This session’s major property tax reform legislation underwent a complete overhaul in a Senate committee Tuesday.
The measure originally rolled every homeowner’s tax bill back to 2021 levels while limiting how much people’s bills could go up each year — which was Gov. Mike Braun’s proposal.
It’s now more narrowly focused on older Hoosiers and disabled veterans, while also limiting how much local governments can collect in property taxes each year.
Under SB 1, homeowners who are disabled veterans or age 65 or older would get a $20,000 deduction on their property taxes, up from $14,000.
It expands who’s eligible for those deductions, as well: income limits go from $30,000 for a single filer and $40,000 for a joint filer to $60,000 and $70,000, respectively. And the limit on how much a property is worth to be eligible would go from $240,000 up to $300,000, with further increases in the future tied to median home sale price increases.
Sen. Travis Holdman (R-Markle), the bill’s author, said those are the people lawmakers heard most from and wanted to target relief towards.
“We just think that there’s a fine line that we have to walk to make sure that we are careful to be responsible to the local units of government and, at the same time, provide some relief to taxpayers,” Holdman said.
The legislation creates a first-time home buyer tax credit of $2,500 for five years, for households that earn $75,000 or less and for homes that cost no more than $250,000.
The measure also significantly changes how local governments can increase the amount of property taxes they collect each year, known as a levy. That includes requiring local officials to vote publicly on any levy increases and requiring ballot referendums if local governments want to increase property taxes above the maximum limit.
Sen. Scott Baldwin (R-Noblesville) said the legislation also changes the formula for how the maximum levy is calculated.
“Really, to kind of flatten the maximum levy growth quotient trend line and a provide more predictable outcome for taxpayers,” Baldwin said.
Sen. Fady Qaddoura (D-Indianapolis) said the bill is an improvement over where it started.
“It’s really impacting growth in the future, not taking money — existing dollars — from local communities as we speak today,” Qaddoura said.
Holdman said the bill’s total savings for taxpayers is $1.4 billion over the next three years.
In a statement, Braun praised some of the changes but said there still needs to be “broad and immediate reductions” in Hoosiers’ tax bills.
Some of the legislation’s provisions come from other bills heard this session, including language creating a property tax deferral program. Counties could allow homeowners to defer up to $500 a year on their property tax bills, up to a total of $10,000 over time.
“And the county may choose to charge interest on the outstanding balance,” said Sen. Linda Rogers (R-Granger). “However, that interest cannot exceed 4 percent.”
The measure also makes changes to property tax ballot referendums. All referendums must go on general election ballots in even-numbered years — when turnout is higher.
Lawmakers also want to create a “cooling off” period in between referendums for capital projects — a one-year gap between one such property tax increase ending and schools putting another referendum on the ballot.
