LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7244 NOTE PREPARED: Apr 9, 2025
BILL NUMBER: SB 1 BILL AMENDED: Apr 9, 2025
SUBJECT: Local Government Finance.
FIRST AUTHOR: Sen. Holdman BILL STATUS: 2
nd
Reading - 2
nd
House
FIRST SPONSOR: Rep. Thompson
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: (Amended)
Property Tax Provisions
General Obligation Bonds: This bill places restrictions on the issuance of certain general obligation bonds.
Farmland Assessments: This bill amends a capitalization rate percentage under the statewide agricultural land
base rate determination.
MLGQ: This bill provides that the percentage cap used to determine the maximum levy growth quotient
(MLGQ) is 4% in 2026.
Annual Levy Growth: The bill provides that, notwithstanding any growth in a political subdivision's assessed
value (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, 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 in the case of annexation, a natural disaster, an accident, or an emergency, and for
property tax revenue shortfalls resulting from erroneous AV.
Personal Property De Minimis Exemption: This bill phases in an increase in the acquisition cost threshold
for the business personal property tax exemption from $80,000 to $2,000,000.
SB 1 1 Personal Property Floor Adjustment: This bill provides that the 30% minimum valuation limitation does not
apply to business personal property placed in service after January 1, 2025.
Homestead Deduction Changes: This bill phases down the homestead standard deduction over five years to
zero beginning for taxes due and payable in 2031. It also phases in an increase in the supplemental homestead
deduction over five years to 2/3 of the assessed value (AV) of the homestead.
Deduction for 2% CB Cap Properties: This bill phases in an AV deduction for all property that is subject
to the 2% circuit breaker credit for excessive property taxes for assessment dates beginning in 2025 up to
a 1/3 AV deduction for taxes due and payable in 2031, and each taxable year thereafter.
Certain Property Tax Deductions Expiration: This bill expires certain property tax deductions allowed in
current law, and instead allows a credit against local property taxes in certain instances.
Supplemental Homestead Credit: This bill provides a supplemental homestead tax credit for property taxes
for a person's homestead if the person qualifies for a standard homestead deduction for the same homestead
property.
Age 65 and Over Tax Cap: The bill makes certain changes to the qualification requirements and credit amount
for the Age 65 and Over circuit breaker credit.
Referendums: This 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 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 modifies the threshold amounts used for
determining whether a political subdivision's project is a controlled project and whether the petition and
remonstrance process or the referendum process applies based on the political subdivision's total debt service
tax rate.
Property Tax Deferral: The 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 provides that property taxes deferred under the program are due after the occurrence of a deferral termination
event. It also provides that the maximum amount of taxes that may be deferred cumulatively year over year may
not exceed $10,000.
Transparency Portal: This 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.
Fire Territories and Conservancy Districts: The bill provides that for a fire protection territory established after
January 1, 2025, each unit in a territory may not impose a tax rate that exceeds $0.40 per $100 of AV. The bill
also provides that a conservancy district established after December 1, 2024 may not impose a special benefits
tax rate that exceeds $0.05 per $100 of AV.
Local Income Tax (LIT) Provisions
SB 1 2 Current LIT Structure: This bill contains the following provisions that pertain to the current LIT structure:
• Eliminates provisions that provide for a distribution of LIT expenditure rate revenue to
schools and civil taxing units in counties that imposed a rate under the prior county adjusted
gross income tax (CAGIT).
• Expires the authority to impose a property tax relief rate under the LIT and repeals the levy
freeze rate.
• Provides that an ordinance adopted to impose a LIT property tax relief rate shall expire
December 31, 2026.
• Provides that, in order to continue to impose an expenditure tax rate after 2027, each county
must adopt a new ordinance in 2027 (on or before October 1, 2027) to impose the rate. This
bill provides that, for counties that fail to adopt an ordinance to renew an existing
expenditure tax rate in 2027, the expenditure tax rate for the county in 2028 shall be the
minimum tax rate necessary for existing debt service. It specifies that this does not prevent
the county from renewing, imposing, or modifying an expenditure tax rate in subsequent
years.
• Eliminates local income tax councils beginning July 1, 2027, and instead provides that the
county fiscal body is the adopting body in all counties for purposes of the county LIT, and
the city or town fiscal body is the adopting body in the case of a municipal LIT.
• Repeals a provision that requires the State Budget Agency to adjust the certified distribution
of a county for the succeeding year following a tax rate change.
• Authorizes a county fiscal body to impose a LIT expenditure rate to provide property tax
relief for property tax liability attributable to homesteads in the county before January 1,
2028.
New LIT Structure: This bill increases, beginning in 2028, the maximum local income tax (LIT) expenditure
rate for all counties to 2.9%. It authorizes a city or town to impose a municipal LIT rate beginning in 2028
not to exceed 1.2%. It provides that within a county’s total expenditure rate, the county may adopt:
(1) up to a 1.2% rate for county general purpose revenue;
(2) up to a 0.4% rate for fire protection and emergency medical services;
(3) up to a 0.2% rate for nonmunicipal civil taxing unit general purpose revenue; and
(4) up to 1.2% for certain cities and towns that are not eligible to adopt a municipal LIT rate.
LIT Holding Accounts: This bill establishes the state and local income tax holding account within the state
General Fund for purposes of local income tax distributions. It provides that the State Budget Agency (SBA)
shall administer the account and requires the SBA to maintain an accounting for each county imposing a local
income tax based on annual returns filed by or for county taxpayers (same as current law). It also requires
undistributed amounts so accounted to be held for purposes of the state and local income tax holding account
beginning after December 31, 2026. (Under current law, undistributed amounts are required to be held in
reserve separate from the state General Fund.)
This bill requires the SBA to present each December to the State Budget Committee a report of the
following: (1) An estimate of the monthly certified distribution amounts for the immediately succeeding
calendar year. (2) A description of the method used to determine the monthly estimates. Beginning in 2028,
the SBA will be required to make monthly transfers to the state and local income tax holding account of the
amount determined for the month in its report to the State Budget Committee.
SB 1 3 School Provisions
Operating Referendum Tax Sharing: This bill requires all school corporations that adopt a resolution for an
operating referendum tax levy that is imposed for the first time with property taxes first due and payable
beginning after 2027 to share revenue with certain charter schools.
Operations Fund Tax Sharing: The bill also requires, beginning with distributions in 2028, that all school
corporations begin sharing revenue from the school corporation's operations fund levy with certain charter
schools. It provides for the phasing in of the sharing of revenue with certain charter schools from the school
corporation's operations fund levy. Additionally, the bill provides for the appointment of additional board
members to the governing board of a charter school that receives property tax revenue.
Charter School Closures: This bill sets forth additional procedures related to the closure of a charter school.
Union School Corporation: The bill dissolves the Union School Corporation.
Additional Provisions
NICTD: This bill prohibits the Northern Indiana Commuter Transportation District (NICTD) from issuing new
bonds after May 9, 2025, that are payable in whole or in part from amounts distributed from the Commuter Rail
Service Fund or the Electric Rail Service Fund.
The bill makes technical corrections, and it makes an appropriation.
Effective Date: Upon passage; January 1, 2025 (retroactive); May 10, 2025 (retroactive); July 1, 2025;
January 1, 2026; July 1, 2026; January 1, 2027; June 30, 2027; July 1, 2027; January 1, 2028.
Explanation of State Expenditures: DLGF: 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.
In addition the bill’s changes to local income taxes represent an additional workload and expenditure on the
agency outside of the agency’s routine administrative functions, and existing staffing and resource levels,
if currently being used to capacity, may be insufficient for full implementation. The additional funds and
resources required could be supplied through existing staff and resources currently being used in another
program or with new appropriations. Ultimately, the source of funds and resources required to satisfy the
requirements of this bill will depend on legislative and administrative actions.
Department of State Revenue (DOR): The DOR has estimated that the one-time cost of implementing a new
municipal LIT tax would be approximately $400,000 (including personnel and technology costs).
Secretary of State: The Secretary of State’s Election Division may need to update election publications and
informational materials to inform of the bill’s proposed referendum 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.
State Budget Agency (SBA): The bill’s requirement of transitioning from the current county trust accounts
SB 1 4 to the state and local income tax holding account and creating a new accounting structure for each county
that imposes a LIT rate under the new structure using the local income tax holding account will result in a
temporary increase in the administrative workload for the SBA.
Property Tax Sharing: The bill’s provisions will increase the administrative workload for the Department
of Education (DOE) and the DLGF related to assisting county auditors distribute property taxes amongst
charter schools. The bill’s requirements are within the agencies’ routine administrative functions and should
be able to be implemented with no additional appropriations, assuming near customary agency staffing and
resource levels.
Union School Corporation: The bill appropriates from the state General Fund the amount needed, if any, to
pay remaining debt and liabilities for Union Schools after dissolution and after assets are sold. No
outstanding debt has been reported for this school corporation according to the Indiana Gateway website.
Explanation of State Revenues: (Revised) Railcar Property Tax: The elimination of the 30% assessment
floor for newly acquired personal property will create an initial revenue increase before it creates a revenue
loss for the Northern Indiana Commuter Transportation District (NICTD). NICTD receives all of the revenue
from the railcar property tax and also from the railroad company property tax imposed on the South Shore
Freight Railroad. These taxes are outside of the regular property tax system and are paid into the Commuter
Rail Service Fund and the Electric Rail Service Fund. The railcar tax is assessed and paid in the same year.
These changes will first affect CY 2026 assessments and CY 2026/FY 2026 payments.
Revenue is estimated to increase by about $340,000 in FY 2026, $877,000 in FY 2027, and $1.1 M in FY
2028. The assessment floor elimination for new property will likely result in additional collections for at least
the first six years. Afterward, revenues are expected to decline. However, the bill also provides that the
elimination of the assessment floor on newly acquired property does not apply in cases where personal
property is pledged as payment for bonds, leases, or other obligations.
The revenue reduction, if any, will continue to grow each year as more newly acquired railcars depreciate
below 30% true tax value. As railcars have a long life, it will take many years before all of the current
railcars are replaced with cars that are not subject to the 30% floor. By comparison, the reduction in revenue
from immediately eliminating the 30% floor on all cars would be estimated at $5.8 M. Railcar taxes currently
generate about $15 M per year.
Explanation of Local Expenditures:
Property Tax Provisions
Referendums: It is likely this bill would amount to little change to local election expenditures when a
referendum is placed on the ballot only at 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.
(Revised) Controlled Projects: This provision could have an indeterminable impact on local units'
SB 1 5 expenditures and related debt service property tax levies. In addition to the projects that would currently
qualify as controlled projects and projects that currently must go through the referendum process, projects
could become controlled projects and be subject to petition and remonstrance or referendum based on the
unit’s current non-referendum debt tax rate. In addition to measuring a project’s cost against a taxing unit’s
AV, through June 30, 2025, a project is also considered a controlled project for a taxing unit that has a total
non-referendum debt service tax rate that exceeds $0.40, and if the total debt service tax rate is at least $0.80
then the unit must hold a referendum. This provision extends the tax rate threshold concept indefinitely but
reduces the thresholds based on unit type. [The table in Appendix B details the rate thresholds and indicates
the count of units that exceed the thresholds based on CY 2025 tax rates.]
Property Tax Deferral: County auditors, treasurers, and recorders will all have additional workload under
this provision.
Local Income Tax Provisions
Current LIT Structure - LIT Councils: The bill eliminates local income tax councils beginning in FY 2028
and provides that the county fiscal body is the adopting body in all counties for purposes of the LIT, with
the exception of the municipal LIT rate for those municipalities that meet the population eligibility
requirements. This provision may result in a minor decrease of the administrative workload for non-county
members of the LIT councils since they would no longer be tasked with determining LIT rate changes.
Current LIT Structure - Homestead Credit: The bill allows a county fiscal body to adopt an ordinance that
imposes a LIT rate for funding a property tax credit applicable to only homestead taxpayers in a county.
New LIT Structure - Eligible Municipalities: This bill’s provisions will result in an increase in the
administrative workload for both the fiscal/legislative body and the fiscal officer of a city or town that meets
the population eligibility requirements (i.e., 3,500 or more) and that decides to enact a municipal LIT rate.
The increase in the administrative workload for the fiscal/legislative body might be temporary in nature -
limited to the process of adopting the rate itself. The increased workload will be ongoing for the municipal
fiscal officer since they would be tasked with handling the distribution of revenue generated from the
municipal LIT rate.
School Provisions
County Auditor: County auditors will experience a workload increase related to distributing a school
corporation’s property taxes amongst charter schools. The bill’s requirements are within a county auditor’s
routine administrative functions and should be able to be implemented with no additional appropriations,
assuming near customary agency staffing and resource levels.
Explanation of Local Revenues:
(Revised) Property Tax Summary: This bill contains multiple provisions that affect local unit property tax
revenue beginning in CY 2026. Changes include the following items: Farmland Base Rate, MLGQ,
Exemption for New Business Personal Property, Personal Property De Minimis Exemption, Personal
Property Floor Adjustment, Homestead Deduction Changes, Deduction for 2% CB Cap Properties, Certain
Property Tax Deductions Expiration, and the Supplemental Homestead Credit. Additionally, this bill
eliminates property tax relief credits (PTRC) and the property tax levy freeze replacement that are funded
via LIT starting in CY 2028.
SB 1 6 These provisions will result in changes to individual property tax bills and changes in revenue losses due to
tax caps.
The following supplemental reports are available by clicking on the indicated links:
Unit-Level Estimated Change in Net Levies Compared to Current Law by Year: Link
Unit-Level Estimated Change in Year-Over-Year Net Levies: Link
Visualization of the Change in Net Levies by Unit Type and Net Tax by Property Type: Link
Supplemental property tax reports include impacts due to changes to homestead credits, the farmland
base rate, MLGQ, New 1%- and 2%- Capped Property Deductions, Existing Property Tax Deductions
Expiration, LIT Property Tax Relief Credits and Levy Freeze Expiration, Personal Property Changes,
and School Operations Fund Sharing.
The following table shows the estimated net tax changes, as compared to baseline estimates by year, by
property type for changes to the stated components.
Estimated Net Property Tax Change ($ Millions)
Compared to Current Law (Baseline) by Year
Includes Homestead Credit, Farmland Base Rate, MLGQ,
New 1%- and 2%- Capped Property Deductions,
Existing Property Tax Deductions Expiration,
LIT Property Tax Relief Credits and Levy Freeze Expiration,
Personal Property Changes, and
School Operations Fund Sharing
Property Type CY 2026 CY 2027 CY 2028
Homesteads -395.5 -466.9 -368.6
Farmland -49.1 -57.8 -9.1
Other Residential -5.4 -13.7 -49.4
Apartments 1.2 -1.7 -24.4
Ag Business 16.9 20.8 25.5
Other Real 108.1 210.1 401.5
Personal Property -62.3 -84.7 2.1
Total -386.1 -393.9 -22.4
Note: Totals may not sum due to rounding.
The following table shows the estimated net revenue changes, as compared to baseline estimates by year, by
taxing unit type for changes to the stated components. [Total estimated local property tax revenue changes
by county for the stated components appear in Appendix A.]
SB 1 7 Estimated Net Property Tax Revenue Change ($ Millions)
Compared to Current Law (Baseline) by Year
Includes Homestead Credit, Farmland Base Rate, MLGQ,
New 1%- and 2%- Capped Property Deductions,
Existing Property Tax Deductions Expiration,
LIT Property Tax Relief Credits and Levy Freeze Expiration,
Personal Property Changes, and
School Operations Fund Sharing
Unit Type CY 2026 CY 2027 CY 2028
Counties -101.5 -118.4 -183.7
Townships -19.0 -21.1 -25.5
Cities and Towns -106.1 -114.3 -231.4
School Corporations -190.7 -217.3 -336.4
Libraries -18.6 -18.2 -24.2
Special Units -29.2 -26.1 -9.8
TIF 78.9 121.5 125.5
Total -386.2 -393.8 -685.6
Total Without TIF -465.1 -515.4 -811.1
Note: Totals may not sum due to rounding.
For CY 2028, the difference between the overall total net tax change by property type and the overall total
revenue change by unit type is approximately $663.2 M, of which $658.6 M for CY 2028 is attributable to
the LIT PTRC being eliminated starting that year. The LIT PTRC is a fully funded property tax credit, and
the amount of LIT revenue that a county decides to allocate to PTRC is distributed to local units via the
property tax billing process. When LIT PTRC is removed, property tax bills will increase overall because
the LIT PTRC is no longer buying down a taxpayer's tax liability, and the amount of revenue distributed to
local units will decrease. The remaining $4.7 M difference is attributable to school operations fund property
tax sharing with charter schools.
Credit Provisions
New Property Tax Credits: This bill expires certain property tax deductions allowed in current law and
instead allows a credit against local property taxes in certain instances. Specifically, new property tax credits
for property owners over 65 years of age, property owners who are blind and/or disabled, and property
owners who are disabled veterans would go into effect beginning in CY 2026. The fiscal impact of these new
credits would result in lower property tax bills for eligible taxpayers and an additional reduction in tax
revenue to the local units beyond what is reflected in the Unit Type Net Revenue Change table above. The
new credits, though, would not result in a shift of property tax liability between different types of taxpayers.
Using microdata available via the U.S. Census Bureau's American Community Survey, 5-Year Estimates
2022, the following table provides an estimated statewide total amount of these new property tax credits for
eligible property owners (for a particular credit). These estimates represent a high end or maximum amount
assuming that every eligible property owner (for a particular credit) would be able to receive the full amount
of the credit. Additionally, these estimates are not included in the impacts shown in the two tables above
since the requisite data is not available to know which specific taxpayers would be eligible for these credits.
The counts are the same for both the partially disabled veterans and totally disabled veterans since the
microdata does not specify whether a veteran's service is during war time. The actual counts of eligible
property owners could be lower for these credits.
SB 1 8 Estimated Statewide Total Property Tax Credits
Property Tax Credit Type Count of Owner
Occupied Housing Units
Maximum Credit
Amount ($)
Total Amount
of Credit ($)
Over 65 640,817 150 96,122,550
Blind or Disabled 599,988 125 74,998,500
Totally Disabled Veteran 73,911 150 11,086,650
Partially Disabled Veteran 73,911 250 18,477,750
Total 200,685,450
Age 65 and Over Tax Cap - New Filers: The elimination of the $240,000 AV cap 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 68,000 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.]
Levy Provisions
MLGQ: The MLGQ is a statewide growth quotient based on changes in Indiana personal income. It is
estimated to provide for a 5.6% increase in maximum levies in CY 2026. 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 4% for all taxing units in CY 2026. The maximum permissible levy controls operating
funds. Debt service and referendum funds are not subject to the maximum levy amount.
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,
unanticipated emergencies, and property tax revenue shortfalls.
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
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% for taxes payable in CY 2026 and CY 2027.
Under current law, the base assessment rate for farmland is $2,390 for taxes payable in CY 2026 and is
estimated at $2,520 for taxes payable in CY 2027. Under this provision, the base rate will be reduced to an
estimated $2,110 for taxes payable in CY 2026 and $2,240 for CY 2027. The estimated reduction is $280
AV per acre in both CY 2026 and CY 2027.
Referendum Provision
SB 1 9 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 tax rate and annual levy amount to the question. Additionally, the public question for
an extension of a school operating or school safety referendum levy will include an estimate of the reduction
in taxes for a median AV residence if the referendum is defeated.
If imposed, the maximum tax rate normally generates an increasing levy amount each year as net AV rises.
The addition of a maximum levy amount will restrict this yearly levy increase.
In addition, the public question for a controlled project also currently includes 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.
Local Income Tax Provisions
(Revised) Current LIT Structure - LIT Property Tax Relief Rate: Beginning in CY 2028, this bill eliminates
the authority for counties to impose a LIT property tax relief rate. Under current law, counties may use LIT
revenues to provide PTRC for homesteads (1% cap), 2% capped property, 3% capped property, non-
homestead residential property, or any combination thereof. Currently 58 counties provide LIT-funded
PTRC. The total property tax relief distribution in CY 2025 is approximately $545.8 M.
Along with the $545.8 M that has been certified for property tax relief, there is an additional statewide total
of $2.4 B in revenue available for CY 2025 if counties were to increase their LIT PTRC rate to the maximum
of 1.25%. With the certified distributions and the additional revenue available combined, counties could
generate up to a total of approximately $3 B statewide for property tax relief credits under the current LIT
PTRC rate in CY 2025. Under the bill, counties would no longer be able to adopt a LIT PTRC rate starting
in CY 2028.
PTRC reduces a taxpayer's gross property tax liability before tax cap credits are calculated. In many cases,
the application of PTRC reduces or eliminates the tax cap credits for a taxpayer, which then reduces revenue
losses for local civil taxing units and school corporations. The elimination of PTRC will reduce local
revenues through higher tax cap credits.
Current LIT Structure - LIT Levy Freeze: Beginning in CY 2028, this bill eliminates the property tax levy
freeze LIT distribution. Under current law, counties were permitted to replace one or more years of civil
taxing unit operating levy growth with LIT distributions. Counties were able to adopt a property tax freeze
through 2016. After 2016, a county that had not adopted the freeze could not adopt one, but existing levy
freezes could continue. A county with a freeze may elect to thaw property taxes at any time. If thawed, the
property tax levy begins to grow again, but the levy growth from the frozen years must be replaced with LIT
distributions thereafter.
Eleven counties have adopted a property tax freeze. Only one county, Carroll, remains frozen. The other 10
property tax freeze counties have since thawed. In CY 2025, the LIT levy freeze distribution amounts to
$73.3 M. The elimination of this distribution will cause an estimated increase in property tax levies for the
11 tax freeze counties totaling $169.3 M in CY 2027 and $347.8 M in CY 2028.
SB 1 10 Current LIT Structure - Homestead Credit: Under this bill’s provisions, counties may choose to adopt a LIT
rate for funding a property tax credit applicable to only homestead taxpayers in the county. Revenue
generated from the rate may only be used to fund the replacement of the county unit’s property tax levy. The
adopted tax rate must be in increments of 0.01% and may not exceed 0.30%. Additionally, this new rate
would be considered part of a county’s expenditure rate and does not provide additional rate capacity beyond
the current 2.5% maximum cap (2.75% in Marion County). This homestead credit would be applied to the
net property taxes due on the homestead after the application of any other credits.
Should counties choose to adopt a LIT rate for the purpose previously noted, the county unit could receive
their first certified distribution of this revenue in CY 2026 if the county fiscal body passes an ordinance
before November 1, 2025. However, this particular credit will not be an available option to the counties
under the new LIT rate structure starting in CY 2028.
(Revised) New LIT Structure: Effective CY 2028, the bill establishes a new rate structure and distribution
formula for LIT expenditure rate revenue for civil taxing units that is based on the following:
(1) up to a 1.2% rate for county general purpose revenue;
(2) up to a 0.4% rate for fire protection and emergency medical services;
(3) up to a 0.2% rate for nonmunicipal civil taxing unit general purpose revenue; and
(4) up to a 1.2% rate for certain cities and towns that are not eligible to adopt a municipal LIT rate.
Overall, the maximum LIT expenditure rate for all counties is increased to 2.9%. It also authorizes a city or
town with a population of 3,500 or more to impose a municipal LIT rate beginning in 2028 not to exceed
1.2%. The municipal LIT rate for these eligible municipalities would only be imposed on income earners who
live in the particular municipality that is imposing the rate.
The bill also eliminates provisions that provide for a distribution of LIT expenditure rate revenue to schools
and civil taxing units in counties that imposed a rate under the prior county adjusted gross income tax
(CAGIT). Furthermore, the bill specifies that distributions to the Northwest Indiana Regional Development
Authority from Lake and Porter counties under the current LIT rate structure will continue under the revised
LIT rate structure (for these two counties) effective CY 2028.
Under the current LIT expenditure rate structure, there is a total of approximately $3.3 B statewide in CY
2025 certified distributions. Furthermore, there is an additional revenue capacity of approximately $2.6 B
statewide available that counties could generate through increasing their expenditure rate in CY 2025.
Between the current certified distributions and the additional revenue capacity available, up to a total of $5.9
B could be generated statewide in CY 2025 under the current LIT expenditure rate. If the proposed new LIT
expenditure rate structure were in place for CY 2025 and the maximum rates were adopted for all applicable
units, up to a total of approximately $7 B could be generated statewide, an increase of approximately $1.1
B. The actual impact of the new LIT expenditure rate structure will ultimately depend on individual county
decisions to increase rates and the magnitude of those increases and on changes in the local income tax base
used to determine the CY 2028 LIT distributions and beyond.
New LIT Structure - LIT Local Taxpayers: The bill amends the definition of local taxpayer for municipalities
that will be allowed to adopt their own municipal LIT rate to eliminate the imposition of LIT on people who
maintain a principal place of business or employment in a county with a LIT but do not reside in a county
that imposes a LIT. This will reduce the tax base for local income taxes for the municipalities that will be
allowed to adopt their own municipal LIT rate. Based on income tax returns filed in CY 2022 (the most
SB 1 11 complete year of data currently available), there was a total of $59.8 M of local income tax generated from
filers who worked in a county that had a LIT rate but lived out of state. This represents potential revenue that
would have been lost for local units had this bill’s provisions been in place for CY 2022 or roughly 2% of
the certified LIT distribution statewide for CY 2022.
School Provisions
Property Tax Sharing: Under current law, school corporations in Lake, Marion, St. Joseph, and Vanderburgh
counties are required to share their operations fund levy collections and operating and school safety
referendum collections under certain conditions with charter schools. The bill modifies these statutes and
requires certain school corporations to share their operations fund levy collections with charter schools
beginning in CY 2028 and their operating referendum collections with charter schools beginning in CY 2028.
[The bill also would end school safety referendum sharing for referendums that first receive revenue in CY
2028 or later, but no school corporation in the impacted counties has a school safety referendum].
(Revised) Operations Fund Sharing: Under the bill, charter schools would receive about $4.5 M more in
operations fund distributions in CY 2028 than they would under current law. Since CY 2028 is the first year
of a four-year phase-in, that number would increase significantly over the next several years.
(Revised) Operating Referendum Sharing: Using CY 2028 estimated collections for the purpose of
calculating the distributions and long-term impact and assuming that all existing operating referendums
would be renewed at the same tax rate, charter school distributions could decrease in the long term by about
$9.6 M annually compared to current law. Ultimately, the impact would only occur if operating referendums
are replaced or reauthorized at the same rate, with the bill impacting referendums that will first generate
revenue in CY 2028. The bill will require all non-exempt school corporations to share operating referendums
by CY 2035, with most school corporations sharing revenue before then as they reauthorize or replace
existing referendums. If school corporations choose to replace existing referendums with referendums that
would bring in more revenue than what would occur under the bill, the impact to charter schools would
change.
Operating and School Safety Referendums: Current law requires school corporations in Lake, Marion, St.
Joseph, and Vanderburgh counties to share operating and school safety referendum collections with charter
schools for resolutions adopted after May 10, 2023. Currently, only MSD Pike Township and Lake Station
Community Schools have operating referendums whose collections must be shared with charter schools.
[There are no school safety referendums that are currently required to be shared.] Under existing law, the
referendum distributions received by charter schools is dependent on the number of students attending the
charter school who reside in the impacted school corporation’s legal settlement area.
Beginning with operating referendums that first begin receiving revenue in CY 2028 or after, the bill requires
school corporations in which both of the following are true:
1. More than 100 non-virtual students of legal settlement attend a brick-and-mortar charter school;
2. The number of non-virtual students of legal settlement attending a brick-and-mortar charter school
is greater than 2% of the school corporation’s ADM;
to distribute a portion of their operating referendum fund levy collections with eligible charter schools
beginning in CY 2028.
[The bill also would end school safety referendum sharing for referendums that first receive revenue in CY
2028 or later, but no school corporation in the impacted counties has a school safety referendum].
SB 1 12 Modifications to Sharing Required under Current Law: The bill would continue the revenue sharing required
under current law in Lake, Marion, St. Joseph, and Vanderburgh counties for:
1. Operations funds through the end of 2027;
2. Current operating referendums and any future operating referendums that begin to receive revenue
before 2028; and
3. Current school safety referendums and any future operating referendums that begin to receive
revenue before 2028.
It amends those sharing provisions so that only revenue attributed to taxing districts located within one of
the four counties is shareable for operations funds and operating referendums. This would have a minimal
impact on operations fund sharing and no impact on any existing operating referendums.
Union School Corporation: This provision dissolves Union School Corporation located in Henry and Randolph
Counties on July 1, 2027. The territory located in Henry County will transfer to the Blue River Valley School
Corporation. The territory located in Randolph County will transfer to the Monroe Central School
Corporation.
If there remain any unpaid debts or liabilities after the real property is sold, the bill appropriates the amount
needed to make the payments from the state General Fund. However, if funds or other assets remain after
debt and liabilities are paid, those funds and assets will be divided among Monroe Central and Blue River
Valley.
Union Schools property taxes collected in Henry County from the second installment in CY 2027 will be
distributed to Blue River Valley. Taxes collected in Randolph County will be distributed to Monroe Central.
In CY 2025, the Union Schools property tax rate was $0.8053 per $100 AV. The Blue River Valley tax rate
was $1.5953, and the Monroe Central tax rate was $1.3476. Union Schools taxpayers will most likely have
a higher tax rate after the dissolution and annexation, while existing taxpayers in the receiving school
corporations will likely have a lower tax rate.
Beginning in FY 2028, Blue River Valley School Corporation and Monroe Central School Corporation will
have an increase in expenditures from Union School Corporation's students coming to those schools that will
likely be more than offset by an increase in state tuition support. It is possible that the dissolution of Union
School Corporation would also increase the number of students, and the associated expenditures and revenue
increases, for other nearby public schools. In FY 2025, Union School Corporation had a fall non-virtual
ADM (a measure of the number of students enrolled and expected to attend on a given date) of 219. It also
has three virtual schools, which had a combined fall ADM of 7,582. Virtual charter schools and school
corporations with virtual schools could experience increased enrollments if Union's virtual schools are
eliminated.
Additional Provisions
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.
Qualified taxpayers may defer up to $500 each year, up to a maximum total of $10,000 over consecutive
years. 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
SB 1 13 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 provision. 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 general
obligation bonds through April 2025 for a period of up to two years must wait one year before issuing
additional general obligation bonds.
Fire Territories and Conservancies: Under the bill, new fire protection territories may not have property tax
rates that exceed $0.40 per $100 of AV. Currently, fire protection territories have no rate cap. Additionally, the
bill limits the special benefits tax rate for new conservancy districts to $0.05 per $100 of AV. Currently, the
conservancy rate cap is $0.0667 per $100 of AV.
Additional Information - LIT Rate Effective Dates: The bill changes the dates the tax rates go into effect
depending on when an ordinance is adopted. An ordinance adopted on or before October 1 of a calendar year
will take effect on January 1 of the next calendar year. An ordinance adopted after October 1 of a calendar
year will go into effect on January 1 of the second succeeding year. [In current law, ordinances adopted
before September 1 go into effect on October 1 of the calendar year, and ordinances adopted after August
31 and before November 1 take effect on January 1 of the next calendar year. Ordinances adopted after
October 31 take effect on October 1 of the next calendar year.]
Operations Fund Levy: The distributions are phased-in over time. In CY 2028, 25% of the collections are
used to calculate the distribution to charter schools. That percentage increases to 50% and 75% in CY 2029,
and CY 2030, respectively, before increasing to 100% in CY 2031 and all years thereafter.
State Agencies Affected: Department of Local Government Finance; Department of State Revenue; State
Budget Agency; Indiana Secretary of State, Election Division; Department of Education.
Local Agencies Affected: County fiscal bodies; County auditors; County treasurers; County recorders; Civil
taxing units and school corporations; Northern Indiana Commuter Transportation District; Public schools.
Information Sources: LSA Property Tax Database; LSA Education Database; Department of Revenue Local
Income Tax Database; Estimated CY 2025 Certified LIT Distributions (Certified November 27, 2024) - State
Budget Agency; CY 2025 Local Income Tax Estimated Certified Distributions and the Estimated Remaining
Capacity Report - LSA; Scott Maitland, DLGF, 317-232-3777; Local Government Database; Purdue
University; U.S. Census's American Community Survey, 5-Year Estimates 2022; Indiana Gateway website.
Fiscal Analyst: Bob Sigalow, 317-232-9859; James Johnson, 317-232-9869; Austin Spears, 317-234-9454.
SB 1 14 Appendix A.
Estimated Change in Property Tax Net Revenue - All Units in County
Compared to Current Law (Baseline) by Year
Includes Homestead Credit, Farmland Base Rate, MLGQ,
New 1%- and 2%- Capped Property Deductions,
Existing Property Tax Deductions Expiration,
LIT Property Tax Relief Credits and Levy Freeze Expiration,
Personal Property Changes, and
School Operations Fund Sharing
County CY 2026 CY 2027 CY 2028
Adams -718,000 -1,024,000 -3,101,000
Allen -23,380,000 -21,273,000 -44,600,000
Bartholomew -4,017,000 -3,178,000 -2,753,000
Benton -975,000 -1,289,000 -1,447,000
Blackford -805,000 -940,000 -855,000
Boone -7,052,000 -6,569,000 -7,005,000
Brown -742,000 -905,000 122,000
Carroll -968,000 -1,060,000 2,650,000
Cass -1,906,000 -2,189,000 -8,075,000
Clark 10,151,000 14,280,000 7,196,000
Clay -697,000 -840,000 -2,151,000
Clinton -753,000 -1,174,000 -3,507,000
Crawford -319,000 -130,000 229,000
Daviess -1,817,000 -2,079,000 -3,387,000
Dearborn -3,772,000 -4,029,000 -4,398,000
Decatur -1,372,000 -1,134,000 -1,298,000
DeKalb -2,831,000 -2,966,000 -4,887,000
Delaware -6,520,000 -6,997,000 -12,338,000
Dubois -2,797,000 -2,682,000 -1,871,000
Elkhart -11,644,000 -11,300,000 -18,783,000
Fayette -1,123,000 -1,326,000 -5,447,000
Floyd -4,931,000 -4,688,000 -5,179,000
Fountain -1,081,000 -1,219,000 -1,280,000
Franklin -1,412,000 -1,509,000 -1,691,000
Fulton -992,000 -1,102,000 -1,618,000
Gibson -1,739,000 -1,357,000 -500,000
Grant -3,506,000 -3,988,000 -14,795,000
Greene -1,336,000 -1,327,000 -1,111,000
Hamilton -35,632,000 -41,908,000 -55,378,000
Hancock -4,663,000 -3,625,000 -6,316,000
Harrison -2,208,000 -2,511,000 -2,839,000
Hendricks -13,195,000 -11,928,000 -17,956,000
Henry -2,544,000 -2,459,000 -4,046,000
Howard -5,645,000 -6,079,000 -15,322,000
Huntington -2,271,000 -2,792,000 -2,867,000
Jackson -1,945,000 -1,647,000 -3,977,000
Jasper -1,593,000 -1,772,000 -666,000
Jay -1,054,000 -1,299,000 -2,540,000
Jefferson -1,805,000 -2,008,000 -1,993,000
Jennings -747,000 -940,000 -1,911,000
Johnson -11,109,000 -9,353,000 -7,767,000
Knox -2,258,000 -2,423,000 -2,189,000
SB 1 15 Appendix A.
Estimated Change in Property Tax Net Revenue - All Units in County
Compared to Current Law (Baseline) by Year
Includes Homestead Credit, Farmland Base Rate, MLGQ,
New 1%- and 2%- Capped Property Deductions,
Existing Property Tax Deductions Expiration,
LIT Property Tax Relief Credits and Levy Freeze Expiration,
Personal Property Changes, and
School Operations Fund Sharing
County CY 2026 CY 2027 CY 2028
Kosciusko -4,839,000 -4,853,000 -5,630,000
LaGrange -2,304,000 -2,850,000 -3,690,000
Lake -32,922,000 -37,235,000 -165,057,000
LaPorte -5,332,000 -6,320,000 -6,485,000
Lawrence -2,207,000 -2,049,000 -5,238,000
Madison -7,014,000 -7,209,000 -21,490,000
Marion -43,182,000 -32,559,000 1,013,000
Marshall -2,889,000 -3,254,000 -3,275,000
Martin -419,000 -472,000 -610,000
Miami -1,498,000 -1,586,000 -3,407,000
Monroe -9,851,000 -11,814,000 -15,471,000
Montgomery -2,531,000 -2,715,000 -7,247,000
Morgan -3,796,000 -3,782,000 -3,328,000
Newton -1,052,000 -1,108,000 -1,026,000
Noble -2,739,000 -2,854,000 -3,633,000
Ohio -352,000 -386,000 -434,000
Orange -621,000 -464,000 -239,000
Owen -1,063,000 -1,148,000 -1,338,000
Parke -501,000 -570,000 601,000
Perry -728,000 -701,000 -593,000
Pike -744,000 -607,000 -40,000
Porter -13,717,000 -14,468,000 -21,412,000
Posey -2,019,000 -2,081,000 -2,063,000
Pulaski -532,000 -618,000 1,578,000
Putnam -1,439,000 -1,253,000 -2,007,000
Randolph -1,249,000 -1,485,000 -2,979,000
Ripley -1,363,000 -1,487,000 -1,718,000
Rush -1,310,000 -1,539,000 -1,775,000
St. Joseph -16,062,000 -21,521,000 -71,292,000
Scott -897,000 -1,014,000 -1,422,000
Shelby -2,146,000 -1,631,000 -428,000
Spencer -1,201,000 -1,270,000 -1,329,000
Starke -1,287,000 -1,463,000 -1,752,000
Steuben -2,318,000 -2,830,000 -3,805,000
Sullivan -1,114,000 -1,077,000 -929,000
Switzerland -365,000 -373,000 -363,000
Tippecanoe -8,001,000 -6,410,000 -11,864,000
Tipton -1,225,000 -1,405,000 -1,869,000
Union -426,000 -487,000 -464,000
Vanderburgh -12,223,000 -14,264,000 -18,650,000
Vermillion -778,000 -739,000 -456,000
Vigo -6,356,000 -7,191,000 -6,911,000
Wabash -1,412,000 -1,663,000 -3,281,000
Warren -309,000 -413,000 -3,000
SB 1 16 Appendix A.
Estimated Change in Property Tax Net Revenue - All Units in County
Compared to Current Law (Baseline) by Year
Includes Homestead Credit, Farmland Base Rate, MLGQ,
New 1%- and 2%- Capped Property Deductions,
Existing Property Tax Deductions Expiration,
LIT Property Tax Relief Credits and Levy Freeze Expiration,
Personal Property Changes, and
School Operations Fund Sharing
County CY 2026 CY 2027 CY 2028
Warrick -4,676,000 -4,927,000 -5,212,000
Washington -1,480,000 -1,758,000 -1,826,000
Wayne -4,361,000 -4,822,000 -4,290,000
Wells -1,717,000 -1,879,000 415,000
White -1,575,000 -1,914,000 -2,295,000
Whitley -2,334,000 -2,574,000 -2,916,000
Total -386,199,000-393,830,000-685,583,000
Note: Totals may not sum due to rounding.
Appendix B.
Controlled Project
Non-Referendum Debt Rate - Based Thresholds
(Counts Based on CY 2025 Tax Rates)
Controlled# OverReferendum # Over
TotalDebt RateControlledDebt RateReferendum
Unit Type CountThresholdThresholdThresholdThreshold
Counties 92 $0.25 0 $0.40 0
Townships 1,002 $0.05 30 $0.10 9
Cities and Towns 564 $0.25 16 $0.40 5
School Corporations 290 $0.40 154 $0.70 36
Libraries 237 $0.05 15 $0.10 0
Special Units 199 $0.05 13 $0.10 3
Total 2,384 228 53
SB 1 17