Article
Upcoming Indiana property tax changes – What you need to know
July 14, 2025 · Authored by Michael Guerrettaz
Significant changes are coming to Indiana’s property tax system beginning in 2025, following the passage of Senate Enrolled Act 1 (SEA 1) and House Enrolled Act 1427 (HEA 1427). Parts of these reforms are designed to provide targeted tax relief for homeowners, landlords, and veterans, while also reshaping how local governments receive and manage property tax revenue.
Changes you can expect
Under SEA 1, the standard homestead deduction will begin to phase out in 2025, starting at $48,000 and ending entirely following 2030. To help offset this change, the supplemental homestead deduction will increase from 37.5% to 66.7% over the same period. Additionally, a new 10% homestead tax credit—capped at $300—will be introduced to provide further relief to homeowners.
Non-homestead properties under the 2% property tax cap category, which includes agricultural, non-homestead residential and long-term care properties, will also see new deductions. This deduction will start at 6% of assessed value in the 2026 tax year and gradually increase to 33.4% in 2031.
HEA 1427 brings expanded benefits for veterans with service-connected disabilities. Veterans who served at least 90 days and received an honorable discharge may qualify for deductions ranging from 50% to 100% of their home’s assessed value, depending on their disability rating. Those who received their home from a nonprofit organization may also be eligible.
Charting the fiscal impact
Reductions in net assessed value (NAV) anticipated to occur as a result of SEA 1 and HEA 1427—driven by the aforementioned deductions—would place upward pressure on property tax rates to maintain property tax levies, increasing the risk of higher circuit breaker (CB) credits, which cap property tax bills and can reduce the actual revenue collected. As a result, municipalities might experience growing fiscal stress, particularly in areas with high concentrations of residential and/or agricultural property, where both NAV losses and CB credit impacts tend to be more significant.
Steps to stay ahead
These legislative changes may significantly affect your property tax obligations and financial planning. To prepare, consider the following steps:
- Understand the phased impact: Analyze how the changes will affect your property tax collections through 2031. This requires a detailed, parcel-by-parcel analysis to fully understand the implications.
- Evaluate your assessed value base: Work with Baker Tilly to assess the composition of your property tax base and understand the potential financial effects of the new deductions and credits.
- Explore alternative funding strategies: Collaborate with Baker Tilly and your legal counsel to identify new strategies for infrastructure and incentive funding considering the evolving property tax landscape.
At Baker Tilly, we’re here to help municipalities navigate these legislative changes, evaluate their fiscal impact and develop proactive strategies to maintain service levels, support infrastructure needs and ensure long-term financial sustainability.
Additional legislative changes:
In addition to property tax changes, the legislation also includes changes to Business Personal Property (BPP) assessments (click here to view the BPP article)
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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