STATEHOUSE (Feb. 22, 2012) – The Indiana House Committee on Ways and Means voted 21-3 today in favor of State Sen. Brandt Hershman’s policy initiative phasing out Indiana’s inheritance tax.
“Hoosier families and farmers are currently burdened by some of the highest inheritance taxes in the country,” Hershman said. “This unpopular ‘death tax’ is also a deterrent to keeping retirees and entrepreneurs in Indiana because they pay taxes on their investments while living and want to avoid burdening their loved ones with paying taxes on those investments again upon their death.”
Hershman (R-Buck Creek), chair of the Senate Tax Committee, said Indiana’s inheritance income tax is levied against heirs who receive inheritances, not including spouses and charitable organizations.
Tax rates vary depending on the beneficiary's relationship with the descendent. For example, children are taxed at a lesser rate than a distant cousin, who would in turn be taxed at a lesser rate than a friend of the deceased.
Hershman’s amended proposal increases inheritance tax exemption amounts and ultimately eliminates the tax completely by 2022.
Supporters of the policy include Farm Bureau, the Indiana Chamber of Commerce, Indiana Manufacturers Association and National Federation of Independent Business.
Senate Bill 293 can now be considered by the full House.