LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7244 NOTE PREPARED: Feb 13, 2025
BILL NUMBER: SB 1 BILL AMENDED: Feb 11, 2025
SUBJECT: Property Tax Relief.
FIRST AUTHOR: Sen. Holdman BILL STATUS: 2
nd
Reading - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: Property Tax Deferral: This bill adds provisions to authorize a county fiscal body
to adopt an ordinance to establish a property tax payment deferral program. It provides that a qualified individual
participating in the program may defer the payment of part of the property taxes that would otherwise be due
on a homestead. The bill defines "qualified individual" and it provides that property taxes deferred under the
program are due after the occurrence of a deferral termination event. It provides that the maximum amount of
taxes that may be deferred cumulatively year over year may not exceed $10,000.
Farmland Assessments: The bill amends a capitalization rate percentage under the statewide agricultural land
base rate determination.
MLGQ: This bill amends the percentage cap used to determine the maximum levy growth quotient (MLGQ) to
equal: (1) 0% in 2026; (2) 1% in 2027; and (3) 2% in 2028. Beginning with property taxes first due and payable
in 2029, it amends the calculation of the MLGQ to provide a new methodology. The bill specifies that the
MLGQ calculation is determined for the county and each civil taxing unit within the county based on specified
criteria and it provides the calculation of the MLGQ for civil taxing units with territory in more than one county.
Deductions and Credit: The bill makes certain changes to the qualification requirements for the over 65 circuit
breaker credit and the property tax deduction for persons 65 years of age or older. It also makes certain changes
to the qualification requirements and deduction amount for the property tax deduction for disabled veterans who
are either totally disabled or at least 62 years of age with a partial disability.
First-Time Homebuyer Credit: This bill establishes a property tax credit for an individual who is a first time
home buyer for the first five consecutive calender years in which the individual has property tax liability for the
individual's homestead and specifies the amount of the credit. It provides qualification requirements for the
credit based on the individual's annual income and the homestead's assessed value (AV).
Referenda: The bill provides that specified referendums may be placed on the ballot only at a general election.
It amends the ballot language for controlled project, school operating, and school public safety referendums.
The bill provides that a school corporation may not adopt a resolution to place a controlled project referendum
SB 1 1 on the ballot during the second calendar year after the final calendar year in which a previously approved
controlled project referendum levy is imposed.
The bill also creates a new referendum for all political subdivisions (but places additional restrictions on a
school corporation's ability to use the referendum) to use to place a referendum on the ballot to impose a
referendum tax levy for one year. It sets forth the procedures for holding the referendum. The bill specifies that
a referendum using the procedure may be placed only on the ballot for a general election, and it specifies the
permissible uses of money collected from the referendum levy.
General Obligation Bonds: This bill places restrictions on the issuance of certain general obligation bonds.
Annual Levy Growth: The bill provides that, notwithstanding any growth in a political subdivision's AV in the
previous year, a political subdivision's ad valorem property tax levy shall not exceed the ad valorem property
tax levy for its last preceding annual budget, unless the fiscal body of the political subdivision adopts an
affirmative tax rate and tax levy increase by ordinance following a separate public hearing. It requires a resulting
decrease in tax rates for each political subdivision in which there was an increase in the political subdivision's
AV in the previous year, subject to any affirmative tax rate and tax levy increase adopted by the fiscal body of
the political subdivision.
Excess Levy Appeals: This bill phases out the authority for the Department of Local Government Finance
(DLGF) to permit an excess tax levy that is based on AV growth, related to a revenue shortfall, school
transportation costs, and other circumstances. It retains the provisions that permit an excess tax levy if the civil
taxing unit cannot carry out its governmental functions and in the case of annexation.
Transparency Portal: The bill requires the DLGF to develop and maintain a property tax transparency portal
through which taxpayers may: (1) compare the property tax liability in their current tax statement compared to
their potential property tax liability based on changes under a proposed tax rate; and (2) provide taxpayer
feedback to the DLGF.
Effective Date: Upon passage; January 1, 2025 (retroactive); July 1, 2025; January 1, 2026; January 1, 2029.
Explanation of State Expenditures: Transparency Portal: The DLGF will incur additional expense to
develop and maintain a portal on the DLGF website to permit taxpayers to compare their current property
tax liability to a potential tax liability based on a proposed tax rate. The additional development expense is
estimated at $50,000 in FY 2026.
Excess Levy Appeals: Workload for the DLGF will be reduced beginning in FY 2026 because the number
of maximum levy appeals will be reduced.
Property Tax Deferral: Under this provision, the DLGF must prescribe the tax deferral loan application and
agreement. The DLGF should be able to implement the bill’s requirements with no additional appropriations,
assuming near customary agency staffing and resource levels.
MLGQ: The State Budget Agency currently computes the MLGQ each year and provides that information
to the DLGF. The DLGF then calculates maximum levies for taxing units each year based on the MLGQ.
This bill’s requirements are within these agencies’ routine administrative functions and should be able to be
implemented with no additional appropriations, assuming near customary agency staffing and resource levels.
SB 1 2 Referenda: The Secretary of State’s Election Division may need to update election publications and
informational materials to inform of the bill’s proposed changes. It is likely any needed revisions would be
able to be incorporated during the publication of next year’s informational materials within existing resources
as a routine matter of business.
Explanation of State Revenues:
Explanation of Local Expenditures: Referenda: It is likely this bill would amount to little change to local
election expenditures when a referendum is placed on the ballot in a year of a general election. Currently,
public questions regarding property tax levies may be placed on the ballot of a general election, municipal
election, or primary election. A special election may be held at the taxing unit’s expense. This bill will
restrict public questions to general elections.
Under this bill, school corporations that would have otherwise requested a special election will save the cost
of the special election. In some cases, this bill will delay a vote on the question. Construction and borrowing
costs could be affected by a delay.
Property Tax Deferral: County auditors, treasurers, and recorders will all have additional workload under this
provision.
Explanation of Local Revenues: Summary: This bill makes numerous changes to property tax AV, levies,
deductions, and credits. The AV and deduction changes will shift some taxes among properties, but the bill
as a whole will reduce net tax bills and local revenues, as compared to current law.
The following table shows the estimated net tax changes by property type for changes to the farmland base
rate, MLGQ, and deduction amounts for taxpayers who currently have an elderly or totally disabled veteran
deduction.
Estimated Net Tax Change ($ Millions)
Farmland Base Rate, MLGQ, and
Deduction Amounts for Current Recipients
Property Type CY 2026 CY 2027 CY 2028
Homesteads -91.4 -169.3 -253.8
Farmland -14.7 -70.6 -78.6
Other Residential -18.8 -35.7 -57.1
Apartments -7.7 -16.6 -26.7
Ag Business -5.2 -7.8 -11.8
Other Real -61.2 -114.9 -161.8
Personal Property -39.9 -69.8 -97.7
Total -238.9 -484.7 -687.5
Note: Totals may not sum due to rounding.
The following table shows the estimated net revenue changes by taxing unit type for changes to the farmland
base rate, MLGQ, and deduction amounts for taxpayers who currently have an elderly or totally disabled
veteran deduction.
[Total estimated local property tax revenue changes by county appear in Appendix A. Estimated local
property tax revenue changes by taxing unit are available at this link.]
SB 1 3 Estimated Net Revenue Change ($ Millions)
Farmland Base Rate, MLGQ, and
Deduction Amounts for Current Recipients
Unit Type CY 2026 CY 2027 CY 2028
Counties -59.8 -120.6 -166.2
Townships -10.9 -21.9 -30.3
Cities and Towns -49.8 -103.8 -150.7
School Corporations -60.6 -127.0 -183.3
Libraries -11.6 -23.0 -32.4
Special Units -16.0 -30.9 -42.9
TIF -30.1 -57.3 -81.7
Total -238.9 -484.7 -687.5
Total Without TIF -208.8 -427.4 -605.8
Note: Totals may not sum due to rounding.
Deduction and Credit Provisions
First-Time Home Buyer Credit: Beginning in CY 2026, this provision provides a credit against net property
tax liabilities for up to five years for first-time home buyers who have annual household income not
exceeding $75,000 and who purchase a home with an AV not exceeding $250,000. The bill limits the credit
to $2,500 annually and $12,500 over five years.
An estimated 9,000 to 10,000 first-time home buyers will be newly eligible for the credit each year. During
each of the first five years, the total cost of the credit will grow as more new home buyers are added. The
credit will reduce revenues for civil taxing units and school corporations.
The estimated total cost of the credits for the first five years is shown in the following table and is based on
(1) the estimate of 9,000 to 10,000 qualified new home buyers each year, and (2) the estimated statewide
average net tax for single-family homesteads.
First-Time Home Buyer Credit
Pay YearEst. Total Credit ($ Millions)
CY 2026 12.3 to 13.6
CY 2027 25.8 to 28.7
CY 2028 40.7 to 45.2
CY 2029 57.1 to 63.4
CY 2030 73.2 to 81.3
Totally Disabled Veteran Deduction - NEW FILERS: The increase in the AV cap from $240,000 to $300,000,
along with the $20,000 deduction amount, will provide for an estimated 5,400 new deductions totaling $107
M AV. These new deductions are worth an estimated $2.3 M in net tax savings to the recipients. Some of
these tax savings will be shifted to other taxpayers, and some will be revenue losses due to tax caps.
In addition, increasing the amount of the disabled veteran deductions may reduce motor vehicle excise tax
revenue that is also distributed to local taxing units. If a disabled veteran's net AV reaches zero before all of
the disabled veteran deduction is applied, the unused deduction amount may be converted into an excise tax
credit at the rate of $2.00 per $100 of unused deduction amount.
SB 1 4 [For taxes payable in 2024 under current law, 28,200 taxpayers claimed the Totally Disabled Veteran
deduction, totaling $385 M in AV.]
65 and Over Deduction - NEW FILERS: The increase in the AV cap from $240,000 to $300,000 and the
increase in the income cap from $30,000 (single) / $40,000 (joint) to $60,000 / $70,000, along with the
$20,000 deduction amount, will provide for an estimated 49,400 to 68,600 new deductions totaling $1.0 B
AV to $1.4 B AV. These new deductions are worth an estimated $21 M to $29 M in net tax savings to the
recipients. Some of these tax savings will be shifted to other taxpayers, and some will be revenue losses due
to tax caps.
[For taxes payable in 2024 under current law, 100,400 taxpayers claimed the 65 and Over Deduction, totaling
$1.38 B in AV.]
65 and Over Tax Cap- NEW FILERS: The increase in the AV cap from $240,000 to $300,000 and the
increase in the income cap from $30,000 (single) / $40,000 (joint) to $60,000 / $70,000 will provide for an
estimated 34,000 to 47,000 additional taxpayers qualifying for the credit. This credit limits the growth in net
property tax bills to 2% per year. At least initially, the credits will be minimal but will increase over time.
[For taxes payable in 2024 under current law, 68,800 taxpayers received 65 and over tax cap credits totaling
$31.4 M in taxes.]
AV Threshold Indexing: The application of an index based on median home price will permit additional
homeowners to receive the Age 65 and totally disabled veteran deductions and the Age 65 credit over time
as they become otherwise qualified. Some of these new deductions will offset deductions for current
recipients that are no longer claimed in future years.
Levy Provisions
MLGQ: The MLGQ is currently a statewide growth quotient based on changes in Indiana personal income
and is estimated to provide for a 5.7% increase in maximum levies in CY 2027 and a 5.3% increase in CY
2028. The maximum permissible levy controls operating funds. Debt service and referendum funds are not
subject to the maximum levy amount. Fast growing school corporations may receive a higher MLGQ for their
operations fund under current law.
Under this bill, the MLGQ will provide levy growth of 0% in CY 2026, 1% in CY 2027, and 2% in CY 2028
for all units. Beginning in CY 2029, each county will have its own MLGQ based on a combination of four
measures – Indiana personal consumption expenditures, Indiana average annual pay, U.S. nonfarm business
labor productivity, and county nonfarm personal income. The estimated MLGQ growth by county ranges
from about 3.1% to 4.3% in CY 2029.
Excess Levy Appeals: Beginning with CY 2026 property tax levies, this provision eliminates most of the
currently permitted excessive levy appeals. When granted, these appeals currently result in higher maximum
levy limits, permitting taxing units to impose higher property tax levies. The bill will eliminate most of these
levy increases. Appeals that remain include those regarding annexation, natural disasters, accidents, and
unanticipated emergencies.
Annual Levy Growth: Under this provision, a taxing unit’s levy for a year may not exceed the previous year’s
levy unless the unit adopts an ordinance permitting an increase (within other statutory limits) at a hearing
SB 1 5 held for the sole purpose of considering that ordinance.
Assessment Provision
Farmland Base Rate: There are three income capitalization rates that are used in the determination of the
farmland base assessment rate. This provision increases the highest capitalization rate in the formula from
8% to 9%.
Under current law, the base assessment rate for farmland is estimated at $2,520 for taxes payable in CY 2027,
$2,480 for CY 2028, $2,460 for CY 2029, and $2,520 for CY 2030. Under this provision, the base rate will
be reduced to an estimated $2,240 for taxes payable in CY 2027 and $2,200 for CY 2028. The estimated
reduction is $280 AV per acre in both CY 2027 and CY 2028. The change in the capitalization rate is
estimated to have no effect on the base rate for CY 2029 or CY 2030.
Referendum Provisions
Taxing Unit Operating Referendum: This provision permits civil taxing units and school corporations to hold
a referendum during a general election to provide an additional property tax levy to be used (1) for purposes
that are permitted for funds that are subject to the maximum permissible levy and (2) as stated in the
referendum. A referendum may be approved for only one year and may not be reimposed or extended.
Levies imposed as a result of a referendum are exempt from property tax caps. As such, a referendum levy
will not affect tax cap losses for the unit that imposes the levy or for intersecting taxing units. The fiscal
impact depends on the actions of taxing units seeking referendum levies and on the vote.
Referendum Extension: The bill prohibits adoption of a resolution regarding a school operating or safety
referendum, or placement on the ballot, in the year after the final year of a referendum levy. Currently, a
resolution to extend a referendum levy must be adopted and approved by the voters by the end of the final
year of the current levy. The bill extends the deadline to the end of the second year following the final year
of the current levy. If a school corporation that wishes to impose a new referendum levy has not held the
referendum by the final year of the current referendum levy, then the school corporation must wait an
additional year to act.
Public Question: Under current law, the public question for a school operating or safety referendum specifies
the duration in years and the purpose of the referendum as well as an estimated percentage increase in the
school property tax paid by homeowners and businesses. The percentage increase will be replaced with an
estimated dollar increase for the median valued residence within the school’s territory. This provision will
also add a maximum annual levy amount to the question.
In practice, operating and safety referendum levies are subject to a maximum tax rate often specified in the
resolution. If imposed, the maximum tax rate generates an increasing levy amount each year as net AV rises.
The addition of a maximum levy amount will restrict this yearly levy increase.
The public question for a controlled project also currently includes as an estimated percentage increase in
the taxing unit property tax paid by homeowners and businesses. The percentage increase will be replaced
with an estimated dollar increase for the median valued residence within the taxing unit’s territory.
Other Provisions
SB 1 6 Property Tax Deferral: Beginning with taxes due in CY 2026, the bill will allow homeowners who meet the
qualifications in an adopting county to defer a part of their property tax bill each year, subject to limitations.
To qualify, a homeowner must have owned the homestead for at least five years and must meet any other
qualifications that a county fiscal body may choose to require, which may include: (1) an age requirement
for seniors, (2) an AV limitation, (3) veteran status, or (4) an income limitation.
Qualified taxpayers may defer up to $500 each year, up to a maximum total of $10,000 over consecutive
years. The total amount deferred plus other liens and mortgages may not exceed the homestead’s AV.
The deferred taxes must be paid within 180 days after (1) the owner ceases to use the property as a
homestead or (2) the date of death of the homeowner (unless there is a surviving spouse). The bill permits
the county treasurer to charge interest of up to 4% per year on the deferred amount.
The total amount of taxes deferred each year depends on the number of counties that adopt the program, the
qualifications imposed in each county, the number of taxpayers who choose to defer, and the amount that
each taxpayer chooses to defer. Overall, at least initially, revenues for all civil taxing units and school
corporations that serve the affected homesteads will decrease under this bill. If deferral repayments are
greater than deferrals in a future year, then revenues would increase in those years.
General Obligation Bonds: Counties, cities, towns, townships, and school corporations that issue short term
general obligation bonds during January through April 2025 must wait two years before issuing additional
general obligation bonds.
State Agencies Affected: Department of Local Government Finance; State Budget Agency; Indiana
Secretary of State, Election Division.
Local Agencies Affected: County fiscal bodies; County auditors; County treasurers; County recorders; Civil
taxing units and school corporations.
Information Sources: LSA property tax database; Scott Maitland, DLGF, 317-232-3777; Purdue University;
Bureau of Economic Analysis; Bureau of Labor Statistics.
Fiscal Analyst: Bob Sigalow, 317-232-9859.
SB 1 7 Appendix A.
Estimated Change in Net Revenue - All Units in County
Farmland Base Rate, MLGQ, and
Deduction Amounts for Current Recipients
County CY 2026 CY 2027 CY 2028
Adams -1,224,000 -2,710,000 -3,755,000
Allen -16,508,000 -33,906,000 -52,686,000
Bartholomew -3,349,000 -6,865,000 -9,988,000
Benton -651,000 -1,546,000 -2,016,000
Blackford -373,000 -820,000 -1,070,000
Boone -5,120,000 -10,467,000 -14,780,000
Brown -612,000 -1,153,000 -1,582,000
Carroll -455,000 -903,000 -1,231,000
Cass -1,085,000 -2,308,000 -3,125,000
Clark -3,645,000 -7,391,000 -11,034,000
Clay -935,000 -1,788,000 -2,439,000
Clinton -1,091,000 -2,355,000 -3,111,000
Crawford -264,000 -582,000 -759,000
Daviess -1,180,000 -2,402,000 -3,342,000
Dearborn -1,402,000 -2,802,000 -3,928,000
Decatur -1,257,000 -2,540,000 -3,679,000
DeKalb -2,603,000 -5,108,000 -7,027,000
Delaware -1,803,000 -3,633,000 -4,838,000
Dubois -1,556,000 -3,096,000 -4,171,000
Elkhart -9,467,000 -18,603,000 -26,496,000
Fayette -590,000 -1,283,000 -1,666,000
Floyd -2,766,000 -5,275,000 -7,157,000
Fountain -685,000 -1,449,000 -1,945,000
Franklin -812,000 -1,627,000 -2,253,000
Fulton -825,000 -1,707,000 -2,335,000
Gibson -2,151,000 -4,212,000 -5,703,000
Grant -1,763,000 -3,521,000 -4,691,000
Greene -715,000 -1,517,000 -1,972,000
Hamilton -18,167,000 -38,475,000 -55,692,000
Hancock -3,346,000 -6,671,000 -10,087,000
Harrison -1,342,000 -2,594,000 -3,549,000
Hendricks -7,504,000 -15,813,000 -24,021,000
Henry -1,127,000 -2,463,000 -3,319,000
Howard -2,209,000 -4,386,000 -5,859,000
Huntington -1,000,000 -2,103,000 -2,804,000
Jackson -1,759,000 -3,458,000 -4,675,000
Jasper -1,633,000 -3,149,000 -4,288,000
Jay -929,000 -1,863,000 -2,507,000
Jefferson -825,000 -1,956,000 -2,626,000
Jennings -998,000 -2,044,000 -2,795,000
Johnson -5,107,000 -10,429,000 -15,608,000
Knox -1,605,000 -3,127,000 -4,293,000
Kosciusko -3,793,000 -7,348,000 -10,422,000
LaGrange -1,553,000 -3,053,000 -4,149,000
Lake -15,379,000 -34,713,000 -51,820,000
LaPorte -3,128,000 -6,277,000 -8,707,000
Lawrence -1,628,000 -3,224,000 -4,361,000
SB 1 8 Appendix A.
Estimated Change in Net Revenue - All Units in County
Farmland Base Rate, MLGQ, and
Deduction Amounts for Current Recipients
County CY 2026 CY 2027 CY 2028
Madison -2,001,000 -4,591,000 -6,564,000
Marion -24,439,000 -45,119,000 -61,729,000
Marshall -2,030,000 -4,044,000 -5,494,000
Martin -390,000 -758,000 -1,033,000
Miami -840,000 -1,729,000 -2,290,000
Monroe -7,654,000 -14,676,000 -20,135,000
Montgomery -1,589,000 -3,156,000 -4,078,000
Morgan -3,016,000 -5,837,000 -7,975,000
Newton -911,000 -1,808,000 -2,436,000
Noble -2,184,000 -4,236,000 -5,753,000
Ohio -206,000 -396,000 -540,000
Orange -866,000 -1,675,000 -2,294,000
Owen -715,000 -1,408,000 -1,950,000
Parke -621,000 -1,220,000 -1,662,000
Perry -482,000 -1,012,000 -1,368,000
Pike -383,000 -976,000 -1,229,000
Porter -7,928,000 -15,789,000 -22,071,000
Posey -1,843,000 -3,573,000 -4,920,000
Pulaski -665,000 -1,303,000 -1,774,000
Putnam -1,348,000 -2,618,000 -3,531,000
Randolph -912,000 -1,902,000 -2,523,000
Ripley -1,071,000 -2,087,000 -2,836,000
Rush -653,000 -1,428,000 -1,871,000
St. Joseph -6,360,000 -13,755,000 -20,993,000
Scott -555,000 -1,219,000 -1,662,000
Shelby -1,873,000 -3,631,000 -4,937,000
Spencer -1,344,000 -2,590,000 -3,525,000
Starke -905,000 -1,793,000 -2,437,000
Steuben -2,073,000 -3,986,000 -5,441,000
Sullivan -609,000 -1,555,000 -1,939,000
Switzerland -413,000 -801,000 -1,090,000
Tippecanoe -7,503,000 -15,556,000 -24,221,000
Tipton -645,000 -1,344,000 -1,812,000
Union -295,000 -611,000 -816,000
Vanderburgh -3,548,000 -6,704,000 -8,715,000
Vermillion -675,000 -1,477,000 -1,955,000
Vigo -1,574,000 -3,434,000 -4,440,000
Wabash -791,000 -1,663,000 -2,203,000
Warren -498,000 -1,069,000 -1,415,000
Warrick -3,134,000 -5,987,000 -8,166,000
Washington -740,000 -1,574,000 -2,095,000
Wayne -782,000 -1,966,000 -2,391,000
Wells -1,231,000 -2,403,000 -3,263,000
White -1,344,000 -2,874,000 -3,956,000
Whitley -1,354,000 -2,619,000 -3,593,000
Total -238,907,000 -484,666,000 -687,480,000
Note: Totals may not sum due to rounding.
SB 1 9