A BILL FOR AN ACT to amend the Indiana Code concerning taxation.
HB 1117 creates a new chapter in Indiana law authorizing certain municipalities to impose a “uniform municipal innkeeper’s tax” on short-term lodging rentals. The tax may be levied on persons renting rooms, lodgings, or accommodations for less than 30 days in hotels, motels, inns, boat motels, college/university memorial unions, residence halls, dormitories, and tourist cabins located in the municipality. The tax must be a flat amount per night and may not exceed $5, and it does not apply to students living in residence halls while earning college credit or to stays of 30 days or more.
The bill also establishes how the tax is administered and collected. A municipality may choose to have the tax reported and paid to the municipal fiscal officer or administered in the same manner as the state gross retail tax through the Department of State Revenue. If the tax is imposed, the municipality must create a convention, visitor, and tourism promotion fund and use the revenue only for tourism promotion, parks and amenities, and certain municipal services related to conventions and special events. The bill also adds felony penalties for knowingly misdirecting or misusing tax revenues and provides that a municipal tax adopted under the new chapter expires 22 years after its effective date.
In addition to creating the new municipal tax, HB 1117 makes conforming changes to existing innkeeper’s tax administration statutes. It clarifies that the existing innkeeper’s tax provisions apply to counties and municipalities imposing such taxes, updates ordinance effective-date rules, standardizes return forms, and requires the Department of State Revenue to provide summary collection data to local officials upon request. It also adds a criminal code cross-reference identifying the new innkeeper’s tax crimes.
The overall sentiment reflected in the bill text is administrative and pro-local-government, with the measure designed to give municipalities another tourism-revenue tool while keeping the rate capped and the use of funds restricted. Because there are no committee transcripts or recorded votes provided, there is no documented public debate in the supplied materials. The main likely points of contention are the new local tax authority, the impact on hotel and lodging businesses and visitors, the $5-per-night cap, and whether the revenue restrictions and felony penalties are sufficient to prevent misuse while still giving municipalities flexibility.
HB 1117 would add a new municipal innkeeper’s tax chapter to Title 6 of the Indiana Code and amend existing innkeeper’s tax administration provisions in Title 6 and the criminal code. It would authorize qualifying municipalities to levy a flat per-night lodging tax, require creation of a dedicated convention, visitor, and tourism promotion fund, and subject the tax to state or local collection procedures depending on local ordinance. The bill would affect municipalities, lodging operators, short-term guests, the Department of State Revenue, and local fiscal officers, while also creating new criminal penalties for improper transfers or use of tax proceeds.
Based on the bill language alone, the measure appears generally supportive of municipal tourism funding and local control over lodging-tax revenue, while also emphasizing administrative uniformity and safeguards. No committee testimony or vote record was provided, so there is no direct evidence of support or opposition from legislators, stakeholders, or the public in the supplied materials. The structure of the bill suggests a pragmatic, revenue-focused approach rather than a controversial policy shift, but it would likely draw interest from municipalities and the hospitality industry.
The most likely areas of contention are whether municipalities should be allowed to impose a new lodging tax at all, whether the flat $5 nightly cap is appropriate, and how the tax would affect hotels, motels, and other short-term rental providers. Another possible issue is the use of the revenue, since the bill restricts spending to tourism promotion, parks and amenities, and certain event-related municipal services, which may be viewed as either appropriately targeted or too narrow. The felony provisions for misuse of funds may also be debated as a strong enforcement mechanism, especially by local officials who would administer the tax and by entities concerned about compliance burdens.