According to American Community Survey, Indiana homeowners paid an average of a little more than $1,700 in 2023 –about half the national average.
(Andrey Popov / Adobe Stock)
Indiana policy makers are eyeing property tax reform this legislative session, after Hoosiers saw increases averaging 17 percent last year.
Property taxes are expected to increase about 7 percent this year, according to Senator Travis Holdman, chair of the tax and fiscal policy committee.
This week the committee will roll out several senate bills addressing property taxes, including Senate Bill 6, a deferral program. Under the bill, a taxpayer could defer from one hundred dollars up to five hundred dollars per year from their tax bill.
He said the maximum people can do that for is $500 a year for up to 20 years — which means the total possible to defer is $10,000.
The catch, Holdman said, is that the deferral becomes a lien on the property, which continues even if the property is transferred to a trust. The deferral would carry interest of 3 to 4 percent.
Holdman is also author of Senate Bill 1. It currently contains Governor Mike Braun’s proposal, which significantly changes property tax deductions and limits future property tax increases. But Holdman says it also has a hefty catch.
“The price tag that it has on local government, which is $1.1 billion in the first year, and it grows up to $1.6 billion, which directly impacts local government services,” he said. “We're trying to reach a compromise.”
Holdman met with Braun in January to discuss this issue.
Lowering taxes is a bipartisan issue for older adults in Indiana, according to the Indiana AARP.
Though property taxes have risen across the country, Indiana has seen a faster than average uptick. From 2022 to 2023, Hoosier homeowners jumped more than ten places in average property taxes paid — going from 44th to 33rd.
Larry Deboer, a professor emeritus for agricultural economics at Purdue University, said the rise in home value during the pandemic caused the jump.
He said reassessed property values have increased taxes for the state before. And each time, lawmakers added another layer of property tax relief.
“It's just an accumulation of efforts over successive assessment crises, property tax crises:” he said, “in 1980, 1990, 1996, 2003, 2008, and as you see, there's a blip upward after 2021.”
Assessed property value increases should cause tax rates to go down, Deboer said. Likewise, when assessed value goes down through tax cuts, the rate should go up. But that depends on other circumstances remaining the same.
Adding to a complicated statewide tax system, Indiana implemented property tax caps in 2008. And when a property hits its cap, the unpaid portion shifts to other property tax classes that have not reached their caps.
