Reserve triggers tax return for Indiana tax filers

State Auditor Tera Klutz, CPA announced that Indiana closed the 2021 fiscal year with reserves of $3.9 billion.

“Indiana once again exceeded expectations and soared through the recession with one of the fastest recoveries on record to end with a cash reserve of $3.9 billion at the end of June,” said Auditor Klutz. “Indiana is poised to make an excess reserve transfer of $1.1 billion, which will be split between retirement funding and a refundable income tax credit for Hoosier taxpayers.”

In Indiana, a state surplus of more than 10% of the next year’s budget is required to be split, with half dedicated to paying down pension obligations and the other half given back to taxpayers. According to the report, about $545 million will go to taxpayers and another $545 million toward pension liabilities. This will be the second time Hoosiers will receive an automatic taxpayer refund since the law passed in 2011.    

The annual report, prepared by the State Budget Agency, highlights the state’s fiscal year ending on June 30, 2021. According to the Associated Press, overall tax revenue grew 14% over the past year as collections bounced back stronger than expected from the COVID-19 pandemic recession.

In a press release, Auditor Klutz credited strong fiscal leadership and teamwork for how Indiana was able to financially navigate through the national pandemic and economic uncertainty while ensuring a reasonable state reserve.

“Indiana’s economic future and fiscal responsibility are directly linked. Maintaining sustainable finances creates a better, stronger, more prosperous Hoosier state for the next generation,” added Auditor Klutz.

Cris Johnston, Office of Management and Budget Director, echoed Auditor Klutz’s statements and added “Years of fiscal discipline, sound tax policy, a resilient Indiana economy, and federal pandemic financial assistance are all reflected in these impressive year-end results which have presented the opportunity to make strategic investments which will benefit Hoosiers in the years to come.”

“The official revenue forecast on April 15th added $463 million to our projections for FY 2021,” said Zac Jackson, State Budget Director. “In the last 75 days of the fiscal year, we exceeded those projections by an additional $1.222 billion. It’s unprecedented for the General Fund reserve balances to increase by nearly $1.7 billion in less than three months.”