SB 390 would create a new Indiana income tax exemption for “minimum wage income,” defined as wages earned by an employee who worked for no more than one employer at a time during the tax year and was paid no more than the state minimum wage, including any overtime tied to that employment. The bill exempts that income from Indiana’s adjusted gross income tax beginning with tax years after December 31, 2024, and it also states that an individual whose only income is minimum wage income would not have to file a state income tax return.
The bill also changes employer withholding rules by relieving employers of the duty to withhold Indiana adjusted gross income tax from qualifying minimum wage income. It is written to apply retroactively to tax years beginning after December 31, 2024, and includes an emergency clause and a sunset date of July 1, 2028. The bill amends Indiana Code sections governing taxable income and filing requirements, specifically IC 6-3-2-30 and IC 6-3-4-1.
Impact
SB 390 would narrow Indiana’s adjusted gross income tax base by excluding qualifying minimum-wage earnings and by removing filing and withholding obligations for taxpayers whose only income is that exempt wage income. In practical terms, it would affect low-wage workers, employers, and the Department of Revenue by reducing compliance requirements for some workers and payroll systems while potentially reducing state tax collections. The bill amends Indiana’s income tax filing statute and adds a new exemption provision to the tax code, with retroactive application to tax years beginning after December 31, 2024.
Sentiment
Based on the materials provided, there is no recorded committee testimony or vote history, so there is no documented public debate to gauge support or opposition. The bill’s structure suggests a policy goal of tax relief for the lowest-paid workers and simplification of filing obligations for those taxpayers. Because no transcripts or votes are available, the overall sentiment cannot be measured beyond the bill’s apparent pro-tax-relief framing.
Contention
The main policy questions likely to arise from SB 390 are whether exempting minimum wage income is an appropriate use of the tax code, how the state would define and verify eligibility, and what the revenue impact would be. Potential concerns include whether the exemption could create administrative complexity for employers and the Department of Revenue, especially for workers with fluctuating pay, multiple jobs, or mixed income sources. Supporters would likely emphasize relief for low-income workers and reduced filing burdens, while opponents could focus on lost revenue, fairness relative to other taxpayers, and the retroactive application of the change.