Garten: Bill to provide small businesses tax relief signed by the governor

FOR IMMEDIATE RELEASE
Contact: Kellyn Harrison, Press Secretary
kellyn.harrison@iga.in.gov
317-232-9498

Garten: Bill to provide small businesses tax relief
signed by the governor

STATEHOUSE (Feb. 22, 2023) — A Senate Republican priority bill authored by State Sen. Chris Garten (R-Charlestown) and State Sen. Scott Baldwin (R-Noblesville) that provides tax relief to Indiana small businesses was signed into law by Gov. Eric Holcomb today.

Senate Enrolled Act 2 changes state tax law so LLCs and S Corps can deduct all state tax payments on federal tax returns, resulting in what is projected to be $112 million in federal tax savings for Hoosier small businesses in tax years 2022 and 2023.

"SEA 2 provides significant tax relief for small businesses by leveling the playing field with large corporations," Garten said. "This bill will undoubtedly promote small-business growth in Indiana and incentivize talent to move here from other states. Targeted tax relief for small businesses is good economic policy for Hoosiers."

Under federal law, businesses can deduct their state tax payments from their federal tax liability. For businesses that pay corporate income taxes, such as C corporations, which are normally larger businesses, this deduction is unlimited. For corporations where owners or shareholders pay their own individual income taxes, such as LLCs and S Corps, this deduction was limited to $10,000.

SEA 2 allows LLCs and S Corps to receive an unlimited federal deduction for their state tax payments, similar to C Corps.

"I am pleased to see this bill signed into law with full bipartisan support," Garten added. "I appreciated working with Sen. Scott Baldwin on this language, as he and I believe Hoosier small businesses are the backbone of our great state."

Eligible businesses can take advantage of this new law when filing their 2022 taxes this year.

Indiana joins at least 29 states that have adopted similar language to their tax laws.

For more information about SEA 2, click here.

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State Sen. Chris Garten (R-Charlestown) represents Senate District 45, which includes Clark County and portions of Floyd County.

Click here to download a high-resolution photo.