What Indiana’s property tax changes will mean for Hoosiers

By GARRETT BERGQUIST
WISH-TV | wishtv.com

An economist and a local government expert on Tuesday said Hoosiers’ individual situations will determine how much they save under Indiana’s new property tax overhaul.

After months of negotiations, the Indiana Senate voted just early Tuesday, just after midnight, to send the property tax bill approved by the House to Gov. Mike Braun’s desk. Braun signed it into law on Tuesday afternoon.

The bill would let homeowners claim a tax credit of up to 10 percent of their total property tax bill, to a maximum of $300.

Disabled veterans could claim an additional credit of $250 while older Hoosiers on fixed incomes could claim an extra $150.

Paul Helmke, director of the Civic Leaders Center at the IU O’Neill School of Public and Environmental Affairs, told News 8 most homeowners likely will qualify for the full $300 or close to it. He said that amount represents a significant savings.

Ball State University economist professor Michael Hicks isn’t so sure. He said the average homeowner based on average home values could still save between $200 and $300, but the median homeowner – the homeowner whose assessed valuation is exactly in the middle – might end up saving less than $100.

“Savings are going to accrue to higher-income households, and so it’s really not going to be as big a bang for families that own a less-expensive home,” he said. “The things that are really going to matter are going to be the assessed valuation of your home and then what other exemptions you have in your home.”

Local government officials have told News 8 they likely will raise local income tax, or LIT, rates to make up for the lost property tax revenue. The bill caps cumulative LIT rates for each county at 2.9 percent, down from the current 3.75 percent.

According to records from the State Budget Agency, just three counties in Indiana – Cass, Randolph and Wabash – have LIT rates that are at or above the new limit. The other 89 counties have room to raise their rates.

Helmke, who served three terms as mayor of Fort Wayne, said inflation and the need to pay public safety salaries will almost certainly drive local governments to raise LIT rates. Even though schools don’t receive LIT revenue, Helmke said, it’s unlikely homeowners will see a net savings due to LIT rates being raised only to fund city and county services.

“I don’t think that you’re going to see cities and counties holding back. I think they’re going to want to get the full income tax amount that they can, or close to it,” he said. “That’s going to make the schools the loser, and I think for most of us taxpayers, it’s going to be a wash.”

Hicks said the bill’s adjustments to business personal property tax likely will hit homeowners as well. The bill significantly expands two exemptions businesses can claim on capital equipment, such as factory machinery. Hicks said larger cities with more manufacturers will be hit harder by loss of that revenue. As a result, he said those jurisdictions likely will see the highest increases in LIT rates.

The provisions of SB 1 take effect for property taxes paid in 2026.

This story was originally published by WISH-TV at wishtv.com/news/politics/indiana-property-tax-overhaul.