Indiana Lawmakers Proposed Property Tax Changes

The plan would replace homestead property tax credits with local income tax increases over five years.

Updated on Sept. 30, 2026 in Taxes

Indiana Lawmakers Proposed Property Tax Changes

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Would you support replacing homestead property tax credits with higher local income taxes?

State lawmakers have unveiled a proposal to replace homestead property tax credits with local income tax hikes to cover taxing unit expenses. The change is set to be phased in over a five-year period starting at 20 percent.

Why it matters

Lawmakers have noted that eliminating all property taxes remains unrealistic, citing the $54 billion in local debt currently supported by statewide revenue. This shift aims to restructure how essential local services are funded across the state.

The plan requires Kosciusko County to cover over $40 million in homestead property tax credits. The transition will phase in from a 20 percent credit to a 100 percent credit over five years.

The players

Ryan Mishler

He is a State Senator who helped present the new property tax proposal to the public.

Craig Snow

He is a State Representative involved in the presentation of the tax shift plan.

Chris Garton

He is a State Senator who worked on the development and introduction of the tax proposal.

Baker Tilly

This consulting firm was criticized by lawmakers regarding the accuracy of its budget growth forecasts.

The details

The proposal was introduced at the Zimmer Biomet Center Lake Pavilion in Warsaw as a strategy to move away from primary residence property taxes. Lawmakers expressed criticism toward the consulting firm Baker Tilly, specifically questioning the accuracy of its previous budget growth forecasts.

Tuesday: Lawmakers unveiled the property tax proposal in Warsaw.
January: Lawmakers convene to begin work on a two-year budget.
Over five years: The homestead credit replacement plan will be phased in.

Administration
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Market Dynamics

This proposal builds upon the fiscal framework established by Senate Bill 1 passed two years ago. It represents a shift in state policy toward using local income taxes to manage the significant $54 billion in total local debt.

Property owners will see a shift in how their primary residence taxes are funded, moving from property-based levies to local income tax contributions. Taxpayers should monitor local income tax adjustments as their respective counties implement the five-year phase-in plan.

The takeaway

The move reflects a state effort to balance local budget needs while managing substantial municipal debt. Residents should prepare for potential changes in their income tax obligations as the credit transition takes effect over the next half-decade.

What happens next

Lawmakers are expected to convene in January to begin working on a two-year budget, where this property tax proposal is slated for further legislative consideration.