Tax reform fleeces Hoosiers with new taxes

Yahoo

07-05-2025

The Libertarian Party of Indiana determines that the new property tax plan allows for more taxes rather than reductions. (Getty Images)
Eighty-two cents a day.
That's the maximum Hoosiers will save on their property tax bills, thanks to Gov. Mike Braun and the Indiana General Assembly's much-touted tax relief package.
But as the state government touts how it's putting a few pennies in one of your pockets, it's allowing your local community to take dollars out of the other pocket.
Senate Enrolled Act 1, which Braun signed into law on April 15, gives homeowners a 10% property tax credit through 2028, with a maximum credit of $300 per year – or 82 cents per day.
But in the meantime, as is fitting for a law enacted on Tax Day, it's creating a new tax.
Any city or town with at least 3,500 residents is now authorized to impose an income tax of up to 1.2%, within a local county tax bill of up to 2.9%
Because politicians respond to incentives, expect this new taxing power to induce a new wave of involuntary annexations by towns and cities desperately seeking to add to their tax bases.
More on new taxes
Not only can they now collect property taxes, but they can also collect income taxes on top of that, and give citizens a double-whammy. What could also easily happen is the municipality will vote to raise the tax rate and then attempt to annex surrounding areas – who had no ability to vote for or against those taxing their income – after the fact.
While Republicans are crowing about how this 'saves Hoosiers money' by capping the county income tax rate at 2.9%, when the cap had been 3.75% – it will only save them money in one county – Cass County currently has a 2.95% income tax rate. But municipalities now having an additional taxing power within the existing county income taxes will likely mean those living in incorporated areas will pay more. And counties will likely raise their rates on those in unincorporated areas to make up for the loss.
Simply put, more of your money goes into your local government's pocket.
Meanwhile, the state isn't done taking money out of your pocket. A $2 per pack cigarette tax was snuck into the state budget at the last minute to help cover a purported future revenue shortfall, as well as taxes on vaping and chewing tobacco.
It doesn't have to be this way. Libertarian Donald Rainwater made property tax reform a centerpiece of his gubernatorial campaign, with a proposal that capped property taxes at 1% of the value of the home, sunsetting seven years after a sale. That was real reform, and it was popular. It also forced Braun's hand, as he scrambled to come up with a package that was significantly more watered-down than Rainwater's.
But on fiscal matters, Indiana Republicans campaign like Libertarians and govern like Democrats.
So we end up with an even more watered-down bill that is wrapped up in a lot of tax-cutting language, but eventually sticks Hoosiers with an even bigger bill.
It's fitting this bill was signed into law on Tax Day. Enjoy your 82 cents, because you're going to be giving that – and even more – back on every future April 15.
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