This legislative session, our state policymakers have been using fancy terms like “tax conformity” to enact new state spending while flying under the radar during a hectic, non-budget session. Here’s what everyone in Indiana should know: SB 243, now on its way to the governor’s desk, is a choice to spend $250M of state and local tax dollars on a very narrow type of tax relief that will not put money back in the pockets of most Hoosiers.
SB 243 is a 156-page, primarily technical bill that makes various tax-related changes to Indiana code, almost all of which are bland changes requested by the Indiana Department of Revenue, with one key exception added by the bill’s author: the creation of a one-year state income tax exemption on tips, overtime, and new car loan interest, similar to what passed at the federal level in 2025.
Supporters of this piece have said that this language does not “open the state’s budget” – something generally forbidden in a non-budget year like this one – because exempting tipped and overtime income from tax is simply “forgoing future revenue (read: income),” and that the cost of this tax expenditure could be paid for by tapping into Indiana’s growing state surplus…