06 May 2025 Indiana law lowers personal income tax rate for 2026, with further incremental cuts starting in 2030 if revenue goals are met On April 16, 2025, Indiana Governor Mike Braun signed into law SB 451, which, for tax years 2030 through 2042, lowers the personal income tax rate by .05 percentage points every other year if revenue goals are met. H.B. 1001, enacted in 2023, lowered the tax rate starting in 2024 with additional tax cuts each year until the rate reached 2.95% in 2026 and 2.90% in 2027. SB 451 accelerates the 2.90% tax rate to 2026 and extends that rate through 2030. (See Tax Alert 2023-0981.) Assuming the revenue thresholds are met at the end of fiscal years 2028 and 2030, the tax rate would be phased down from 2.9% to 2.85% for tax year 2030 and 2031 and 2.8% for tax year 2032 and 2033. (SB 451 fiscal impact statement.) For tax years 2030 through 2042, employers may need to confirm if updates are needed to Indiana's withholding formula.
Document ID: 2025-0991 | ||||
