Indiana small businesses could save millions under legislation unanimously approved by a Senate committee Tuesday.
Businesses can deduct the state taxes they pay from their federal taxes each year. But about half a million businesses in Indiana pay the state’s individual income tax, rather than the corporate income tax.
And that means instead of getting to deduct all their state taxes from their federal taxes, they only get to deduct up to $10,000.
Sen. Scott Baldwin’s (R-Noblesville) bill, SB 2, would remove that cap.
“Resulting in over $50 million annually, as estimated, in federal tax savings for the owners of these small businesses,” Baldwin said.
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Donna Niesen, representing the Indiana CPA Society, said it’s an issue of fairness.
“This bill levels the playing field for businesses and taxpayers in Indiana,” Niesen said.
The measure is not expected to affect Indiana’s tax revenues. It now heads to the full Senate.
Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.