STATEHOUSE –The Inheritance Tax bill, Senate Bill (SB) 293, passed out of the House Friday with a final vote of 78-17 and is now headed to the Governor’s desk to be signed into law. Rep. Eric Turner’s (R-Cicero) sponsored bill would allow small business owners, farmers and individuals who have acquired savings and assets to pass these to their children or others without tax.
Indiana is the only state that does not exempt direct descendants’ 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.
“The bill would raise the exemption in 2012 for Class A transferees, children and grandchildren, then phase out the tax over a period of nine years, which is extremely manageable,” said Rep. Turner. “When SB 293 is signed into law, parents and grandparents who have acquired savings will not have their children pay a second tax. By increasing exemption rates and phasing out the tax, Indiana allows families to retain their acquired assets and lessen financial burdens on those inheriting the property.”
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.
“This will protect Hoosier beneficiaries from having to pay a tax on assets that have already been taxed,” said Rep. Turner. “People want to know they can pass on their businesses, farms and homes knowing their children and grandchildren can afford to keep them.”
The bill would raise the exemption in year one and phase out the Indiana Inheritance Tax over the next 9 years starting in 2013. It phases out inheritance tax replacement amounts payable to counties over 10 years. Every year, incremental reductions of approximately $14 million would be removed from the State’s inheritance tax revenue.
The bill, once fully phased-in, is estimated to keep as much as $165 million in the pockets of taxpayers each year.