Local Income Taxes

For my first couple of postings, I will be writing about some of the data from the newly available Indiana Handbook of Taxes, Revenues, and Appropriations for Fiscal Year 2011 (yeah, I know, great bedtime reading).

In Indiana, 91 of 92 counties (with Lake County as the only exception) have local option income tax rates that are used to fund the various units of local government (counties, cities and towns, townships, public libraries, and some other special taxing units). Currently, there are 6 different forms of local option income taxes available to local governments (and are only available in certain combinations and at certain rates). I’ll probably wind up talking in more detail about each of them, but in short, they are:

  • County Option Income Tax (COIT) — this is the only income tax rate that Monroe County uses
  • County Adjusted Gross Income Tax (CAGIT)
  • County Economic Development Income Tax (CEDIT)
  • LOIT to Freeze Property Tax Levy
  • LOIT for Property Tax Relief
  • LOIT for Public Safety (requires one of the other two LOIT options to be adopted as well)
The following excerpt from the Handbook of Taxes, Revenues, and Appropriations (Indiana LOIT Rates 2011-2012) shows the total income tax rates for all 91 counties in Indiana that have local income taxes. Monroe County’s rate is 1.05%, which is on the low side compared to other counties (65 counties have higher income tax rates than we do).
The 1.05% income tax rate is actually divided into two rates: the base COIT rate of 1% and a special COIT rate of 0.05% that is dedicated to juvenile treatment and services. The 1% base rate is divided up among the following taxing units (the formula for dividing up the income tax among the units definitely a subject for another post!):
  • Monroe County
  • Cities and Towns (Bloomington, Ellettsville, and Stinesville)
  • Townships (Benton, Bloomington, Perry, Richland, Bean Blossom, Van Buren, Polk, Indian Creek, Clear Creek, Salt Creek, Washington)
  • Monroe County Public Library
  • Bloomington Transportation (the city bus service)
  • Perry-Clear Creek Fire Protection District
The 0.05%, often referred to as the “Juvenile COIT”, is used to fund the Monroe County youth shelter, as well as several juvenile probation officers, all at the county level.
I’ll talk in the next posting about how much revenue these income tax rates represent to local governments.

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