Hoosiers getting state tax refund after surprising revenue surplus

Indiana Statehouse (IBJ file photo)

Indiana taxpayers can expect to see a refund when they file their state income taxes in 2022 because state revenue collections for this year exceeded expectations.

The total refund will be $545.3 million divided among taxpayers. An exact amount of how much taxpayers will get likely won’t be determined until this fall when the state has an idea of how many Hoosiers will file 2021 taxes. Some of the extra money will also go toward a teacher pension fund.

The state won’t be sending out refund checks. The money will be refunded to taxpayers as a credit on state tax returns submitted next year.

Indiana found itself with $1.2 billion more in revenue than expected in the last three months and finished the fiscal year ended June 30 with nearly $4 billion in reserves. That was unexpected after last year’s revenues were off by about $1.4 billion due to the impact of the pandemic.

“It’s unprecedented for the General Fund reserve balances to increase by nearly $1.7 billion in less than three months,” said State Budget Director Zac Jackson.

The reserves are about 23% of Indiana’s expenditures. Under Indiana law, if the state’s reserves are 12.5% of general fund appropriations or higher, Hoosiers get some money back. The last time a tax refund was triggered was in 2012 where taxpayers in the state each got an $111 refund from a surplus of $360 million.

The state did not expect to bounce back to 2019-level revenues and beyond this quickly, said Cris Johnston, director of the state Office of Management and Budget.

“We were always on guard, you know, what if we have a relapse?” Johnston said. “We were always cautiously optimistic, but to be having a taxpayer refund at this magnitude, we weren’t prepared for that.”

Revenues were strong across sales, income, corporate and gaming taxes, Johnston said. Overall tax collections came in about 14% higher than a year ago. Federal pandemic relief aid to the state also played a role, along with one-time stimulus payments to Hoosiers to boost the economy.

“I would be foolish to say that didn’t have an impact,” Johnston said.

State leaders reacted to the surplus and tax refund announcement positively. Gov. Eric Holcomb said in a written statement that Indiana is poised to start fiscal year 2022 strong, and he praised state fiscal leaders.

“Because of the strong position Indiana occupied going into last year’s unprecedented global pandemic and partnerships at all levels of government, we now find ourselves at a place of full employment and growing economy,” Holcomb said. “State fiscal leaders deserve high praise for closely monitoring financial forecasts and then quickly adapting to the facts on Main Street, Indiana.”

GOP leadership in the House and Senate also reacted positively in written statements. House Speaker Todd Huston, R-Fishers, said a tax refund for Hoosiers is “well-deserved,” adding that the Legislature is going to “jump at the chance to explore sustainable tax cuts and reforms next session.”

“The automatic taxpayer refund ensures that reserves beyond what’s needed go back to where they belong–in the pockets of hardworking Hoosiers,” Huston said.

Senate President Pro Tem Rodric Bray, R-Martinsville, echoed Huston’s sentiments.

“It’s rare for government to return money to taxpayers, but with the automatic taxpayer refund kicking in, that’s exactly what our state is doing, and I am pleased we are in a position to return some of that hard-earned money,” Bray said in a written statement.

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26 thoughts on “Hoosiers getting state tax refund after surprising revenue surplus

    1. Yes, since some people don’t pay Sales Tax, Gas Tax, Rent, or Utilities… what a weird take.

    1. there are a multitude of reasons, including the basis upon which the refund will be calculated, the criteria for refund qualification, the IT and software requirements to compute the refund amounts. Further, Indiana has other state constitutional considerations with respect to these sorts of payments that the federal government does not have to abide by.

  1. The article is not clear whether the refund is $111 to each taxpayer? to each citizen? or somehow pro-rated to taxpayers based on how much they paid toward this surplus?
    If to each citizen, Biden and the Democrats will adopt this nationally as a great way to re-distribute wealth.

    1. It’s STATE tax. Biden and Democrats have nothing at all to do with this. None whatsoever.

      “An exact amount of how much taxpayers will get likely won’t be determined until this fall” but it will probably be slightly higher than before, per taxpayer, since the surplus is higher.

    2. Fred, in the 2012 refund, each individual tax payer got a credit of $111 on their state tax returns the next year. Couples filing jointly received a credit of $222. The amount for this year’s refund has not been determined.

  2. Indiana should double down on *qualify of life “. We have the right tax structure, cost of living, and employers flocking here. We need more people. Better parks, roads, policing, schools, and entertainment, will get people moving here in droves.

    The effect on the State budget will be extremely positive, by generating strong income and payroll taxes

    1. I agree with your point, but we need slightly higher taxes to pay for better roads, better policing, schools (both k-12 and higher education).

    1. ^^^This. I’d rather have them give bigger raises to teachers, or fill more potholes, or increase environmental enforcement so no one else has to drink contaminated water (as in Franklin).

    2. yeah Joe we should strive to be more like Illinois and chicago – they must have the lowest taxes in the country right?

      Wrong. government spending is not the answer to these problems. it is the way the money is spent. it is unbelievable to me that some people think the government can fix anything

    3. @Joe— Hicks is a liberal academic who is quoted often by Gannett because he fits their agenda. Hicks was recently in a Gannett article against cutting off the additional unemployment benefits. Apparently there are no help wanted signs at Ball State. He has zero credibility.

    4. Dustin – yes, because things worked so well in Kansas when they cut taxes to spur growth a few years ago. How’d that work for them?

      People want to live in places with good schools with good infrastructure. There’s a reason that Indiana is emptying into the Indianapolis area.

      Why do the best and brightest from Indiana leave and go elsewhere, and what can we do to keep them here to drive Indiana’s economy for the next 50 years? That’s the problem we should be solving for, not whether we can cut taxes to bring in another distribution center where the workers will be automated out of jobs as soon as the tax incentives go away.

      Hicks is a liberal? I guess by the definition that anyone who thinks Trump is fallible is liberal … he’s a liberal. But there are a lot of conservatives who didn’t become liberal, they got abandoned by Trumpublicans because they aren’t sufficiently deferential to Dear Leader, he of the … laughable economic record.

  3. Too bad we couldn’t fix our roads with that money. Would really love to stop having to continuously replace tires and wheels from from hitting potholes on my commute.

    1. You could pay more in taxes, or you can pay via the slow destruction to your vehicle and your time and the inconvenience of repairs. Either way, you pay.

    2. From Joe B: People want to live in places with good schools with good infrastructure. There’s a reason that Indiana is emptying into the Indianapolis area.

      Indiana is emptying INTO the Indianapolis area? Well, not Indianapolis per se…maybe the doughnut counties. The “best and brightest” leave because they THINK nirvana is outside Indiana. When they come back quietly, they don’t say much.

      But thank goodness, Joe, that if you consider this place to be so horrible, move to a more wonderful place…you know, at least Illinois, if not California or New York.

    3. Bob, the doughnut counties are the Indianapolis area. Good grief.

      Carmel and Avon and Center Grove would not be growing by leaps and bounds if they weren’t close to a big city like Indianapolis with things to do and amenities that local government has taken the lead on, like trails and remade downtowns and good schools.

      Here’s a map of population projections for the next 30 years. Behold the vast swaths of Indiana that are emptying out. That’s what we need to be solving for. Got any ideas besides letting it return to forest?

      https://www.stats.indiana.edu/maptools/maps/thematic/projections/2018/county/pc-all_2015-50.png

  4. Why does each taxpayer get the same refund amount? Should taxpayers who pay the most tax get a higher amount than ones who pay very little or none? What about corporate taxpayers? Regardless, it is not prudent for legislative leaders to be talking about reducing taxes next year. The future effects of the virus are unknown due to the new variants appearing now and the fact that many Hoosiers refuse to get their vaccinations. We don’t know whether there will be another pandemic requiring strong administrative actions by the governor and health officials. Yet, this legislature tries to tie their hands by reducing their powers. How wise is that?

    1. So true, Chuck; so true…there is never good news in or about Indiana according to them, is there?

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