Hoosiers who work overtime or for tips are another vote closer to a $200 million break on next spring’s tax returns — while those who prefer to pay in cash could soon encounter a statewide penny-rounding regime amid a national shortage of the discontinued coin.
That’s after the House on Monday approved Senate Bill 243 in a bipartisan 77-19 vote.
The measure would add one-year tax deductions on overtime and tip income, along with the interest on loans for U.S.-made vehicles — mimicking the three-year federal breaks in President Donald Trump’s signature One Big Beautiful Bill Act.
“I love tax cuts,” said Rep. Jack Jordan, R-Bremen, before advocating for further “broad-based” cuts benefiting dishwashers, gas station workers and a “plethora” of other employees.
The overtime provision is expected to save taxpayers — and cost both the state and local units of government — between $45 million and $54 million in income taxes, while the tips hit is estimated between $96 million and $154 million, according to a fiscal analysis by the nonpartisan Legislative Services Agency. The interest deduction is worth a projected $30 million.
“In local government, that’s not walking around money, that’s survival money,” said Rep. Greg Porter, D-Indianapolis. He also argued the tips break would benefit higher earners more.
The legislation also takes aim at a penny shortage that began after the U.S. Mint ended production of the one-cent coin in November. Retailers and agencies have been handling cash transactions as they wish in the absence of a statewide policy.
“The way we have drafted this is, if the … business wants to round up, they may; they may round down. It’s their call,” said Rep. Jeff Thompson, R-Lizton. He is the bill’s House sponsor.
In committee, Thompson and other supporters of that amended language suggested firms should round down to the next nickel, and that those who rounded up would face customer blowback.
Hoosier governments, meanwhile, would be required to round down.
The rounding regime could cost the state millions in sales tax revenue, while agencies could lose thousands in earnings off fees, fines and more. It would take effect in 2027.
The Senate must either agree to changes made in the House, or both chambers must compromise on a final version before Friday, the expected final day of the legislative session.
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