SB 304 revises Indiana’s food and beverage tax statutes to give the city of Marion and the city of Richmond new authority to impose a local food and beverage tax of up to 1% on qualifying restaurant and prepared-food transactions. For both cities, the tax would be imposed by ordinance, collected in the same manner as the state gross retail tax, and deposited into city-controlled receipts funds. Marion’s new chapter allows the tax to be used for economic development and park/recreation purposes, including land purchases and related debt service, while Richmond’s new chapter limits use of the revenue to parks and recreation, trails, activation of the Whitewater Gorge, and related debt obligations.
The bill also changes the existing municipal food and beverage tax framework by clarifying the timing and administration of ordinances and by allowing certain municipalities to increase an existing food and beverage tax rate up to 2% under specified conditions. It repeals the Wayne County food and beverage tax chapter, and it sets a January 1, 2047 expiration date for the new authority and any rate increases authorized under the bill. The bill is effective July 1, 2025.
The overall sentiment appears strongly favorable. The Senate Tax and Fiscal Policy Committee reported the bill out unanimously on a 13-0 vote after amending it, and the full Senate later passed it overwhelmingly on third reading, 47-2. That voting pattern suggests broad support for giving the affected local governments additional revenue tools.
The main points of contention are likely to be local control, tax burden, and the use of the revenue. The bill authorizes a new consumer tax on food and beverage transactions, which can draw concern from restaurants, merchants, and taxpayers even though the rate is capped and tied to specific local purposes. Another possible issue is the bill’s differing treatment of municipalities, since it gives Marion and Richmond new standalone authority while also preserving a separate rate-increase path for certain other municipalities and repealing Wayne County’s existing chapter.
Impact
SB 304 amends Title 6 of the Indiana Code to expand and reorganize local food and beverage tax authority. It creates new chapters for Marion and Richmond, authorizes those cities to levy a food and beverage tax of up to 1% in 0.25% increments, establishes collection and remittance procedures, and restricts how the revenue may be spent. It also amends the general municipal food and beverage tax provisions to clarify ordinance filing and effective dates, allows certain municipalities to increase an existing tax rate up to 2%, and repeals the Wayne County food and beverage tax chapter. These changes affect municipalities, retail merchants selling prepared food and beverages, and the Department of State Revenue.
Sentiment
The bill appears to have broad bipartisan or at least cross-member support in the Senate, based on the 13-0 committee vote and the 47-2 floor vote. The committee’s favorable report indicates little formal opposition in the legislative process reflected here. The strong votes suggest the bill was viewed as a practical local revenue measure rather than a controversial statewide tax increase.
Contention
The likely areas of disagreement are the creation of new local taxes and the earmarking of the proceeds. Opponents may object to adding or expanding a tax on meals and beverages, which falls on consumers and can affect restaurants and other merchants. There may also be concern about the bill’s tailored treatment of specific cities—Marion and Richmond receive new authority with different spending purposes, while Wayne County’s existing authority is repealed and some municipalities are allowed to raise rates under separate conditions. Supporters, by contrast, appear to favor local flexibility and dedicated funding for economic development, parks, trails, and related projects.