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Proposed Bill Would Alleviate Tax Burden Among Active Duty Military Members In Indiana

Photo Supplied / Indiana Statehouse

INDIANAPOLIS, Ind. (NETWORK INDIANA):  Among the many bills being considered this legislative session, one bill aims to alleviate the tax burden on active duty military members stationed here in the Hoosier state.

HB 1034 filed by State Rep. Randy Frye, who represents a portion of southeast Indiana in the Indiana House, aims to eliminate the state income tax for active duty military in Indiana, similar to what is already the case for Indiana National Guard, reserve soldiers, and military retirees who live here.

“I feel like it’s not really a level playing field, it’s not really fair to those who are in active duty, the Marines, Army, Navy, I wanted to exempt those heroes as well,” said Frye.

Frye filed the bill in the previous session in 2021, but because it was a non-budget year the bill was not considered before the full House chamber. It’s something Frye had expected but hoped that filing the bill last year would at least get eyes on it early so lawmakers would be more inclined to consider it this session.

The bill is certainly unique given that Gov. Eric Holcomb is calling for increased spending over the next two years, while this bill would eliminate a source of revenue for the state.

“There is a great deal of reserves that can be used for some of the spending the governor mentioned,” Frye said. “And, this is not a huge fiscal impact. It phases in over a four-year period of time. The first year is $3.1 million.”

Frye said that with the state looking at over $6 billion in cash reserves, he added that $3.1 million in 2024 is “not huge.” Frye said that fiscal experts he’s spoken to indicate that the bill will see roughly $21 million in tax revenue disappear over the four-year phase-in period. But, Frye is convinced that number might be less than predicted.

“Having talked to folks who I converse with in the military they tell me that it’s very common for a solider to say (for example) ‘I don’t live in Indiana, I live Texas’,” said Frye. “So Indiana (already) isn’t getting this money.”

The bill has a couple of committees it has to get through before it is considered on the full House floor. Then it will need State Senate approval before the governor has a chance to look it over.

Frye is confident he has enough support on both sides of the aisle to see the bill become law.

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