STATEHOUSE –House Bill 1199, co-authored by State Rep. Tom Dermody (R-LaPorte), passed out of the House on Monday with a 78-17 vote. The proposed bill allows small business owners, farmers and individuals who have acquired savings pass these to their children or others one day without tax.
Indiana is one of the few states that does not exempt direct descendents children and grandchildren from paying the inheritance tax. Indiana’s neighboring states, Michigan and Ohio, do not have inheritance taxes and Kentucky does not tax on transfers to children.
“It’s an unfair practice for Hoosiers to have to pay taxes on the money that they receive when a loved one passes away, because it has already been taxed,” said Rep. Dermody. “I’m pleased to see this bill progress, and that Indiana is taking one more step towards being a great state to both live and work.”
Indiana’s inheritance tax rate can range from one percent to as high as 20 percent of a person’s inheritance; 20 percent is the highest possible inheritance tax rate of any state.
The bill would phase out the Indiana Inheritance Tax over the 10 year period of 2013-2023. Every year, incremental reductions of approximately nine percent would be removed from the state’s inheritance tax.
The bill, once fully phased-in, is estimated to keep as much as $165 million in the pockets’ of taxpayers each year.