A bill designed to save millions of dollars in taxes for the majority of Indiana businesses is heading to Gov. Eric Holcomb’s desk for his signature. Senate Bill 2 is expected to provide a state and local tax, or SALT, deduction for what are known as pass-through entities, which are businesses that are not subject to corporate income tax.
The bill unanimously passed the Senate on Feb. 6 and was sent to the House, which also passed the bill by unanimous vote on Monday.
Examples of pass-through entities include sole proprietorships, partnerships, LLCs, and S-corporations.
Currently, federal law limits the deductibility of state and local taxes at $10,000. Indiana Chamber of Commerce President and CEO Kevin Brinegar says SB2 creates a workaround that allows businesses to fully deduct.
In an interview with Inside INdiana Business Host Gerry Dick conducted prior to the House vote, Brinegar talked about the benefit the bill would bring to Hoosier businesses.
“[The bill] would save our small businesses north of $100 million in federal tax liability,” Brinegar said. “Twenty-nine other states, including all of our surrounding states, have enacted this legislation, so we don’t want to put our small businesses or pass-through entities at a competitive disadvantage on the tax front.”
The chamber is also backing bills on data privacy, childcare, and early childhood education.
But one bill being opposed by the chamber is House Bill 1008, which would require Indiana’s public pension system to divest from firms or funds that use certain non-financial investment criteria.
The Indiana Capital Chronicle previously reported the bill is part of a GOP effort to crack down on the environmental, social and governmental framework known as ESG investing.
Brinegar said the bill is more of a political statement and the chamber’s position is that the government should not be in “the business of picking winners and losers.”
“We’re particularly concerned because a recent Legislative Services Agency analysis of this bill says that it could reduce the rate of return of investments of those funds by more than 1% and cost the funds as much as $7 billion in lost investments over the over a 10-year period of time,” he said. “That’s a big number that’s not really fair to the funds and to the people that are counting on their public employee pensions.”