IndianaIndiana sets five-cent rounding rules for cash payments
Indiana’s law sets cash rounding rules for government payments and purchases, with qualifying transactions generally covered starting in 2027.
What it does
Indiana and local governments round qualifying cash tax payments down to five-cent amounts. Payments under five cents become zero, and separate rules govern taxes collected through an agent.
For cash purchases, businesses and public units may round the total to a five-cent amount. They may round down, round up, or use the law’s nearest-five-cent method.
For one tax year, eligible taxpayers may deduct qualifying tips, overtime pay, and passenger vehicle loan interest from Indiana income. The vehicle interest deduction requires Indiana residency when the interest is paid or accrued.
Argument forRounding cash payments to five-cent amounts could make checkout and government payments simpler for customers, businesses, and public offices.
Argument againstBusinesses may choose to round cash totals up, so some customers could pay a few cents more on a purchase.
More detail
Government units round qualifying cash tax payments down to five cents. This applies to cash payments to Indiana or a local unit, such as a county, city, town, school corporation, or special taxing district. This covers taxes, fines, fees, and other required payments, but not payments for goods or services. For taxes collected or withheld by an agent, the tax is calculated before rounding; rounding applies to the total remittance under the stated rules. This applies to qualifying cash transactions after December 31, 2026.
Businesses may round cash transaction totals to five-cent amounts. This applies to cash transactions with businesses and state or local units that sell or provide property or services for payment. For totals of five cents or more, a business may round down, round up, or use the stated nearest-five-cent method. For totals under five cents, a business may round to zero or five cents. This applies to cash transactions after December 31, 2026. A transaction generally counts based on when the property is delivered, with an exception for agreements and payments made before January 1, 2027.
Eligible taxpayers may deduct certain tips, overtime pay, and passenger vehicle loan interest from Indiana income. These deductions apply to individual taxpayers for the taxable year beginning after December 31, 2025, and ending before January 1, 2027. The tips and overtime deductions match amounts deducted from federal adjusted gross income under the cited federal rules. The vehicle loan interest deduction is limited to an Indiana resident when the interest is paid or accrued, and estates and trusts cannot claim it. The deductions apply only to the taxable year beginning after December 31, 2025, and ending before January 1, 2027.
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Where it stands
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Mar 5Public Law 128Latest
- Mar 5Signed by the Governor Mike BraunBecame Law
- Feb 27Signed by the President Pro TemporeMajor
- Feb 27Signed by the SpeakerMajor
- Feb 27Signed by the President of the SenateMajor
- Feb 25Senate concurred with House amendments; Roll Call 285: yeas 47, nays 0
- Vote recorded SB 243 - Holdman. Result: pass.Upper
- Feb 24Returned to the Senate with amendmentsMinor
- Feb 24Motion to concur filedMinor
- Feb 23Third reading: passed; Roll Call 310: yeas 78, nays 18Passed House
- Vote recorded SB 243 - Thompson - 3rd Reading. Result: pass.Lower
- Feb 19Second reading: amended, ordered engrossedMinor
- Vote recorded SB 243 - Thompson - 2nd Reading. Result: fail.Lower
- Vote recorded SB 243 - Thompson - 2nd Reading. Result: fail.Lower
- Vote recorded SB 243 - Thompson - 2nd Reading. Result: fail.Lower
- Feb 19Amendment #3 (DeLaney) failed; Roll Call 288: yeas 35, nays 58Major
- Feb 19Amendment #7 (Thompson) prevailed; voice voteMajor
- Feb 19Amendment #1 (Hamilton) failed; Roll Call 287: yeas 38, nays 56Major
- Feb 19Amendment #5 (Thompson) prevailed; voice voteMajor
- Feb 19Amendment #2 (DeLaney) failed; Roll Call 289: yeas 31, nays 63Major
- Feb 17Committee report: amend do pass, adoptedMinor
- Feb 2First reading: referred to Committee on Ways and MeansMinor
- Jan 29Referred to the HouseMinor
- Jan 28Senator Alting added as coauthor
- Vote recorded SB 243 - Holdman - 3rd Reading. Result: pass.Upper
- Jan 28Third reading: passed; Roll Call 122: yeas 47, nays 1Passed Senate
- Jan 28House sponsor: Representative Thompson
- Jan 28Cosponsor: Representative Snow
- Jan 26Amendment #2 (Yoder) failed; voice voteMajor
- Vote recorded SB 243 - Holdman - 2nd Reading. Result: fail.Upper
- Vote recorded SB 243 - Holdman - 2nd Reading. Result: fail.Upper
- Jan 26Amendment #6 (Young M) failed; Roll Call 67: yeas 11, nays 32Major
- Jan 26Amendment #5 (Young M) failed; voice voteMajor
- Jan 26Amendment #4 (Young M) failed; Roll Call 66: yeas 20, nays 24Major
- Jan 26Second reading: ordered engrossedMinor
- Jan 26Senator Rogers added as third author
- Jan 20Committee report: amend do pass, adoptedMinor
- Jan 15Senator Dernulc added as coauthor
- Jan 15Senator Baldwin added as second author
- Jan 12First reading: referred to Committee on Tax and Fiscal PolicyMinor
- Jan 12Authored by Senator HoldmanIntroduced
Taxes & Budget