Today (2/16/15) the Indiana House of Representatives voted by a vote of 94 to 2 on Third Reading and Final Passage in the House on HB 1142 which eliminates the Indiana insulation tax deduction and the solar attic fan tax deduction.
The two state legislators who voted "NO" are:
IndianaDG send a BIG "Thank you"
to Rep. Dvorak and Pierce
for voting "NO" on HB 1142.
The Fiscal Impact Statement Summaraizes HB 1142 as follows:
Summary of Legislation: Tax Incentive Review: The bill specifies that the Legislative Services Agency (LSA) (rather than the Commission on State Tax and Financing Policy or its successor committee, under current law) shall before October 1 of each year conduct the review, analysis, and evaluation of all tax incentives under House Enrolled Act 1020-2014, according to a schedule developed by the LSA. It requires the LSA to submit the results of the review, analysis, and evaluation to the Legislative Council and the Interim Study Committee on Fiscal Policy. The bill requires the Interim Study Committee on Fiscal Policy to hold an annual public hearing after September 30 and before November 1 of each year at which: (1) the LSA presents its review, analysis, and evaluation of tax incentives; and (2) the interim study committee receives information concerning tax incentives. It requires the InterimStudy Committee on Fiscal Policy to submit to the Legislative Council any recommendations made by the interim study committee that are related to the LSA’s review, analysis, and evaluation of tax incentives prepared under this section. The bill requires the LSA to provide information to be used by the General Assembly to make certain determinations regarding tax incentives. (Current law requires the LSA to make these determinations.)
Tax Expenditure Report: The bill requires the LSA to prepare and publish a tax expenditure report before November 1 of each even-numbered year. It specifies the required elements of the tax expenditure report. Repeal of Deductions: The bill repeals the home insulation deduction and the solar-powered roof vent and fan deduction.
Effective Date: Upon passage; January 1, 2016.
Explanation of State Expenditures: Summary- The changes made by the bill to the tax incentive review program and the tax expenditure reporting requirement established in the bill can be implemented by LSA within current resources. The Department of State Revenue will incur additional expenses to revise tax forms, instructions, and computer programs to reflect the repeal of the home insulation deduction and the solar-powered roof vent/fan installation deduction. The DOR's current level of resources should be sufficient to implement these changes.
Explanation of State Revenues: Summary- The bill repeals the home insulation deduction and the solar powered roof vent/fan installation deduction effective beginning in tax year 2016. The revenue gain from the repeal of the deductions would begin in FY 2017. Both deductions may be claimed under the individual adjusted gross income (AGI) tax which is distributed to the state General Fund. The estimated revenue gain is specified in the table below.
The revenue gain could potentially grow by 1%-2% annually thereafter.
Provision FY 2017
Home Insulation Deduction: $1.1 M
Solar-Powered Roof Vent/Fan Installation Deduction: $6,000
Total: $1.1 M
Additional Information- The home insulation deduction may be claimed against an individual taxpayer’s AGI. The maximum deduction is equal to $1,000 for the material and professional installation costs of insulation and insulating products installed in the taxpayer’s principal place of residence. The solar-powered roof vent/fan installation deductionmay be claimed against an individual taxpayer’s AGI. The deduction is equal to 50% of the total installation cost, both materials and labor, up to $1,000 for the installation of a solar-powered roof fan/vent on a building the taxpayer owns or leases.
Explanation of Local Expenditures: Explanation of Local Revenues: Because the repeal of the deductions will increase state taxable income of individuals, counties imposing a local option income tax (LOIT) could experience an increase in LOIT collections. Based on the median LOIT rate of 1.45%, collections on a statewide basis could increase by an estimated $500,000 annually in 2018.
State Agencies Affected:
General Assembly; Legislative Services Agency; Department of State Revenue.
Local Agencies Affected: Information Sources:
Legislative Services Agency, Indiana Tax Incentive Review, November 2014.
Fiscal Analyst: Jim Landers, 317-232-9869.
Here is the link to Roll Call #135 on HB 1142>
To read a copy of HB 1142 see >
The Senate sponsor of HB 1142 is Sen. Brandt Hershman.