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By passing an amendment offering greater short-term tax relief, the Indiana House reached a compromise with Gov. Mike Braun, who had pushed the Legislature to pass wide-reaching and immediate property tax relief this session.
Under the newly amended Senate Bill 1, two-thirds of homeowners will see cheaper tax bills in 2026 than in 2025. Rep. Jeff Thompson, R-Lizton, said that over the course of three years, the proposal would provide $1.4 billion in relief—a 40% increase since the bill passed out of the House Ways and Means Committee on Monday.
“This is historical taxpayer savings,” House Speaker Todd Huston said on the floor Wednesday afternoon. “This bill fits the balance that you have to have on this type of issue.’
The amendment—authored by Thompson, who is the architect of the current version of SB 1—passed along party lines.
The primary change is a 10% tax credit, with a maximum impact of $300. That’s up from a 7.5% credit and $200 cap. The credit would be applied to all homeowners’ tax bills, including those that hit the state’s 1% tax cap.
For example, if a home’s assessed value is $400,000, the new $300 tax credit and the 1% tax cap would mean a homeowner would not pay more than $3,700. That number may fluctuate slightly depending on other tax credits or additional tax rates approved by voters at a municipal level.
The amendment also removed the phase-out of the business personal property tax, meaning business owners would still need to pay taxes on equipment and any other property it holds. It also raised the cost threshold of the business personal property tax exemption to $1 million in 2026 and $2 million in 2027. It currently sits at $80,000.
Lawmakers did not say how the amended bill might impact local governments. The latest fiscal note, which does not yet include Wednesday’s changes, estimated that local governments and schools would miss out on $1.3 billion in property tax revenue.
Matt Greller, CEO of AIM (formerly the Indiana Association of Cities and Towns), told IBJ he’s very happy with Wednesday’s updates, but the bill still has pain points lawmakers will need to find solutions for in years to come.
“It preserves in our ability to do economic development—bring jobs, bring people into our communities, in our state,” he said, “so I’m excited about that.”
In a statement Wednesday afternoon, Braun thanked Huston and President Pro Tem Rodric Bray for working to find a compromise.
“I am proud to announce that with Amendment 36 to Senate Bill 1, we have agreed upon a plan to bring historic property tax relief to Hoosiers,” Braun said.
Through a spokesperson, Bray said, “we are headed in the right direction with SB 1.”
The governor and legislative leaders have for weeks gone back and forth on SB 1’s contents. The bill has gone through two major “strip-and-insert” revisions since it was introduced in January.
The House’s plan—which leaders debuted last Friday—also includes a previously introduced proposal to reform how the state collects property taxes and a contentious charter school revenue-sharing bill.
The House must still vote to pass the bill out of its chamber by Monday. The Senate will then decide whether it agrees with the House’s changes.
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