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Indiana has long prided itself on keeping taxes low for hardworking Hoosiers. The Tax Foundation ranks our state first in the Midwest and 10th in the nation for competitive tax climate. CNBC ranked Indiana fifth in the nation for both cost of living and cost of doing business. To uphold these ideals, the Legislature has cut taxes every year over the last decade, including advancing over a billion dollars in tax relief this legislative session.
One of our focuses this year was on providing relief to homeowners who have been feeling the impact of rising local property taxes. I serve as vice chair of the Indiana State and Local Tax Review Task Force, which we formed to take a comprehensive look at our tax system and identify ways for further reform to benefit taxpayers.
This session, state lawmakers passed major property tax relief and reform based on some of the task force’s recommendations. Our goals for Senate Bill 1, which passed into law, were twofold: Provide immediate relief to homeowners struggling with rising property tax bills and advance longer-term reforms that move us toward a better, more transparent system. Through a combination of credits and reforms, homeowners will save more than $1.3 billion in property taxes over the next three years. Most Hoosiers will see a lower property tax bill next year.
The new law includes a 10% property tax credit of up to $300 on all homestead property tax bills beginning next year. It also provides an additional credit of $150 for fixed-income seniors and phases in a two-thirds property tax deduction for Hoosier homeowners. This is significant relief for Hoosier homeowners in the near term. Equally important, we’re creating a system that improves accountability in local government spending, reins in local government debt and reduces local reliance on property taxes long term.
Senate Enrolled Act 1 also reduces the total amount of local income taxes local governments can collect by $1.9 billion. This will make local officials more accountable to their constituents when making the case for additional revenue. It puts Hoosier taxpayers in the driver’s seat to shape the kind of community they want to live in while still ensuring local government officials have the tools they need to make the investments their residents desire.
The law also puts additional pro-taxpayer reforms in place to prevent property tax hikes. Those include requiring property tax referenda to be held during general elections when there’s higher voter turnout to ensure more residents’ voices are heard and adding transparency through a property tax transparency portal so taxpayers can compare their current tax bill with proposed tax rate changes.
SEA 1 will provide immediate relief to homeowners and lasting reforms to local government finance to give Hoosier taxpayers more insight and control into how their communities and essential services are funded. I will continue working with fellow lawmakers and stakeholders on this important topic to ensure taxpayers are protected and that our growing communities can continue to thrive.•
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Thompson, a Republican from Lizton, represents portions of Boone, Hendricks and Montgomery counties. He is chair of the House Ways and Means Committee.
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