Hoosiers will get credits worth $111 if they file individually or $222 for joint filers when they pay their 2012 income taxes next year, Gov. Mitch Daniels announced Wednesday.
The income tax credits come as Indiana divides $360 million in surplus cash among more than 3.2 million taxpayers. It's happening because of the state's "automatic taxpayer refund" designed to keep the general fund from amassing extra cash.
"Past a point of rock-solid fiscal strength, it's better to leave this money in the pockets of those who earned it than to let it burn a hole, as it tends to do, in the pocket of government," Daniels said.
The tax credits were triggered when Indiana ended the most recent fiscal year in June with a $2.1 billion surplus.
Some of that money is being kept in the bank in case of an economic downturn, but $360 million is going to taxpayers and another $360 million is being pumped into the state's public pension funds.
The credit will reduce the average Hoosier's $850 income tax burden by 13 percent. About 460,000 taxpayers will see their state income taxes slashed in half by it, and 230,000 taxpayers will get their state income taxes completely refunded.
"We insisted on a per capita refund for two reasons: first, maximum simplicity, as seen on the new tax form. Second, to provide the most relief to lower and middle income Hoosiers, for whom $222 may be meaningful right now," Daniels said.
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