INDIANAPOLIS – The Indiana House of Representatives recently advanced legislation that would phase in a complete state income-tax exemption for military pay earned by active-duty members.
Bill co-author State Rep. Ryan Lauer (R-Columbus) 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 exemption of $5,000. House Bill 1034, which now moves to the Indiana Senate for consideration, would have a military pay exemption of 25% in 2024, 50% in 2025, 75% in 2026, and a full exemption by 2027.
“Our state values Hoosiers with military experience and the skills they bring to the table,” said Lauer, a member of the House Veterans Affairs and Public Safety Committee. “Exempting active service members from the state’s individual income tax is a great way to say thank you and serves as a motivator for them to call Indiana home.”
State Rep. Jim Lucas (R-Seymour) 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.
State Rep. Jennifer Meltzer (R-Shelbyville) said neighboring states including Michigan and Kentucky offer a complete military income tax exemption for residents.