(INDIANAPOLIS) - Indiana's sweeping property tax overhaul is now in effect, promising more than $1.3 billion in tax relief over the next three years while raising concerns about long-term impacts on schools and local governments.
The law, Senate Enrolled Act 1, approved during the 2025 legislative session, aims to slow rising property tax bills driven by higher home values and inflation. Supporters say it provides meaningful relief for homeowners struggling with housing costs, while critics warn it could strain local budgets and reduce funding for public services.
Starting in 2026, homeowners will receive an automatic property tax credit equal to 10 percent of their total bill, capped at $300 for homesteads. The law also phases in a major expansion of the supplemental homestead deduction, eventually allowing homeowners by 2031 to deduct two-thirds of their home's assessed value from taxation.
Additional credits target seniors on fixed incomes, designed to ensure older homeowners still see savings even if their tax bills are already limited by Indiana's constitutional tax caps.
Beyond direct tax cuts, SEA 1 changes how property tax increases are approved. Local property tax referendums must now appear on general election ballots, a move lawmakers say improves transparency and voter participation. The state has also launched a new online portal allowing taxpayers to see how proposed local spending plans could affect their individual tax bills.
Local officials and school leaders have raised concerns that the changes could reduce revenue for cities, counties, and school districts, potentially leading to service cuts or pressure to raise other taxes and fees. Critics also note that renters do not directly benefit from the relief and that some homeowners may see limited savings depending on their circumstances.
Supporters counter that the law forces more discipline in local spending while still allowing communities to pursue projects with voter approval.
Most Hoosiers are expected to begin seeing the impact of the changes when 2026 property tax bills are issued, as debate continues over how the law will reshape local finances in the years ahead.