Business leaders are walking away from this year’s legislative session with several wins as lawmakers passed legislation to offer tax relief for small businesses, child care tax credits for employers, and hundreds of millions of dollars in financial incentives for economic development projects.
Senate Bill 2 was the first piece of legislation Gov. Eric Holcomb signed in 2023. It allows pass-through business entities, which can include partnerships and S corporations, to deduct all state tax payments on federal tax returns, a change that is expected to result in $100 million in federal tax savings for Hoosier businesses at no cost to the state.
They also praised the passage of Senate Bill 5, a consumer data protection measure that seeks to limit a company’s ability to collect personal data.
Legislators also approved the creation of a state and local tax review commission that will explore the feasibility of eliminating the state income tax and paying down the teacher pension fund.
“We feel very positive about this session and like there are a lot of key victories in a number of different areas,” said Kevin Brinegar, president of the Indiana Chamber of Commerce.
House Bill 1002, authored by Rep. Chuck Goodrich, R-Noblesville, creates state-funded scholarship accounts students can use toward technical coursework and credentials based on their career aspirations and interests. Goodrich’s Indianapolis-based company, Gaylor Electric, has a partnership with The Crossing School of Business and Entrepreneurship in Noblesville, a private high school offering career and technical education and work-based learning experiences.
The budget includes $16 million over the biennium for the Governor’s Workforce Cabinet to spend on workforce development initiatives, including increased access to STEM curriculum, adult education, workforce-ready grants and digital-skills training.
House Bill 1449 ensures that students who qualify for the 21st Century Scholars Program do so automatically, without having to apply, while Senate Bill 167 requires high school seniors to complete and submit the Free Application for Federal Student Aid form unless the student opts out with consent from a parent, principal or school counselor.
Indiana employers’ biggest concerns are workers’ lack of access to affordable housing and child care, Brinegar said.
House Bill 1005 allocates $75 million to a Residential Housing Infrastructure Assistance Program and Fund, giving local governments the option to create a tax-increment-financing district to support housing projects. The law, which aims to address a rural housing shortage, stipulates that 70% of the funding must go to municipalities with a population less than 50,000.
Senate Bill 186 establishes a state tax credit for employers and child care facilities to help expand access to child care.
Lawmakers also expanded eligibility for On My Way Pre-K from 127% to 150% of the federal poverty limit, or about $41,625 a year for a family of four.
The Indiana Economic Development Corp. landed more than $1.2 billion in new and continued funding, including $500 million for READI 2.0, $500 million in cash performance grants as part of a deal-closing fund, $150 million for a site-acquisition fund, and more than $120 million for grants, programs and administrative costs.
Technology parks throughout the state will be able to collect more tax revenue thanks to legislation authored by Sen. Brian Buchanan, R-Lebanon, and pushed by tech and business lobbyists. Senate Bill 271 will allow the state’s 22 tech parks to receive up to $250,000 per year in incremental income tax revenue, up from $100,000 under the current funding model.
The Indiana Destination Development Corp., the state’s tourism agency that also focuses on worker recruitment and retention, received a sizable boost to its budget, going from $4.7 million to $20 million. Some of that will be spent on marketing campaigns in neighboring Midwestern states.
A bill designed to prevent the state’s pension fund from working with asset managers that use environmental, social and governance—or ESG—considerations in their investment strategies passed despite some objections from the business community.
While the legislation was supported by firearms manufacturers and groups representing fossil fuel companies, organizations like the Indiana Chamber and the Indiana Bankers Association lobbied against it, saying the policy “picks winners and losers” in the free market and “might have a chilling effect on the Indiana economy.”
Senate Bill 7, which prevents health care systems from imposing noncompete clauses on primary care physicians, passed both chambers and is awaiting review by the governor. The Indiana Chamber and the Indiana Hospital Association opposed the measure.•
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