Doubts Voiced on Indiana’s Goal of Abolishing State Income Tax

Revenue analysts raised significant concerns about Indiana’s ability to eliminate or drastically cut its personal income tax Friday, noting the state would face challenges replacing the nearly $12 billion currently flowing into state and local coffers each year.

Fiscal analysts with Indiana’s Legislative Services Agency revealed the personal income tax generated $8.2 billion in fiscal 2022 and $7.6 billion in fiscal 2023—just over one-third of the total tax revenues needed to fund state operations. Indiana is one of a handful of states that also authorizes and administers local income taxes, generating another $3.4 billion for county operations in ...