Indianapolis, Indiana – Indiana lawmakers are gearing up for a session that could see significant shifts in the state’s tax landscape. One of the first major items on the agenda is expected to be conformity with the federal One Big Beautiful Bill Act (OBBBA), a move that could influence both businesses and workers across the state.
Currently, Indiana conforms to federal tax law only through January 1, 2023, which means legislators must now determine which of the new federal provisions to adopt for Tax Year 2025. The decision is not merely a procedural update; it carries real implications for the state’s economy, businesses, and everyday taxpayers.
Governor Braun’s administration has already convened an internal working group to evaluate the fiscal impacts of aligning with the OBBBA. Several provisions are expected to draw particularly close scrutiny. Among these are new incentives for domestic manufacturing investment, which could encourage companies to expand production within Indiana, potentially creating jobs and stimulating local economies. Changes to research and business expensing rules are also under review, offering potential simplification of tax compliance for companies engaged in innovation and development.
Other provisions have more direct implications for workers. Temporary federal deductions for certain types of income, including “no tax on tips,” overtime pay, and interest on qualifying car loans, could provide immediate relief to employees while also affecting state revenue streams. “Some of these measures would simplify compliance or enhance Indiana’s competitiveness, while others present meaningful short-term revenue implications,” officials noted.
The Indiana Chamber of Commerce has signaled it will play an active role as the session unfolds. “The Chamber will remain actively engaged as the session begins, working to ensure Indiana’s conformity decisions balance competitiveness, predictability and long-term fiscal health,” a spokesperson said. The organization plans to keep members informed and offer opportunities for feedback as lawmakers debate which provisions to adopt.
Observers suggest that the early focus on tax conformity highlights the state’s broader approach to economic policy. By selectively aligning with federal provisions, Indiana could position itself as an attractive place for investment and business growth while maintaining a stable revenue base for essential public services. At the same time, any misstep could result in unforeseen fiscal pressures, requiring careful analysis and strategic planning.
As the legislature prepares to convene, all eyes are on how quickly and effectively lawmakers will tackle these complex tax questions. The choices made in the coming weeks could have lasting effects on Indiana’s economic competitiveness, the financial well-being of its residents, and the predictability of the state’s fiscal outlook.
