INDIANAPOLIS — As you know, Hoosiers will be seeing a little bump in their tax refunds next year since the state’s surplus in cash that it has in the bank has exceeded the amount to trigger an automatic refund of some of that money.
Last week, State Auditor Tera Klutz announced that Indiana closed the 2021 fiscal year with reserves of $3.9 billion. That’s just over a billion in extra cash reserves, so that means you are getting some of that money back.
What’s astonishing to some Hoosiers is how this could have happened after coming off a year during which a global pandemic brought the entire economy to a virtual standstill.
“Certainly the federal stimulus, the direct checks, and the enhanced unemployment benefits helped keep household spending fairly high,” said Chris Watts with the non-partisan Indiana Fiscal Policy Institute. “We collect about half of our total general fund revenues from the state sales tax so that was a big help.”
But Watts told Indy Politics that what really helped keep revenues stable for the state were the enhanced unemployment benefits.
“Indiana, like most states, not all but most also taxes unemployment benefits,” Watts said. “Even on the income tax side, these enhanced federal benefits kept income tax collections stable even when unemployment was elevated.”
Not to mention that extra $1.7 billion bump from sports betting brought in in 2020.
Watts also says despite an initial worker shortage once worst of the COVID restrictions were lifted, Hoosiers were among the quickest to get back to work among Indiana higher-paying jobs, which added even more fuel to the state’s surplus in both spending and income tax revenue.
With over a billion dollars to work with, the state says half of that, roughly $545 million will be returned to taxpayers, in the realm of $170 per individual or $340 per joint filing. The other $545 million will go to the state’s pension liabilities.