INDIANAPOLIS (AP) — Republican Gov. Mike Pence signed a package of business tax cuts into law Tuesday that he hopes will draw more business into Indiana.
The new law slashes the state's corporate income tax and provides options for county leaders to reduce property taxes on business equipment. But it still will be awhile before the changes take full effect: The corporate tax cut will not be completed until 2023 and the equipment tax cut will be on hold until mid-2015.
"We worked through a legislative process that I think resulted in Indiana becoming more competitive for the kind of investment that creates jobs," Pence said Tuesday, following a bill-signing ceremony at One Click Ventures, an Internet company based in Greenwood.
"I think by signaling to the country that we've given local communities more options in the area of business personal property taxes is an important message to send," he said. "And I believe it's going to put our local communities and counties in a better position to attract investment."
Pence had sought the elimination of the state's property tax on business equipment, but he faced strong opposition from local government leaders worried about losing a key source of revenue. The tax plan approved by lawmakers amounts to a portion of what Pence originally sought.
The corporate income tax will be dialed back from 6.5 percent to 4.9 percent in the coming years, but the full cut will not be enacted until 2023. The state's financial institutions tax, which is levied on banks, will also be cut from 6.5 percent to 4.9 percent by 2023.
Instead of flatly eliminating the state's business personal property tax levied on equipment, the new law places the decision with counties. Starting after July 1, 2015, local leaders will be allowed to eliminate the tax for small businesses — any with less than $20,000 in business equipment — and also strike the tax for new business equipment purchased by companies.