A bill from Indiana House Republicans would scrap the state’s 7% sales tax on diapers, reflecting a push by lawmakers to provide inflation relief to families in need.
House Bill 1001 – the House’s response to Senate Bill 3 that does not reduce the diaper tax – proposes an automatic taxpayer refund for Hoosiers in addition to greater tax exemptions for adoptive families. This proposal could still be modified during the legislative session.
The proposed House bill also details millions of dollars in funding for programs for families and children, including $30 million for Medicaid assistance. The diaper exemption could reduce sales tax revenue up to $6.2 million in fiscal year 2023, depending on the effective date of the exemption.
Legislation to scrap Indiana’s diaper tax never made it through committees in 2019 and 2020 as Democratic lawmakers drafted the bills. According to the National Diaper Bank Network31 states tax diapers, with Indiana having among the highest tax rates.
During the 2020 legislative session, Rep. B. Patrick Bauer, D-South Bend, proposed that the General Assembly remove the tax, but it was never passed. Ways and Means Committee.
In the 2022 regular session, Rep. Carey Hamilton, D-Indianapolis, moved a tax amendment House Bill 1002which called for tampons, children’s diapers, products used by adults to manage incontinence, and over-the-counter drugs to be exempt from state sales tax.
This proposal did not pass, with the vast majority of Republicans voting against the measure.
During Tuesday’s House Ways and Means Committee meeting, the Indiana Community Action Poverty Institute expressed support for the diaper tax measure in the proposed bill.
“We know how expensive diapers are for low-income families. Sometimes they can consume a lot of their budget, so this will be a help for them,” said Jessica Fraser, Director of ICAPI.
A pack of Pampers Swaddlers size 1 diapers is $27.49 at Target in Indiana. The tax on this item would total $1.92.
In a statement before the session, House Speaker Todd Huston, R-Fishers, reiterated that House leadership would associate this bill with any abortion-related proposals passed.
“In anticipation of a life-protecting bill in the special session, House Republicans will also pursue significant investments to support moms, babies and families,” Huston said.
Other states, including Florida and Maryland, have moved to lower their own diaper taxes to help needy families and seniors who use the products.
House Bill 1001 aligns closely with Gov. Eric Holcomb’s $1 billion tax relief plan that would give every Hoosier a $225 tax refund.
This refund would be on top of the automatic $125 refund taxpayers received when filing their 2022 taxes, from inflated income from the prior year.
If passed, Senate Bill 3 would place a cap on the state sales tax on gasoline and would not exceed $0.295 per gallon. The bill would also suspend sales tax on utilities.