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Indiana tax reforms in the past few years have been impressive. In 2011, state
senator Brandt Hershman addressed a weak link in the state’s tax code by
leading a bill that set the corporate income tax rate on a four-year phasedown
from 8.5 percent to 6.5 percent.1 In 2013, Governor Mike Pence worked with
the legislature to maintain these corporate rate cuts while instituting a moderate
cut in the state’s already well-structured individual income tax and speeding up
the repeal of the state’s inheritance tax.2
This year, policymakers have continued the Hoosier trend toward better tax
laws, as the governor signed a major tax package on March 25 that will improve
the state’s business tax climate further. Indiana’s reforms to business personal
property taxes are of particular interest, as they could serve as a template for
tax reform discussions by policymakers in other states. This report lists some
major changes in the tax reform bill and the impact they will have on the state
New Law Cuts Corporate Income Taxes and Reforms
Business Personal Property Taxes
The new tax law, Senate Enrolled Act No. 1, is a compromise of S.B. 1,
originally authored by Sens. Brandt Hershman and Luke Kenley, and H.B.
1001, originally authored by Rep. Eric Turner.
Major components of the package will:
• Phase down the corporate income tax rate to 4.9 percent by 2022, which
would make Indiana’s the second lowest corporate tax rate of any state
levying the tax.
• Allow localities the option to enact a business personal property tax
filing threshold for businesses with less than $20,000 in personal
property (this threshold is based on acquisition cost of the property).
1 Niki Kelly, Corporate Tax Cut Praised as Jobs Bill, Journal Gazette, May 1, 2011, http://www.journalgazette.
2 Joseph Henchman, Indiana Approves Income Tax Reduction, tax Foundation tax Policy BloG, May 14, 2013,