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Governor Daniels' Proposed Initiatives for 2007

(1) Increase allowable deductions on military and veterans pay from $2000 to $5000

  • Under current statute, a taxpayer is eligible to take a state tax deduction if the income reported on his or her income tax return includes active or reserve military pay, retirement pay or survivor's benefits. The deduction is equal to the actual amount of military income received or $2,000, whichever is less. If both taxpayers in a joint return received military income, they may each claim the deduction for a maximum of $4,000. This amount has not been changed since the deduction was implemented in 1977.

    This proposal would increase the deduction to $5,000 for individuals, or $10,000 for military couples filing jointly (a 150% increase in either case).

(2) Exempt all military pay earned while under deployment orders to a combat zone

  • This proposal would provide a FULL Indiana income tax deduction for pay earned while under deployment orders to a combat zone, including train-up or mobilization time as well as the decompression period after the deployment. Would apply to active duty, reserve and Guard personnel who file Indiana tax returns

(3) Provide state match to contributions/license plate sales for Military Family Relief Fund

  • Law passed in 2005 (SEA 75) created a new Military Family Relief Fund to assist families facing financial hardship due to a soldier's deployment overseas. Fund to be financed by private contributions and sale of "Hoosier Veteran" and "Support Our Troops" license plates, which go on sale Jan. 1, 2007.
  • The legislature would include in biennial budget a state match of all contributions and license plate sales made in support of the Military Relief Fund, up to an annual limit of $350k.

(4) Allow in-state tuition rates for out-of-state soldiers assigned to Indiana

  • Part of package requested by Sec. Rumsfeld - national effort thru NGA to develop consistent policies to support military and their families
  • Would allow service members and families assigned to Indiana to be immediately eligible for in-state tuition rates at state colleges and universities, and would enable children enrolled in Indiana institutions to continue paying in-state rates even if parents are transferred elsewhere.

(5) Spouse Employment Program

  • Establish model program aimed at helping military spouses more efficiently transfer professional licenses (teaching, nursing, real estate, etc).

(6) Delayed High School Diploma Program

  • Extend program originally created for WWII vets to vets of Korean and Vietnam Wars
  • Would provide high school diploma to those vets who left high school in order to perform military service before getting their diploma.