STATEHOUSE (Feb. 13, 2023) – The Indiana House of Representatives recently advanced legislation co-authored by State Rep. Michael Aylesworth (R-Hebron) that would phase in a complete state income-tax exemption for military pay earned by active-duty members.
Aylesworth, a veteran, said unlike active duty National Guard and reserve members who are exempt from the individual income tax, other active duty members can qualify for a maximum $5,000 exemption. House Bill 1034, which now moves to the Indiana Senate for consideration, would start with a 25% exemption on military pay in 2024, 50% exemption in 2025, 75% exemption in 2026, and end with a full exemption by 2027.
"Our active-duty service members deserve to keep as much of their hard-earned money in the pockets as they can," Aylesworth said. "Exempting their military pay from state income tax would also incentivize more of these highly skilled workers to plant roots here."
Indiana is already facing a skilled labor shortage, according to Aylesworth, with more than 85,000 open job opportunities. He said veterans, with the necessary leadership and technical skills, could help fill these positions and boost Indiana's workforce.
Neighboring states including Michigan and Kentucky offer a complete military income tax exemption for residents.
For more information and to follow legislative proceedings, visit iga.in.gov.
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State Rep. Michael Aylesworth (R-Hebron) represents House District 11,
which includes portions of Jasper, Lake, Newton and Porter counties.
Click here to download a high-resolution photo.
