Indiana property tax bill amended in House Ways and Means, advances to House

Yahoo

07-04-2025

The property relief bill was further amended to draw from components of three bills in the Indiana House Ways and Means committee Monday, which Democratic members voiced concern about and Republican members praised for its property tax relief.
A 368-page amendment to Senate Bill 1 was approved Monday. The amendment includes elements of the Senate amended Senate Bill 1, like allowing a county's fiscal body to set up a property tax deferment program, and Senate 518, which would require by 2027 that school corporations share referendum revenue with charter schools and by 2028 all school corporations begin sharing revenue from the school corporation's operations fund levy with charter schools.
Further, the amended Senate Bill 1 contains language from House Bill 1402, proposed by House Ways and Means committee chairman Jeff Thompson, which includes a 5-year phase-in of exemptions and deductions so that every parcel in the state hits the property tax cap.
The amended Senate Bill 1 states that the percentage cap used to determine the maximum levy growth quotient is 4% in 2026. Beginning in 2028, the maximum local income tax expenditure rate for all counties will be 2.9%, according to the amended bill.
Under the amended bill, approximately 93% of homeowners will see, on average, a decrease of $200 in their pay-2026 property tax bill, Thompson, R-Lizton, said.
Senate Bill 1 initially included language that Gov. Mike Braun campaigned on, a homestead standard deduction amount of 60% of the homestead's assessed value if the value is more than $125,000 or $48,000 plus 60% of the remaining assessed value if the homestead has an assessed value of $125,000 or less. That language was introduced in Senate Bill 1.
Braun's plan would cut $4.1 billion across the state between 2026 and 2028, including $1.9 billion from schools, $254 million from libraries, $890 million from cities and towns, and $765 million from counties.
The Senate amended Senate Bill 1 to remove Braun's language from the bill. The amended bill would shift the percentage cap used to determine the maximum levy growth quotient to 0% in 2026, 1% in 2027 and 2% in 2028; and allows a county fiscal body to establish a property tax payment deferral program, where up to $10,000 can be deferred and the deferment becomes a lien on the property.
The fiscal impact of the amended bill would cut $1.4 billion across the state between 2026 and 2025, including $370.9 million from schools, $67 million from libraries, $304.3 million from cities and towns, and $346.6 million from counties.
Last month, Thompson stripped Senate Bill 1 and inserted his House Bill 1402, which was not heard in committee in the first half of session.
Under Thompson's bill, phases down the homestead standard deduction over 5 years to 0 beginning for taxes due and payable in 2031; phases in an increase in the supplemental homestead deduction over 5 years to two this of the assessed value of the homestead; establishes a new local income tax expenditure tare for all counties to 2.9%; and phases in a total exemption for business personal property that is placed in service after Jan. 1, 2025.
The fiscal impact of Thompson's bill would cut $362.8 million across the state through 2028, including $76.7 million from counties, $147.2 million from cities and towns, $186.2 million from school corporations and $2.1 million from libraries.
Rep. Mike Andrade, D-Munster, said he had concerns with the amended bill because the local income tax change will negatively impact Lake County and because it prohibits the northern Indiana commuter transportation district – which runs in his district – from issuing new bonds after May 9 that are payable in whole or in part from amounts distributed from the commuter rail service fund.
'This is not in the perfect place that it needs to be,' Andrade said. 'It's concerning that we're shifting the burden still on local units of government while trying to give some relief to the homeowners.'
Rep. Ed DeLaney, D-Indianapolis, said the amended bill likely won't appeal to Gov. Braun because it goes 'nowhere near his goal' to lower property taxes. The Senate likely won't go for the bill, DeLaney said, because it amends its bill.
While he doesn't support school corporations sharing referendum dollars with charter schools, DeLaney said he does appreciate the charter school portion of the amended bill because it tones down the language in Senate Bill 518.
'I think we have a tough job getting this over the finish line,' DeLaney said.
Rep. Tonya Pfaff, D-Terre Haute, said while the legislature will be able to say that it decreased property taxes, the relief is only an average of $200 at the cost of funding police, fire, schools, library and other local services.
'To me, it's a wash,' Pfaff said.
Rep Chris Campbell, D-West Lafayette, said she opposed the bill because property taxes fund police, fire, schools and local municipal needs. Additionally, without a fiscal impact of the amendment, Campbell said she can't approve the amendment.
'Without a fiscal, we're asking this group of decision makers to write a blank check,' Campbell said. 'One size does not fit all.'
Rep. Danny Lopez, R-Carmel, said Thompson 'struck a great balance' in offering relief and ensuring municipalities still receive some funding.
'I know there's work that's left to be done. I appreciate your commitment to continue to work on this,' Lopez said.
Rep. J.D. Prescott, R-Union City, said he would 'like to see a lot more property tax relief across statewide for this.'
'This is not everything that I want from a property tax relief package, but a no vote would represent keeping the current law in place, with no relief; a yes vote does provide some relief,' Prescott said. 'I will vote yes because I think it's important that we provide relief moving forward. I will continue to push for more meaningful reforms in the future.'
Democratic members proposed five amendments, including a renter's deduction and local income tax match, which were voted down along party lines.
The amended bill passed in separate 15-8 votes, with all Republicans voting in favor and all Democrats voting against. The bill moves forward for consideration by the House.
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