Tax notebook: $6.9M total extra local income tax revenue in 2025 for Monroe County units—half as much as last year
The annual extra infusion of revenue from local income tax (LIT) to government units across the state will amount to about $6.9 million in Monroe County this year.
That’s about half the $14.3 million supplemental distribution of LIT that Indiana’s State Budget Agency (SBA) calculated for units in Monroe County units in 2024.
The 2025 calculations were released by the SBA in mid-February.
Local units include: Bloomington, Ellettsville, Monroe County government, Bloomington Transit, Monroe County Public Library, Monroe Fire Protection District, and all the townships.
The source of the revenue is the local income tax (LIT). Specifically it is a supplemental distribution from the SBA’s trust account for local income tax receipts. Monroe County residents pay local income tax at a total rate of 2.14 percent. That includes the 0.17 percent rate for the jail tax, which was enacted by the county council last year.
The supplemental distribution is not new. It is a routine calculation done every year, to ensure that the amount in the trust account does not get too big. The state legislature’s idea of what counts as “too big” has evolved to mean that the trust account balance for any county should be no bigger than 15 percent of the total certified distribution of income tax to the county in a given year.
For fiscal year 2025, the total amount of certified distribution to Monroe County units was $94,331,678. The amount in the SBA trust account for Monroe County was $21,105,673. That was too much, because 15 percent of $94,331,678 is just $14,149,752.
To get the trust account balance down to the 15-percent level, the SBA is distributing the difference ($21,105,673 – $14,149,752) to Monroe County units. That’s where the $6,955,921 figure comes from.
Even though that’s a little less than half the amount of the supplemental distribution from last year, it’s still the third biggest supplemental LIT amount in the last 25 years—after $8.2 million was recorded in 2016. For the five years between 2019 and 2023, the supplemental distribution for Monroe County units has averaged about $3.96 million.
How much will each government unit get from the $6,955,921?
How that supplemental pie gets sliced is a function of the way that ordinary certified shares of LIT get distributed to the local units. It also includes the way that the economic development local income tax (ED LIT) gets distributed.
The distribution of certified shares of LIT to each unit of government is based on a formula that includes the relative proportion of property taxes levied by that unit. ED LIT, in contrast, is distributed to just four units (Monroe County, Bloomington, Ellettsville, and Stinesville), based on the relative population of those four units.
To get an idea of how the extra money might work out for the city of Bloomington this year, last year’s supplemental distribution for all Monroe County units, in May 2024, was $14,301,262. The city of Bloomington received $4,622,546 of that, an amount that included $922,132 in supplement to the public safety local income tax (PSLIT).
If the same simple percentage from 2024 [$4,622,546 / $14,301,262] were applied as a rough approximation to this year’s total, then in 2025 the city of Bloomington could see around $2 million in additional LIT revenue, when the PSLIT revenue is included.
