STATEHOUSE –House Bill 1199, co-authored by State Rep. Sue Ellspermann (R-Ferdinand), 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 and assets to pass these to their children or others without tax.
Indiana is the only state 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.
“The phase out of the Inheritance Tax is one of the great bills to pass out of the Indiana House this session,” said Rep. Ellspermann. “Farmers and small business owners particularly will benefit as it enables them to retain family farms and businesses across generations. I am so pleased that we could move this bill forward truly benefiting families and communities across southern Indiana.”
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.