Since the consolidation of the former CAGIT, CEDIT and COIT into a single Local Income Tax (LIT), Indiana counties have increasingly turned to LIT as a valuable resource. October 31, 2018 was the deadline for Indiana counties to amend any component of their LIT rate for 2019. With final certified 2019 rates recently available, you may wonder how your county’s rate compares.
For 2017, the first year post-consolidation, the mean LIT rate across Indiana’s counties was 1.59% and the median rate was 1.50%. For 2018, 22 of the 92 counties adjusted their rate, with 18 of those 22 raising their total rate. For 2018, the mean and median rates climbed to 1.67% and 1.73%, respectively.
This year, 18 of Indiana’s 92 counties adjusted their LIT rate. Six counties maintained the same total rate, while reallocating among the various components. Twelve counties increased their total rate, with increases ranging from 0.04% to 1.00%. For 2019, Indiana counties will maintain rates ranging from 0.35% to 3.38%, with a state-wide mean of 1.72% and median of 1.75%.
Counties continue to leverage LIT to assist with challenges faced due to circuit breakers, jail overcrowding and other challenges. New legislation specifically allows counties to adopt a rate of up to 0.20% to fund expenses related to correctional and rehabilitation facilities. Of the 18 counties that adjusted their rate for 2019, 10 took advantage of all or a portion of the new component.
Your Baker Tilly advisor can provide an analysis of your options with respect to the various rate components and the impact of any action, and we are ready to assist if an adjustment to your county’s rate needs analysis.
For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team.
Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax advice, if any, contained in this communication was not intended or written to be used by any taxpayer for the purpose of avoiding penalties.