Income tax cut tops legislative roundup
Sen. Travis Holdman, R-Markle, presents his tax bill before the Senate on Jan. 28, 2025. (Whitney Downard/Indiana Capital Chronicle)
While the new governor and budget stewards are tightening state spending due to modest revenue growth, the Indiana Senate on Tuesday passed a bill cutting the state individual income tax rate in the future.
Also in the Senate and House, legislators tackled bare-knuckle fighting, fentanyl strips and physician availability.
Lawmakers are in the middle of a five-year process to reduce the state's income tax rate down to 2.9% by 2027. That would be the third-lowest rate in the country for states with an income tax.
But Senate Bill 451, authored by Sen. Travis Holdman, R-Markle, wants to go further. His legislation would automatically lower the tax rate by 0.05% every even-numbered year, beginning in 2030 — but only if state revenues grow by at least 3% in the previous even-numbered year. Lawmakers could also suspend the law in odd-numbered years.
Holdman said in the decade prior to COVID, state revenues grew 3.24% each year.
WFYI reported that for a household earning $100,000, that would be a savings of $50 a year. It would cost the state hundreds of millions of dollars per year in revenue.
There was no discussion on the bill, which passed 49-0, and now moves to the House.
A bill to ban non-compete agreements for all physicians cleared the Senate on a 47-2 vote, with both 'no' votes coming from Republicans.
Senate Bill 475 would expand the state's current prohibition on non-compete agreements, which only impacts primary care physicians.
Sen. Jean Leising, R-Oldenburg, urged her colleagues to also vote no, citing concerns about attracting physicians to her rural district.
'My rural hospitals have challenges, sometimes, when it comes to acquiring specialists, specifically obstetricians,' Leising said. 'I'm sure some have signed non-compete agreements … and I know how hard it would be to replace them.'
Health systems in Indianapolis and Cincinnati often lured away specialists by offering competitive salaries that rural hospitals couldn't afford, she said. Non-compete agreements kept specialists there for the term of their contract.
The bill moves to the House for further consideration
The Senate voted 49-0 to add more regulations regarding large state contracts.
Sen. Scott Baldwin, R-Noblesville, said Senate Bill 5 improves efficiency and accountability in state government through stronger rules for contracts exceeding $500,000 and a no-bid list for poor-performing contractors.
The bill also requires state agencies to submit quarterly progress reports about major state contracts to the state budget committee. Agencies would also undergo review for making 'significant' contract amendments or when applying for new federal funds that require an Indiana match.
'These are practical common sense reforms,' he said.
Baldwin said the bill isn't targeting any certain agency or bad actors. It now moves to the House.
In the House, lawmakers approved proposals dealing with fighting and drug-testing strips.
They engaged in little discussion on House Bill 1073, which requires the Indiana Gaming Commission to regulate boxing, sparring, professional wrestling, mixed martial arts and martial arts — including bare-knuckle fighting.
'These things exist. We're not bringing this to Indiana,' said Rep. Craig Haggard, R-Mooresville.
But because such activities aren't regulated, safety-related rules limiting fight round length and number aren't standard everywhere, and diseases have spread.
'When we don't have it regulated, it is a Wild West out there and people are getting hurt,' Haggard added. The measure passed in a vote of 86-5.
His chamber also quickly passed, on an 88-2 vote, a measure clarifying that drug-testing strips don't count as illegal drug paraphernalia.
House Bill 1167's author, Rep. Jennifer Meltzer, said the strips can detect dangerous substances like fentanyl and xylazine. She said local health departments, nonprofit groups and others are distributing test strips to Hoosiers in active addiction, helping them avoid potentially lethal overdoses.
The legislation, per Meltzer, will ensure 'those individuals can continue to use those harm reduction tools to, hopefully, save their life today so that they can get treatment tomorrow.'
Both bills move to the Senate.
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