The Indiana House approved a bill Thursday that will offer $300 property tax relief for homeowners beginning on payments made next year, which will result in local governments seeing a more than $1 billion budgetary hit, officials said.
Senate Bill 1, which has been renamed as a local government finance bill, was amended further in the House Wednesday for an additional $100 deduction in property taxes, which raises the total savings in property taxes up to $300 for the majority of homeowners in pay-2026, said Rep. Jefferey Thompson, R-Lizton.
The bill passed 65-29, with three Republicans joining the majority of Democrats present to vote against the bill. Rep. Wendy Dant Chesser, D-Jeffersonville, was the only Democrat present to vote in favor of the bill.
Thompson proposed a six-page amendment, named Amendment 36, on Wednesday to Senate Bill 1 homeowners, will see $1.5 billion of property tax relief over the course of 3 years, which would be accomplished by the amendment shifting the standard deduction credit to 10% or no more than $300, he said.
“With that, about two-thirds of our homeowners will see a reduction in pay 2026 compared to pay 2025. Nearly all homeowners state-wide will see a reduction in what would happen without the bill, and so it’s a gain for nearly all of them,” Thompson said. “This amendment makes a good bill even better, and provides more relief for homeowners.”
Under Amendment 36, the local income tax capacity decreases from 3.75% to 2.9%, Thompson said. State Rep. Mike Andrade, D-Munster, said the LIT component is a “bait and switch” because with the decrease in property taxes — which fund police, fire, libraries, schools, municipalities, local governments — government units will be forced to increase the income tax.
“This bill guts communities and schools while Hoosiers are being told it helps them,” Andrade said.
State Rep. Phil GiaQuinta, D-Fort Wayne, said the bill was a “bait and switch” because local income taxes will increase as property taxes decrease.
“To make matters worse, these cuts are being made on the backs of services and servants our communities hold dearly, public schools, police, fire and EMS,” GiaQuinta said. “Senate Bill 1 provides minimal relief to taxpayers while gutting resources from the local governments they rely on.”
In a rare move, House Speaker Todd Huston, R-Fishers, addressed the House in favor of the bill amendment Wednesday and in favor of the bill Thursday. Huston voted in favor of the amendment and the bill.
Huston said Thursday he found it “comical” that the bill was described as “a bait and switch” because the bill will provide property tax relief.
“This is pro-tax payer,” Huston said. “You can be in support of two things at one time. You can be in support of the taxpayer and be in support of local communities. But you have to have some expectations.”
State Rep. Gregory Porter, D-Indianapolis, asked Thompson Wednesday what the fiscal impact of the amended bill would be because an updated fiscal note wasn’t provided as of Wednesday. Thompson said local governments would see a decrease of $1.3 billion.
Porter said Thursday the bill “is still not ready for prime time” because while property taxes may decrease, income tax will increase and local communities will be negatively impacted fiscally.
Governor Mike Braun issued a statement Wednesday stating he supported Amendment 36 to Senate Bill 1 because with it his administration and the legislature “have agreed upon a plan to bring historic property tax relief to Hoosiers.”
“I agreed to a deal that delivers meaningful property tax cuts, eliminates the proposed full phase out of business personal property taxes, and cuts the total local income tax rate by 23% from 3.75% to 2.9%. This deal puts a cap on how much locals can tax your income, without this bill they could tax your income even more,” Braun wrote on X, formerly known as Twitter.
Braun said his team would go through the amendment “line by line to verify all of the language matches the deal.” If they find any errors, Braun said he’s “confident the House and Senate will make the needed edits to honor the deal” before he signs it into law.
Senate Bill 1 was initially the property tax relief plan that Braun campaigned on. It was amended in the Senate to offer property tax relief by adjusting the percentage cap used to determine the maximum levy growth quotient, among other proposals.
When the bill moved to the House, House Ways and Means committee chairman, Thompson, stripped the bill and inserted his House Bill 1402, which wasn’t heard in the House during the first half of session.
On Monday, in the House Ways and Means committee, the bill was amended to include language from the Senate amended Senate Bill 1; Senate Bill 518, which addressed school corporations sharing referendum funding with charter schools; and from House Bill 1402, which includes a five-year phase-in of exemptions and deductions so that every parcel in the state hits the property tax cap.
Senate Bill 1 states that the percentage cap used to determine the maximum levy growth quotient is 4% in 2026. Beginning in 2028, the maximum local income tax expenditure rate for all countries will be 2.9%, according to the amended bill.
When the bill passed the House Ways and Means Committee Monday, Thompson said approximately 93% of homeowners would see, on average, a deceased of $200 in their pay-2026 property tax bill.
Under Amendment 36, the total valuation of a taxpayer’s assessable depreciable personal property may not be less than 30% of the adjusted cost of all the taxpayer’s assessable depreciable personal property in the taxing district.
The amended bill also states that any civil taxing unit that is obligated to make payments to the Northwest Indiana Regional Development Authority from general purpose revenue to pay for bonds, leases or other obligations related to railroad projects cannot reduce those payments.
Further, the amendment includes language specific to Porter County, which states that the first $3.5 million of the county’s local income tax be transferred to the Northwest Indiana Regional Development Authority.
On Tuesday, the Lake County Council approved a resolution to oppose Senate Bill 1’s proposed elimination of business personal property tax, which would result in Lake County losing tens of millions of dollars.
In the House Wednesday, Democrats presented 16 amendments to the bill, including tax cuts for renters and a first-time homebuyer tax credit, but each was voted down by the Republican supermajority.
State Rep. Becky Cash, R-Zionsville, said property tax relief is one of the top two issues for her constituents.
“This bill does not go far enough for many Hoosiers. It does not deliver enough relief for those who have lived in homes for decades, watched their property assessments skyrocket, and watched their local and school dollars go up,” Cash said. “This bill may not go far enough, but it does offer some relief.”
State Rep. Justin Moed, D-Indianapolis, reiterated that the decrease in property taxes will result in an increase in local income taxes.
“We’re going to give you some money over here, but we’re going to take it away over here. I don’t see that as a tax plan. I see that as a tax scam,” Moed said.
