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Indiana public schools stand to lose $1.8 billion over two years under property tax relief proposal

By Kirsten Adair

Posted February 5, 2025

Children are getting off of a school bus.

(FILE PHOTO: WTIU News)

Indiana lawmakers discussed a measure Tuesday that would provide Hoosiers with property tax relief. Lawmakers, local government leaders and taxpayers all agreed that relief is sorely needed.

However, government officials who oppose SB 1 said small units of government — especially school districts — will be forced to make drastic budget cuts if the current bill becomes law.

Under the bill, public schools stand to lose more than any other government unit — more than $1.8 billion between 2026 and 2028.

Some lawmakers said schools should budget more carefully. But local officials say rising costs and the extent of these cuts would make that difficult.

READ MORE: Braun to local leaders on negative impact of property tax cut: 'Prove it'

Denny Costerison spoke on behalf of the Indiana Association of School Business Officials, the Indiana School Boards Association and the Indiana Association of Public School Superintendents. He said state education leaders support property tax relief, but this bill goes too far.

“The estimated net revenue change for all corporations and across the state are just numbers that boggle our mind a little bit,” he said.

Property taxes are the single largest source of revenue for public school districts. A digest of public school finance data from 2021-2023 said more than 43 percent of all property taxes collected in 2021 were dedicated to public school funding.

Indiana capped property taxes in 2023, which some schools said hurt their budgets. This proposal would provide widespread property tax credits to homeowners, further reducing the amount available for schools.

Costerison and other local officials who testified to the Tax and Fiscal Policy Committee told lawmakers they should find a way to replace at least some of the revenue schools will lose.

Kirsten is our education reporter. Contact her at kadair@wfyi.org or follow her on Twitter at @kirsten_adair.

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