Indiana governor announces $125 automatic refund for all state taxpayers
(The Center Square) – Indiana Gov. Eric Holcomb announced Wednesday all state taxpayers will receive an automatic $125 refund this year.
“Despite a pandemic, Indiana exceeded all expectations and closed the state fiscal year with an unprecedented amount in reserves,” said Holcomb. “We have an obligation to put this money back in the hands of taxpayers instead of leaving it in the hands of government.”
Taxpayers will receive the automatic refund after filing their 2021 taxes.
Holcomb made the announcement 10 days before Christmas and less than three weeks before the start of the new session of the Indiana General Assembly on Jan. 3.
Holcomb said in a written statement the state estimates a total of $545 million will be returned to Hoosiers in the form of the automatic refund, and he is working with legislative leaders on a bill that will streamline the process to make an additional 910,000 taxpayers eligible.
The typical taxpayer in Indiana pays about $1,000 a year in state taxes.
The refunds will be issued under the state’s Automatic Taxpayer Refund program, which was established in 2011 under former Gov. Mitch Daniels.
The ATR program was triggered in July when Holcomb announced that because the state had collected more in taxes than expected over the last year – 14% more – the state’s financial reserves were $3.9 billion, a record high.
Under the ATR program, tax money collected from taxpayers that exceeds a “prudent” level of funds in reserve must be returned to the taxpayers.
In 2012, state reserves exceeded that level for the first time. The following year, taxpayers received an automatic refund of $111 for single filers and $222 for joint filers, for a total of about $360 million returned to taxpayers.
This is the second time the ATR has been triggered and money returned to taxpayers.
State tax revenues have continued to grow over the last several months, with $137 million more collected in taxes in October than had been budgeted.
Indiana has a flat 3.23% personal income tax rate – with all state taxpayers paying this same rate, regardless of income level. Most counties in the state also levy a tax, which is also collected by the state each year.
The Indiana Department of Revenue is encouraging people to file early this year, and to file electronically, in order to receive their refund more quickly.
An estimated 4.3 million people will receive the one-time $125 refund.
Taxpayers who apply for an extension will receive the payment after filing their return.
The Department of Revenue says it expects to complete refunds by May 1 for all taxpayers who filed their taxes by the April 18.
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