A new report on Indiana's local income taxes urges state legislators to simplify a system that has seven types of taxes and a two-year lag before the money collected by the state is distributed to local governments. The Indiana Fiscal Policy Institute says that the local income taxes have successfully lowered property taxes throughout the state but they are complex and varies widely around the state.

The report found most local income taxes are used to reduce property taxes, though counties are increasingly using local income tax revenue for other expenses. The report said $1.5 billion in revenue from local income taxes was distributed in 2012 to counties.