Indiana taxpayers could receive $125 refund from budget surplus

INDIANAPOLIS - Indiana officials are working on a plan that the governor's office said Wednesday would result in taxpayers receiving $125 refund payments from the state's growing budget surplus.

Officials had announced in July that stronger-than-expected tax collections following the COVID-19 pandemic recession would trigger Indiana's automatic taxpayer refund process.

The distribution plan from Republican Gov. Eric Holcomb, however, aims to make more people eligible for what would be direct payments from the state rather than a credit on their state tax returns submitted next year.

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Those payments to an estimated 4.3 million taxpayers will come after overall state tax revenue grew 14% for the past budget year. That pushed state government's cash reserves to a record-high $3.9 billion as of June 30.

Indiana State Capitol Building, as photographed from the Indiana Government Center, in Indianapolis, Indiana. (Raymond Boyd/Michael Ochs Archives/Getty Images / Getty Images)

The state refund law's calculation directs that $545 million be refunded to taxpayers as that process was triggered for the first time since 2012.

"We did the right thing by putting a formula together that would send that money back if it hit a certain limit," Holcomb said.

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State tax collections have continued to be better than anticipated since July, leading to talk within the Republican-dominated Legislature of cutting taxes, although some are urging caution.