Boone County Hendricks County Montgomery County Rep. Thompson Supports Phase Out of Inheritance Tax
Of the seven states that collect inheritance taxes, Indiana is one of only three that does not exempt descendants from paying the tax. In the Midwest, Michigan and Ohio do not have inheritance taxes, and Kentucky does not tax on transfers to children. “Parents who save their money throughout their lives, in an effort to support future generations of their family, are penalized for being fiscally responsible,” explained Rep. Thompson. “Indiana is taking a slice of the American dream that was meant for our children and grandchildren. Not to mention, our government can take the largest bite out of this slice in comparison to all other states. This is unacceptable.” The bill would phase out the Indiana Inheritance Tax over the ten year period of 2013-2023. Every year, incremental reductions of approximately 9 percent would be removed from the state’s inheritance tax. “The bill would phase out the tax over a period of 10 years, which is a manageable way to accomplish the goal. Hoosiers want to know that one day they can pass on their assets without additional taxes to their heirs,” said Rep. Turner. Indiana’s inheritance tax rate can range from 1 percent to as high as 20 percent of a person’s inheritance; twenty percent is the highest possible inheritance tax rate of any state. “Money that is inherited has already been taxed when the person first earned it; it’s as simple as that,” said Rep. Jeff Thompson. “Inheritance taxes are a form of double taxation, and that is unfair.” The bill, once fully phased-in, is estimated to keep as much as $165 million in the pockets of taxpayers each year. The bill will now move to the Senate. -30- Note to the Editor: The first graph on the attachment denotes the fiscal impact the tax credit will have on the state. The second graph shows the incremental increase in the Inheritance Tax Credit until being fully phased out in 2023. The credit would apply to transfers made by persons who die within the dates specified in the second table. Since the Inheritance Tax must be paid within 12 months after the decedent's death (within 9 months to receive the 5% early payment discount), the bulk of the impact of the first year's credit (equal to 25%) would not be experienced until FY 2015.
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