Chamber supports SALT deduction invoice, READI 2.0 – Inside Indiana Business

(Photo courtesy Indiana Chamber of Commerce)

The Indiana Chamber of Commerce supports several initiatives that will be considered by the Indiana General Assembly this year. Among them is Senate Bill 2, which would provide a state and local withholding tax (SALT) for many small businesses in Indiana. Chamber President and CEO Kevin Brinegar said the law, if passed, could potentially result in an estimated $50 million in annual tax savings for business owners.

Brinegar discussed the bill in a virtual meeting with reporters on Wednesday.

SB 2, drafted by Republican Senators Scott Baldwin, Chris Garten and Travis Holdman, would provide the deduction for pass-through entities, which are corporations not subject to corporate income tax.

According to the Tax Policy Center, examples of pass-through entities include sole proprietorships, partnerships, LLCs, and S corporations. Brinegar said pass-through units represent the majority of Indiana’s businesses.

Instead of paying corporate or other corporate-level taxes, owners or shareholders of pass-through businesses pay business taxes on their individual income tax returns.

But Brinegar said companies can’t fully deduct the state and local income taxes they pay on their federal tax returns, which has been the standard for decades.

“You will recall that in 2017 the federal tax relief program limited the deductibility of state and local income taxes paid to $10,000,” he said. “This legislation would essentially be a workaround, allowing these small business owners and shareholders to take the full deduction.”

Brinegar said Hoosier companies are excited at the prospect of how much they would save if the bill becomes law.

“We estimate it’s an estimated $50 million a year that companies need to invest in their people, in machinery and equipment, and in things that allow them to stay competitive,” he said. “So it’s very competitive for our small businesses. Indiana is a small business state; We’re not really a corporate headquartered state. So the vast majority of Indiana businesses are pass-through entities that would be able to take advantage of this new Senate Bill 2 tax regime.”

The chamber also supports Gov. Eric Holcomb’s efforts to secure a second round of $500 million in funding for the Regional Economic Acceleration and Development Initiative (READI).

The first round of funding came from the American Rescue Plan Act of 2021. A second round would need to be approved by lawmakers as part of the state’s next biennium.

Brinegar said the first round of READI proved a success due to the amount of additional funding that was leveraged. David Rosenberg, chief operating officer of Indiana Economic Development Corp., said in December the initiative has raised a total of $6.2 billion in project costs from local, philanthropic and private investments.

“The quality of where you live is especially important in this day and age, when there are particularly talented people with skills who choose where they want to live and then look for a job,” Brinegar said. “We think the quality of the local initiatives funded by the READI program is very, very important. We know that the first round of READI grants received twice as many projects and proposals from communities across the state as the funding would cover.”

Brinegar added the Chamber is optimistic it will spend more time on actions to move the state forward, such as: B. early childhood education and personnel development, and less time for “social fringe issues”.