Laws to impact tax returns of low income Hoosiers

2018-05-14

INDIANAPOLIS – Low income Hoosiers are about to face a double whammy.

Those Hoosiers who take advantage of the earned income tax credit when filing their tax returns will see some major benefit losses under the tax bill adopted by Congress and a companion measure being considered by Indiana legislators during this week’s special session.

The Institute on Taxation and Economic Policy predicts Hoosiers will lose 12 million dollars in federal and $700-thousand dollars in state earned income tax credits in 2019.

Congress changed the way cost of living increases were calculated for the federal earned income tax credit so they grow at a rate far lower than inflation. The state’s credit is set by the General Assembly at 9 % of the federal credit.

A provision of House Bill 1316 would also adopt the federal Chained CPI. The Indiana Institute of Working Families is trying to persuade lawmakers not to tie the two together but hasn’t been successful so far.

The General Assembly meets in special session starting today and has already passed HB 1316. Republican leaders say a few tax related bills and a boost to school safety funding are the main focus.

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