THE RAATZ ROUNDUP
Submitted for use on Feb. 27, 2023
Word Count: 281
By State Sen. Jeff Raatz (R-Richmond)
Small businesses are the backbone of our communities and economy, with the Indiana Destination Development Corporation reporting nearly 500,000 small businesses in Indiana employing more than 1.2 million Hoosiers statewide.
Until recently, small-business owners were navigating an uneven playing field when it came to qualifying for the same federal tax deductions as larger corporations.
This is why I supported Senate Enrolled Act 2, which changes state tax law so LLCs and S Corps can deduct all state tax payments on federal tax returns, resulting in approximately $50 million per year in federal tax savings for Hoosier small businesses.
Under federal law, businesses can deduct their state tax payments from their federal tax liability. For businesses that pay corporate, 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.
Indiana was recently named the No. 1 state to start a business in 2023 by Forbes. Offering this targeted tax relief helps continue to make our state an even greater destination for maintaining businesses and attracting talent. I look forward to seeing how this legislation helps our local small businesses and economy continue to grow.
SEA 2 was signed into law by the governor Wednesday, Feb. 22.
Eligible businesses can take advantage of this new law when filing their 2022 taxes this year.
If you have any questions or concerns on these or other topics, feel free to contact me at Senator.Raatz@iga.in.gov or 317-233-0930.
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State Sen. Jeff Raatz (R-Richmond) represents Senate District 27, which includes
Henry, Union and Wayne counties, and portions of Franklin County.
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