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Indiana counties consider new local income tax options for 2024

Many Indiana counties have taken advantage of increased Local Income Tax (LIT) flexibility since the consolidation of the former County Adjusted Gross Income Tax (CAGIT), County Economic Development Income Tax (CEDIT) and County Option Income Tax (COIT) into a single LIT. Income tax was once again a hot topic during the 2023 legislative session, with a reduction in the state individual income tax scheduled to occur by 2027 and several new LIT options available to counties. Counties dealing with jail overcrowding, EMS funding challenges and rising court costs have new and expanded LIT resources to consider. Indiana counties were very active this past year, with over one in every four Indiana counties having taken action to adjust their LIT rates. With the October 31, 2023 deadline now passed, you may wonder how your county’s certified 2024 rate compares.

How Indiana counties compare

Of the 24 counties that adjusted their rates, 17 increased the total rate, with increases ranging from 0.04% to 1.00%. Six counties maintained the same total rate, while reallocating among the various components. Just one Indiana county reduced its total rate. For 2024, Indiana counties will maintain rates ranging from 0.50% to 3.00%, with a state-wide median of 1.85% and mean of 1.89%.

Since 2017, the first year under the consolidated LIT, the median LIT rate across Indiana’s counties has risen from 1.50% to 1.85% for 2024. Likewise, the mean rate has risen from 1.59% to 1.89% over the same stretch.

Moving forward

This year’s legislative changes now allow for an increase in the correctional and rehabilitation facilities rate for certain eligible counties to 0.3% from the previous 0.2%, with up to 0.2% available to be used on jail operations. The 2023 changes also have made the 0.2% EMS rate available to all counties. In addition, another 0.2% rate is now able to be adopted to pay for court staffing costs. Several Indiana counties have already taken advantage of these new or expanded components.

If you have questions about your options or the potential impact of taking action, your Baker Tilly team can provide you with the necessary analysis to make a decision. If an adjustment to your county’s rate makes sense, we are your trusted advisor to guide you through the process.

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