Rogers, sponsor of the measure, told the committee the bill is “a work in progress” designed to make the LIT framework enacted in last session’s SEA 1 workable for municipalities, counties and school corporations. Among the principal changes Rogers described were reducing the county services cap from 1.2% to 0.7% and reallocating 0.5 percentage points to the municipal services cap (raising it to 1.9%), moving 0.2 percentage points of the fire/EMS rate to municipalities, and changing the business personal property de‑minimis threshold from $2,000,000 to…