Bill Text: IN SB0326 | 2012 | Regular Session | Introduced

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Bill Title: State income tax rate adjustment.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2012-01-09 - Senator Head added as second author [SB0326 Detail]

Download: Indiana-2012-SB0326-Introduced.html

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Introduced Version

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SENATE BILL No. 326

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DIGEST OF INTRODUCED BILL

Citations Affected: IC 6-3-2-1.

Synopsis: State income tax rate adjustment. Provides for a biennial reduction of 0.1% in the state adjusted gross income tax rate on residents, nonresidents, and corporations if the budget agency determines that year-over-year revenue from the adjusted gross income tax exceeds 3.1%. Provides that the minimum rate is 2.9% for persons and 6% for corporations. Requires the budget agency to make the determination before September 1of each even-numbered year and for the rate reduction to take effect for taxable years beginning in the immediately following odd-numbered year. Requires the department of state revenue to publish a statement of the rates in the Indiana Register and on the department's web site and make the statement available for public inspection and copying.

Effective: July 1, 2012.

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Buck

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    January 9, 2012, read first time and referred to Committee on Tax and Fiscal Policy.

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Introduced

Second Regular Session 117th General Assembly (2012)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2011 Regular Session of the General Assembly.

SENATE BILL No. 326

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    A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 6-3-2-1; (12)IN0326.1.1. -->     SECTION 1. IC 6-3-2-1, AS AMENDED BY P.L.172-2011, SECTION 54, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 1. (a) Each taxable year, a tax at the rate of three and four-tenths percent (3.4%) percentage rate determined under subsection (d) of adjusted gross income is imposed upon the adjusted gross income of every resident person, and on that part of the adjusted gross income derived from sources within Indiana of every nonresident person.
    (b) Except as provided in section 1.5 of this chapter, each taxable year, a tax at the following rate of adjusted gross income is imposed on that part of the adjusted gross income derived from sources within Indiana of every corporation:
        (1) Before July 1, 2012, eight and five-tenths percent (8.5%).
        (2) After June 30, 2012, and before July 1, 2013, eight percent (8.0%).
        (3) After June 30, 2013, and before July 1, 2014, seven and five-tenths percent (7.5%).

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        (4) After June 30, 2014, and before July 1, 2015, seven percent (7.0%).
        (5) After June 30, 2015, six and five-tenths percent (6.5%).
The percentage rate shall be adjusted as provided under subsection (d).
    (c) If for any taxable year a taxpayer is subject to different tax rates under subsection (b), the taxpayer's tax rate for that taxable year is the rate determined in the last STEP of the following STEPS:
        STEP ONE: Multiply the number of months in the taxpayer's taxable year that precede the month the rate changed by the rate in effect before the rate change.
        STEP TWO: Multiply the number of months in the taxpayer's taxable year that follow the month before the rate changed by the rate in effect after the rate change.
        STEP THREE: Divide the sum of the amounts determined under STEPS ONE and TWO by twelve (12).
However, the rate determined under this subsection shall be rounded to the nearest one-hundredth of one percent (0.01%).
    (d) Subject to subsection (f):
        (1) the tax rate to be used under subsection (a) is the same rate used for the preceding taxable year; and
        (2) the tax rate to be used under subsection (b) is the rate specified in subsection (b), minus the cumulative adjustments under subsection (e) in previous years;
unless the two (2) year average percentage increase in net adjusted gross income tax revenue collected by the state is at least three and one-tenth percent (3.1%), as determined under subsection (g).
     (e) Subject to subsection (f), if the two (2) year average percentage increase in net adjusted gross income tax revenue is at least three and one-tenth percent (3.1%), the tax rate to be used for the taxable year beginning in the immediately following odd- numbered year is as follows:
        (1) In the case of persons covered by subsection (a), the rate for the preceding taxable year minus one-tenth percent (0.1%).
        (2) In the case of corporations covered by subsection (b):
            (A) for a taxable year beginning before January 1, 2016, the tax rate specified in subsection (b) minus:
                (i) the cumulative adjustments under this subsection in previous years; and
                (ii) one-tenth percent (0.1%); and
            (B) for a taxable year beginning after December 31, 2015,

the rate for the preceding taxable year minus one-tenth percent (0.1%).
    (f) The rate used under:
        (1) subsection (a) for a taxable year beginning before January 1, 2013, is three and four-tenths percent (3.4%), and may not be less than two and nine-tenths percent (2.9%) for a taxable year beginning after December 31, 2012; and
        (2) subsection (b) may not be less than six percent (6%) for a taxable year beginning after December 31, 2015.
    (g) Before September 1 of each even-numbered year, the budget agency, using a two (2) year average, shall determine whether an increase in net adjusted gross income tax revenue has occurred. In making this determination, the following apply:
        (1) Returns processed during the three (3) calendar years that immediately precede the determination year shall be used.
        (2) Net adjusted gross income tax revenue collected from all taxpayers under this article on these returns shall be considered.
        (3) Overpayments refunded to taxpayers during these calendar years shall be subtracted.
        (4) Automatic taxpayer refunds provided to individuals as credits under IC 4-10-22-4 during these calendar years shall not be subtracted.
        (5) The best information available to the budget agency at the time the determination is made shall be considered.
Beginning in 2012, the budget agency shall compute and determine whether an increase in net adjusted gross income tax revenue has occurred and, if so, the amount of the two (2) year average percentage increase in net adjusted gross income tax revenue. The budget agency shall certify the results of the computation to the department of state revenue.
    (h) Before October 1 each year, the department shall submit for publication in the Indiana Register, under IC 4-22-7-7, a statement of the tax rate to be used under subsection (a) and the tax rate to be used under subsection (b) for a taxable year beginning on or after January 1 of the following year. The department shall also publish the statement on the department's web site and make the statement available for public inspection and copying under IC 5-14-3.