The first legislative proposal to win approval this year by both the Senate and the House, sending it on to the governor's desk to be signed into law, partially adjusts Indiana's tax statutes to match the provisions of the federal One Big Beautiful Bill Act.
Senate Enrolled Act 212 was fast-tracked through the General Assembly because its provisions retroactively apply to 2025 income taxes, for which the federal and state filing period opened Monday and runs through April 15.
Most Hoosiers will not be able to take advantage of the tax savings unless they adopted a child last year. A massive federal business tax cut tied to accelerated asset depreciation was not included in Indiana's conformity measure.
As a result, the tax policy changes included in the plan only are expected to cost the state approximately $1.5 million a year.
Separately, Senate Bill 243, which passed the Senate 47-1 Wednesday and next goes to the House, would permit eligible Hoosiers whose earnings this year include overtime or gratuities to avoid state and county income taxes on the money, in addition to federal income tax, when they file in 2027.
That measure, which also allows for up to $10,000 in tax-deductible interest on loans used to purchase U.S. assembled vehicles, only would apply for one year if it becomes law due to its estimated $251 million negative impact on state tax revenue.
State Sen. Travis Holdman, R-Markle, the sponsor, said the 2027 General Assembly will decide whether to continue those state tax breaks in future years as part of the process of crafting Indiana's next two-year state budget.
Notably, Republican Gov. Mike Braun had hoped the first measure to reach his desk from the current General Assembly would be a partisan redrawing of Indiana's nine congressional districts to advantage Republican candidates in this year's elections.
But House Bill 1032 was defeated 31-19 by the Republican-controlled Senate Dec. 11, despite passing the Republican-controlled House, 57-41 earlier that month.
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