Gov. Holcomb signs property tax relief bill, but don’t get excited — yet

Gov. Eric Holcomb signed a complex 50-page bill Thursday that would provide some property tax relief for homeowners amid rapidly rising tax bills — but largely not until 2024.

House Bill 1499 could save homeowners across Indiana more than $100 million in 2024, according to a fiscal analysis performed by the Legislative Services Agency. But some Democrats critiqued Republicans for not providing more relief sooner. The new law won’t impact property taxes that are due this month. 

Still it passed both chambers, receiving only one no vote. 

“We know right now from data that we’re going to see more than likely a repeat again in 2024,” said bill author Rep. Jeff Thompson, R-Lizton, “and this is the time to take care of homeowners in the following year.”

What the new law does

The final bill does the following:

  • It limits how much local governments’ budgets can grow in 2024 and 2025, which curbs how much total costs get passed onto taxpayers.

  • The legislation temporarily increases the supplemental homestead deduction for property taxes due in 2024 and 2025, which means Hoosiers will pay less in property taxes on their primary home. 

  • The bill allows counties to provide additional property tax relief if the county’s fiscal body chooses to as early as this fall. 

  • It enables more Hoosiers 65 years and older to qualify for a deduction from the assessed value of their home, which is used to calculate how much they owe in property taxes.  Under the bill, there will be a cost of living increase each year to the income ceiling for determining who qualifies for the deduction.

  • More Hoosiers 65 years and older would also qualify for an additional tax credit.

  • The legislation clarifies the property tax appeals process. 

  • The bill also limits the amount by which a school corporation’s existing operating referendum tax levy can increase in 2024. 

Some of the tax burden would be shifted onto other property taxpayers in the short term. In 2024, for example, the total tax collection on business equipment is expected to increase by $39 million in 2024 due to the property tax changes in the bill. But by 2025, all property classes will start to see the benefit. 

Local governments would lose out on a combined $93 million in 2024 and 2025 due to the changes and more in future years, with school corporations experiencing the brunt of the impact. 

Why it matters

Residential property tax liability was expected to increase by more than 18% on average across the state this year, according to an analysis by the Association of Indiana Counties and Policy Analytics. 

That’s due in large part to rising assessed values of properties, but there are other factors as well

How much your bill jumped depends on where you live. In terms of total tax liability, 16 counties were expected to have totals that increase by more than 8% year over year, including Marion, Vanderburgh, Hamilton, Delaware and St. Joseph. That includes all property types, so homeowners in those counties likely experienced even larger increases.

It’s probable that likely property taxes will continue to increase next year. 

This map shows how much each county's property tax liability is expected to increase this spring, regardless of property type. Homeowners should expect a larger increase than other property owners. (Credit: Prepared for the Association of Indiana Counties by Policy Analytics)

Does it go far enough?

Republican legislative leaders were hesitant to dramatically impact property taxes, because property taxes go entirely to local governments, not the state. 

Democrats were hoping for more. The state, for example, could have provided relief to homeowners and backfilled local governments’ budgets with money from the state’s coffers. The state opted not to do that when crafting the state budget. 

An initial version of HB 1499 also included a provision that would have lowered the property tax caps for homeowners, resulting in more savings. That was stripped from the final bill. 

“Homeowners really need some help,” said Cherrish Pryor, D-Indianapolis. “I wish we had done a little bit more for them, but the one thing I just really don’t want people to do and that is to lose their home because they cannot afford their home or they can’t pay their property taxes.”

Contact Kaitlin Lange on Twitter @kaitlin_lange or at [email protected]

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Header image: Property tax bills have increased across the state. (Credit: Brittney Phan)