INDIANAPOLIS (WANE) — Indiana taxpayers will receive a $125 refund after filing their 2021 taxes.
Gov. Eric Holcomb on Wednesday said the state closed the fiscal year with an “unprecedented” amount in reserves, previously reported as $3.9 billion. Holcomb said as a result, “we have an obligation to put this money back in the hands of taxpayers instead of leaving it in the hands of government.”
An estimated $545 million will be returned to Hoosiers in refunds, the state said.
“It’s an exciting time. Not often do we get refunds from our taxes that we send to the government and this year we are able to actually send $125 per taxpayer back to Hoosier taxpayers,” said Rep. Daniel Leonard (R-Huntington).
The last time there was a surplus passed back to Hoosiers through a tax refund was in 2012. Rep. Leonard has been in the statehouse for 20-years and he said it’s not often the state is in the situation where it can send money back to Hoosiers.
Back in July, State Auditor Tera Klutz, CPA (Certified Public Accountant) announced that Indiana closed the 2021 fiscal year with reserves of $3.9 billion. Of the total, $1.1 billion of the funding will be transferred and split between retirement funding and a refundable income tax credit for Hoosier taxpayers.
Governor Holcomb is working with leaders of the general assembly on legislation that will streamline the process and make an additional 910,000 taxpayers eligible for the credit.
“I think a good example of that is people that pay quarterly taxes, at the end of the year, don’t owe any taxes because they pay them each quarter,” Rep. Leonard explained. “According to the statute those people are not included in the taxpayer refund. But, they are taxpayers, they just paid ahead of time. We originally thought we would be able to send out $170 to taxpayers, but we left those people out.”
In July, the state said single filers could receive up to $170 and joint filers could see $340 in refunds due to the extra state revenue. Under Indiana law, anytime the state’s reserve dollars go above 12.5% of the total budget, that revenue must be distributed back to taxpayers.
After calculating in the 910,000 taxpayers, the total amount of money for each Hoosier taxpayer dropped from $170 to $125.
The tax credit isn’t the only thing that lawmakers are considering to keep money in Hoosiers’ pockets. With the current surplus, the House of Representatives is considering possible tax cuts to be discussed in the upcoming 2022 General Assembly. Rep. Leonard said the reason behind the tax cuts are the current state surplus and that the forecast for the revenues are “really good.”
“We have all kinds of proposals on the table,” Rep. Leonard said. “There’s everything from income tax reductions, to sales tax reductions, to personal property deductions, eliminating the floor on business personal property.”
Rep. Leonard added that the tax break will depend on what the General Assembly decides. He added that the surplus was created because of the federal money that flowed into the state, spending, and the collection of certain sales tax.
“I will tell you it’s been a great couple of days for northeast Indiana. Not only am I able to tell taxpayers that they are going to get $125 a piece back, but northeast Indiana was also granted $50 million in READI grants. I think that’s phenomenal,” Rep. Leonard said. “I think the last couple of days have been tremendous. I’m going to sleep real well tonight.”
Refunds are expected to be completed by May 1, 2022 for taxpayers who file by April 18, the state said.
More information will be released by the state later in 2022.