Indiana Governor Holcomb Signs Bill Giving Tax Relief for Small Businesses
Indiana Governor, Eric Holcomb signed Senate Bill 2 into law on Wednesday, providing tax relief to Hoosier small businesses.
Senate Bill 2
Senate Bill 2, which was authored by Indiana Republican State Senators Scott Baldwin and Chris Garten, would change the law regarding state taxes for LLCs and S Corps. The bill would allow small business owners to deduct their Indiana state tax payments when filing their federal returns. The Senate Bill 2 reads in part,
Authorizes certain pass through entities to make an election to pay tax at the entity level based on each owner's aggregate share of adjusted gross income. Provides a refundable tax credit equal to the amount of tax paid by the electing entity with regard to the owner's share. Allows a credit for pass through entity taxes that are imposed by and paid to another state. Makes certain changes to provisions that apply to taxpayers who file a combined return for the financial institutions tax.
Leveling the Playing Field
This change will level the playing field between small businesses operating as LLCs and S Corps, and larger companies like C Corps that already are eligible to deduct their tax payments in totality. Previously, LLCs and S Corps could only deduct a maximum of $10,000. This will reportedly result in millions of dollars in federal tax savings for small businesses across Indiana. According to KPCNews,
That’s expected to generate $112 million in tax savings for businesses, and that relief can start immediately as it covers eligible businesses filing their 2022 and 2023 taxes.
The Governor's Desk
Senate Bill 2 passed both the Senate and the House unanimously before making its way to Governor Holcomb's desk to be signed into law. The bill will impact more than 500,000 small Hoosier businesses that will now be able to take advantage of the tax break.