Article
Understanding the impact of SEA 1 and HEA 1427 on Indiana Business Personal Property (BPP)
May 7, 2025 · Authored by Matt Eckerle
The Indiana Department of Local Government Finance (DLGF) defines “Business Personal Property” (BPP) as “equipment used in the production of income or held as an investment; billboards; foundations for the equipment; and all other tangible property other than real property.”
Senate Enrolled Act (SEA) 1 and House Enrolled Act (HEA) 1427 both implement changes to how BPP is assessed in Indiana. These legislative changes to BPP assessments including increased de minimis exemption and removal of the depreciation floor, will significantly impact taxpayers and taxing units.
Changes to BPP assessments
SEA 1, which was subsequently updated in some respects by HEA 1427, made the following changes to BPP assessments:
- Increased the current de minimis exemption: SEA 1 increased the current de minimis exemption from BPP assessment and taxation from a total acquisition cost of $80,000 to a total acquisition cost of $2,000,000 beginning with the January 1, 2026, assessment date.
- Remove of the current 30% depreciation floor: The current 30% “depreciation floor” for the assessment of all BPP placed in service after January 1, 2025, will be removed. However, here is an exception to this change if the BPP is located within a tax increment allocation area (TIF Area) established prior to January 1, 2025.
What does this mean for you?
- Increased de minimis exemption level: This change will increase the number of taxpayers who are no longer subject to BPP taxation, reducing the net assessed value of taxing units.
- Depreciation impact: As larger BPP taxpayers continue to invest in new equipment and retire existing equipment, taxing units will see a decrease in net assessed value as equipment that is no longer subject to the 30% depreciation floor depreciates.
- Impact on tax increment financing (TIF) and property tax abatement: Cities, towns, and counties will see less assessed value benefit from the use of tax increment financing (TIF) and/or property tax abatement to incentivize new personal property investments, as the new BPP will be depreciated significantly during the time those tools are in effect for a project.
- Reduced effectiveness of TIF: TIF will have reduced effectiveness as an infrastructure funding tool when used for industrial projects that have high BPP investment levels because of the reduced assessed value being generated by the BPP investment.
What can you do?
- Engage with local BPP taxpayers: Discuss the impacts of this legislative change with local BPP taxpayers.
- Evaluate property tax assess value base: Work with Baker Tilly to evaluate the composition of your property tax assessed value base and the potential financial effects of the changes to BPP assessments
- Determine alternative strategies: Work with Baker Tilly and your legal counsel to determine alternative strategies for infrastructure and incentive funding in the context of the new BPP assessment reality.
If you have any questions or need further clarification on the recent changes to BPP assessments, connect with a Baker Tilly specialist today.
Other legislative changes
In addition to the changes to BPP assessments, the recently concluded legislative session saw several changes to other elements of the local government funding framework. Changes to the homestead deduction regime, a new assessment deduction for 2% categorized properties, and changes to the Local Income Tax structure were all included in the Bills that have been signed into law. Community impacts should be evaluated by taking these changes into collective account, though certain projects or local initiatives may focus on specific aspects of the legislative session’s outcomes.
If you have any questions or need further clarification on the recent changes to BPP assessments or other legislative changes, connect with a Baker Tilly specialist today.
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