The Indiana House of Representatives has advanced State Rep. Randy Frye’s (R-Greensburg) legislation that would phase-in a complete state income-tax exemption for military pay earned by active duty members.
Frye said unlike active duty National Guard and reserve members who are exempt from the individual income tax, other active duty members can qualify for a maximum $5,000 exemption.
Frye’s House Bill 1034, which now moves to the Indiana Senate for consideration, would start with a 25% exemption on military pay in 2024, 50% exemption in 2025, 75% exemption in 2026, and end with a full exemption by 2027.
“We need and want skilled veterans to call Indiana home,” Frye said. “With this tax cut, we can incentivize more military members to settle here in our state, and help honor their commitment to serving our great nation.”
Frye said Indiana is already facing a skilled labor shortage, with more than 85,000 open job opportunities.
He said veterans, with the necessary leadership and technical skills, could help fill these positions and help drive the workforce.
Neighboring states including Michigan and Kentucky offer a complete military income tax exemption for residents.
For more information and to follow legislative proceedings, visit iga.in.gov.
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