Less than a quarter into the new fiscal year, Indiana has collected hundreds of millions more in taxes than expected.
Through August, Indiana collected $353 million more in revenue than the current budget needs. That’s ahead of where the state was a year ago, and it finished the last fiscal year with $3 billion more than its budget plan.
Indiana can trigger an automatic taxpayer refund law in odd-numbered years, when its two-year budget cycle ends. It did so in 2021, sending back $125 per person to anyone who filed a tax return.
But triggering that law in 2023 will be more difficult. That’s because of a change lawmakers put into recent legislation, SEA 2 (ss), during the special session. Next year, when closing the state’s financial books, the first $1 billion of excess reserves won’t be used for a taxpayer refund. Instead, it will go entirely to paying down debt in a teacher pension fund.
Any excess tax collections after that would go towards taxpayer refunds.