STATEHOUSE (Feb. 14, 2023) – The Indiana House of Representatives recently advanced legislation that would phase in a complete state income-tax exemption for military pay earned by active-duty members.
The bill's co-author State Rep. Ryan Lauer (R-Columbus) 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 state values Hoosiers with military experience and the skills they bring to the table," said Lauer, a member of the House Veterans Affairs and Public Safety Committee. "Exempting active service members from the state's individual income tax is a great way to say thank you and serves as a motivator for them to call Indiana home."
State Rep. Jim Lucas (R-Seymour) said Indiana is already facing a skilled labor shortage, with more than 85,000 open job opportunities. He said veterans, with the necessary leadership and technical skills, could help fill these positions and help drive the workforce.
"As a former Marine, I know our service members deserve and appreciate keeping more of their hard-earned money," said Lucas, vice chair of the House Veterans Affairs and Public Safety Committee, and co-author of the bill. "In Indiana, we'll continue supporting Hoosier service members and incentivize them to settle in our state."
State Rep. Jennifer Meltzer (R-Shelbyville) said neighboring states including Michigan and Kentucky offer a complete military income tax exemption for residents.
"Thanks to our state's strong financial standing, we are in the position to cut taxes for those who serve our country," Meltzer said. "Our military members and their families make a lot of sacrifices, and this would be a commonsense step to support them and attract more service members to Indiana."
For more information and to follow legislative proceedings, visit iga.in.gov.
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State Rep. Ryan Lauer (R-Columbus) represents House District 59,
which includes a portion of Bartholomew County.
Click here to download a high-resolution photo.
State Rep. Jim Lucas (R-Seymour) represents House District 69,
which includes portions of Bartholomew, Jackson, Scott and Washington counties.
Click here to download a high-resolution photo.
State Rep. Jennifer Meltzer (R-Shelbyville) represents House District 73,
which includes portions of Bartholomew, Decatur, Jennings and Shelby counties.
Click here to download a high-resolution photo.
