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Indiana is gradually reducing its individual income tax rate to 2.9 percent by 2027.
Brandon Smith / IPB NewsHoosiers who pay state income tax will see a little less taken out of their paychecks in 2025.
Lawmakers passed a tax cut package in 2022, which included gradually reducing the individual income tax rate down to 2.9 percent. That would make Indiana’s rate the third lowest in the country among states with an income tax.
The reduction was originally set to take place over seven years, and only if state revenues reached a certain growth level.
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But in 2023, legislators shortened that timeline and got rid of the triggers. That means the reductions will end in January 2027.
The latest rate cut will move it down to 3 percent in 2025. For someone making $65,000 a year, that’s a savings of $33.
Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.
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