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A leading fiscal legislator has introduced a sprawling amendment to a bill that would overhaul Indiana’s property tax system—the third major iteration considered this session—signaling that legislative leaders have not yet settled on their approach to what many Republicans have said is a priority issue.
The amendment, which was discussed in the House but not adopted Wednesday afternoon, inserts 238 pages of potential solutions into an already complex property tax debate. Senate Bill 1, the Legislature’s primary bill for property tax relief, has already been overhauled once so far this session.
Gov. Mike Braun has pressured the Legislature to enact significant property tax relief measures this session after hinging his gubernatorial campaign on the issue. His plan would have instituted growth caps and expanded the homestead deduction, but the Senate instead passed legislation last month that would slow property-tax growth and target relief to vulnerable demographics.
House Ways and Means chair Rep. Jeff Thompson, R-Lizton, brought forward an amendment this week with the exact language of his House Bill 1402, which he did not call in the first half of the session.
The move was a means to inspire conversation on the bill’s contents within the committee and would likely not be adopted without additional tweaks.
The legislation would overhaul both the state’s property tax system and how municipalities collect local income taxes, which is a key revenue replacement solution Republicans have said could make up for property tax cuts.
The amendment, which is the most complicated of the versions so far, resulted in a few hours of discussion, clarifying questions from both sides of the aisle and testimony. Still, several committee members voiced their apprehension of the potential second-half overhaul.
“This is not easy, and we need to be able to follow through exactly what these impacts are going to be,” Rep. Hal Slager, R-Shererville, said. “I’m not quite sure how we’re going to do that. Right now, I don’t know anybody that fully understands it.”
Braun, who has threatened a veto if more homeowner relief isn’t added to SB 1, said Wednesday morning that the amendment is part of the process to find the proper balance.
“My prediction is what we’re going to end up with is going to be a combination of every single thing you see at this point and a lot of what I had in there,” he told reporters. “At this point, it’s still early in the process.”
Lawmakers have about six weeks left to pass a property tax relief this session. The final day lawmakers can deliberate in the Statehouse is April 29.
What’s included
Though Braun has pushed for more “immediate relief,” a fiscal analysis of the amendment language shows modest savings.
As it stands, the amendment would reweigh the property tax burden across the tax groups and establish assessed value increase parameters. The fiscal analysis of the bill shows that, besides real business property taxes, most tax groups will fluctuate mildly in the first few years but experience relief over time.
Hoosier homeowners would see nearly $150 million less of an increase in their property taxes in 2026 and $243.2 million in 2031.
Several demographics would also see their targeted property tax deductions become credits instead. Seniors, disabled veterans and those with disabilities would see lower tax bills, since a credit directly lowers how much a taxpayer owes.
And some businesses would see massive savings in business personal property taxes, which are taxes on a business’s property and equipment. The amendment would exempt all business personal property in service this calendar year and moving forward. Altogether, it would slow the increase of business personal property taxes, eventually leading to $487.5 million less in such taxes charged in 2031.
However, the burden on real business property will be the largest change. The state expects nearly $140 million more in those taxes to be collected next year and up to $664.3 million in 2031.
David Ober, Indiana Chamber vice president of taxation and public finance, called the changes to business taxes a “double-edged sword.”
Local concerns linger
The primary hurdle for expansive property tax relief is the ability of local governments to cut millions of dollars out of their budgets. Local leaders warned that Braun’s and the Senate’s plan would result in significant cuts to critical services.
Braun’s tax cuts would have resulted in $1.2 billion in potential property tax revenue cut from local governments across the state in 2026, according to the bill’s fiscal note, and that cost is expected to compound each year. The Senate’s version would see local governments lose out on collecting about $1.4 billion over three years, according to the bill’s fiscal analysis.
Local leaders said those cuts would drastically scale back services and infrastructure maintenance and threaten public safety funding. In response, some local government leaders began pumping the brakes on spending, instituting hiring freezes and holding off on raises.
And some concerns remained for Thompson’s amendment.
Of those who testified Wednesday, many mentioned how imperative it is for some industry-reliant cities to collect the current rate of business personal property tax. Campbell Ricci, AIM policy director, told lawmakers that each city would have different impacts depending on the breadth of business there.
Ken Sicard, president of the Ferdinand Town Council, gave the committee a list of local services that would likely be curbed to accommodate the loss in revenue, including road maintenance, their Americans with Disabilities Act-related sidewalk improvement plans and park cleanup. The cuts would also force the town to limit its volunteer fire department, he said.
“I feel that it would be a very big detriment to the town,” he said.
SB 1 is expected to return to the committee for more amendments and a vote in the coming weeks.
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Well, here is further confirmation that you don’t get what you don’t pay for…but only now are people are beginning to realize this?? They all run on ‘we are going to lower’ your tax burden and the average JD believes it – but noone explains the consequences to JD… We are already behind the 8-ball when it comes to road and other infrastructure maintenance….maybe we can sell off local bridges and roads???
“This is not easy, and we need to be able to follow through exactly what these impacts are going to be. I’m not quite sure how we’re going to do that. Right now, I don’t know anybody that fully understands it.”
It was once said that “It is difficult to get a man to understand something when his salary depends on his not understanding it”. Our legislators take that to heart.
They’re had untold numbers of local officials warn them what will come if they pass what they’re debating. But they’re led by Shrugging Mike Braun, who doesn’t care one whit. He’s rich, you see, so it’s not his problem.
The line you quoted is a lie. The budget office knows exactly what is collected now. It can model exactly what any change will mean, most likely down to the nearest dollar.
Like you said, I am sure the Marion County Accessor’s office could tell you down to the penny what next year tax collection will look like if any of the formulas change.
Legislators also trying to figure out public perception … a survey company called my daughter last night and administrated a very long survey that focused a lot on people’s opinions of the cuts once they made the connection that cutting property taxes meant lower school funding.
Ok… I saw an analysis that says the big problem is home owners have had the burden of taxes shift from businesses and agriculture to homeowners. So if I read this correctly, none of the burden shift shifts. It just goes down for everybody.
This is stupid. Many Local governments and school systems are starving for tax dollars and we are going to cut MORE?!?
OK…. Somebody must have run the numbers to figure out that waiting until schools, bridges, roads, etc… just fail is cheaper than spending the money and Indiana is NOT in a race to be more like Missouri or Kansas?
STUPID, STUPID, STUPID!
yep
Let Braun veto what the legislature sends him. Problem solved!
An Indiana Governor’s veto is just a symbolic gesture. It only takes a simple majority to override the veto and so they just vote on it again.
First and foremost, after decades of manipulation each session, Indiana has arguably the most convoluted, detailed, over-officious, confusing tax code in the nation. Everything from fuel, property, income etc needs extreme streamlining. A number of states are doing just fine with ZERO income tax. Ramaswamy, running for governor in Ohio, plans, if elected, to eliminate their state’s income tax. Only in Indiana does the tax rate on gasoline ⛽️ go-up when retail prices rise. A progressive tax on gasoline! Please. The entire tax code in Indiana needs to be re-evaluated, re-assessed, prioritized, simplified and over hauled…….instead of adding and complicating it each election cycle. As for dedicated appropriations……local road maintenance needs a bigger chunk of the annual budget. If ‘education’ makes up more than 50% of the annual budget….something is completely out of whack.
Florida has zero income tax, but they tax the mouse to the hilt. Indiana doesn’t have someplace like Disney to make up for the lost revenue. With bad schools, crumbling roads, and poor weather we don’t have a lot of reason for people to even move here.
YOU GET WHAT YOU PAY FOR…
^^^^^^ What he said or you don’t get what you don’t pay for..
Levy a small percentage tax on churches and other properties currently tax exempt. Say 1/4 of 1% and then lower the residential rate from 1% of assessed value to 3/4 of 1%.