Holcomb signs bill providing tax relief for Indiana small businesses

Indiana small business owners received some good news as Gov. Eric Holcomb signed the first bill passed during this year’s General Assembly session.

Proponents say Senate Bill 2 offers limited liability companies and S corporations relief by allowing them to deduct state tax payments on their federal returns completely.

That’s expected to generate $112 million in tax savings for businesses, and that relief can start immediately as it covers eligible businesses filing their 2022 and 2023 taxes.

Senate Majority Floor Leader Chris Garten, R-Charlestown, said the bill means smaller businesses will be treated the same way as larger ones. C corporations can fully deduct their state tax liability, but LLCs and S corps were capped at $10,000.

“This bill will undoubtedly promote small-business growth in Indiana and incentivize talent to move here from other states,” said Garten, who co-wrote the bill with state Sen. Scott Baldwin, R-Noblesville. “Targeted tax relief for small businesses is good economic policy for Hoosiers.”

According to Garten, at least 29 other states offer this type of relief to small business owners.

Holcomb’s signing came just two days after the House passed the legislation. SB 2 sailed through both chambers unanimously.

“I am really appreciative of the effort that went into passing this piece of bipartisan legislation,” Baldwin said. “Seeing the commitment to moving this forward in a timely manner reinforces the legislature’s and state’s commitment to helping Hoosier small businesses.”

The legislation was a priority for lawmakers and the business community, as the Indiana Chamber of Commerce included it on its agenda.

“The more than half-million business owners who are eligible for this tax relief now have certainty as they prepare to file their 2022 returns,” Chamber President and CEO Kevin Brinegar said.