Editorial: Tax law merits more discussion as impacts reverberate statewide

Before lawmakers return to the Statehouse in January for their 2026 legislative session, we encourage them to spend some time talking in-depth with city and town officials in their districts.

Many of those public officials have struggled to develop budgets under changes to local property and income taxes that lawmakers approved and Gov. Mike Braun signed into law earlier this year.

We know that struggle was in part the point of the legislation. Braun and GOP lawmakers were determined to cut property taxes, which had been rising over the past few years as home prices increased dramatically. In addition, Braun maintained during his campaign and after that he believed local governments could be more efficient. It’s important to note that he’s not singling out local governments. He has also sought to cut spending by state government, as well.

But big changes in tax structures lead to uncertainty—and almost always some unintended consequences.

It might be too soon to know what all of those are. As reporter Marek Mazurek explains in his story on page 1A, the tax changes won’t go into effect fully until 2028. That’s when local officials expect much bigger cuts will be necessary.

We’re not siding with local officials in a debate between tax cuts for homeowners and businesses and money for local governments. Nothing is that simple, anyway.

We are concerned, though, about what we see (and several people quoted in Mazurek’s story explain) will be an impact on the ability of local communities to grow.

The tax changes appear to mean that local government revenue will be more dependent than ever on population growth—especially the growth of higher-income residents who will pay more in income taxes.

But to provide the amenities that can attract those kinds of residents, local governments need enough revenue to build and operate good roads, parks, downtowns and programs. Some local officials say the tax changes are stripping them of the revenue needed to make that transition.

We know, of course, that tax rates can play a role in attracting residents, too. But it’s a balance, and it’s not always easy to get that balance right. We suspect that lawmakers could make tweaks in 2026 that make the tax laws better.

We know local officials have lots of ideas. Mazurek writes that some elected leaders already are talking to lawmakers about changes. We encourage local officials to make creative and constructive suggestions, and we hope that legislative leaders and the Governor’s Office listen with an open mind and come up with their own innovative ideas, as well.

Then this spring, homeowners and businesses will begin seeing the impacts of the changes on their tax bills. That will undoubtedly lead to additional concerns, questions and suggestions—all of which should be part of the larger conversation.

This kind of big tax change shouldn’t be a one-and-done piece of legislation. It should be an ongoing conversation—one IBJ looks forward to covering.•

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