• WBST 92.1 FMMuncie
  • WBSB 89.5 FMAnderson
  • WBSW 90.9 FMMarion
  • WBSH 91.1 FMHagerstown / New Castle
Indiana Public Radio, a listener-supported service of Ball State University
Listen Live Online. Tap to open audio stream.

Indiana small businesses could save millions under bill approved by Senate committee

By Brandon Smith, IPB News | Published on in Business, Economy, Government, Politics
Indiana legislation would all small businesses to fully deduct their state taxes from their federal taxes. (FILE PHOTO: Justin Hicks/IPB News)

Indiana small businesses could save millions under legislation unanimously approved by a Senate committee Tuesday.

Businesses can deduct the state taxes they pay from their federal taxes each year. But about half a million businesses in Indiana pay the state’s individual income tax, rather than the corporate income tax.

And that means instead of getting to deduct all their state taxes from their federal taxes, they only get to deduct up to $10,000.

Sen. Scott Baldwin’s (R-Noblesville) bill, SB 2, would remove that cap.

“Resulting in over $50 million annually, as estimated, in federal tax savings for the owners of these small businesses,” Baldwin said.

READ MORE: How do I follow Indiana’s legislative session? Here’s your guide to demystify the process

Join the conversation and sign up for the Indiana Two-Way. Text “Indiana” to 73224. Your comments and questions in response to our weekly text help us find the answers you need on statewide issues throughout the legislative session. And follow along with our bill tracker.

Donna Niesen, representing the Indiana CPA Society, said it’s an issue of fairness.

“This bill levels the playing field for businesses and taxpayers in Indiana,” Niesen said.

The measure is not expected to affect Indiana’s tax revenues. It now heads to the full Senate.

Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.