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The Indiana Senate voted early Tuesday morning to send the House’s version of a high-profile property tax bill to the governor, passing legislation that has been criticized both for not providing enough homeowner relief and for reducing revenue for local governments.
Senate Bill 1 now moves to Gov. Mike Braun’s desk for his consideration. He has previously threatened to veto the bill if it doesn’t meet his homeowner-relief expectations. However, he said in a written statement after its passage that he looks forward to signing the bill “as soon as he receives it.”
About 20 minutes after midnight, the Senate approved the House’s changes, preventing it from landing in a conference committee where further amendments could have been made. Senators approved the bill 27-22, with Democrats and a dozen Republicans voting in dissent.
Lawmakers were in session for about nine hours Monday to consider and amend 21 bills with a combined 172 filed amendments. The chamber capped off the night with more than an hour and 45 minutes of debate before the property tax concurrence vote.
“This is historic property tax relief,” Braun said in his statement. “Senate Bill 1 cuts property taxes for most Hoosier homeowners, farmers, and businesses, limits future tax hikes, and makes the tax system fairer, more transparent, and easier to understand. Real property tax relief was a core promise of my Freedom and Opportunity Agenda and with the collaborative leadership of our legislators, we are delivering real savings and protections for taxpayers.”
State leaders have sought to strike a balance between homeowner relief while maintaining funding of local governments, which largely rely on property tax revenue to operate critical services. The bill has since gone through two major “strip-and-insert” revisions to land on the current version.
“Senate Bill 1 in its current form has been the work of many hours of discussion and refinement in the end of two years of a long study regarding taxation,” said Sen. Travis Holdman, R-Markle, who originally introduced this bill in January. “Property taxes are very complicated in the state of Indiana. It’s taken the Legislature 50 years to make it as complicated as we possibly could.”
Under the bill, about two-thirds of homeowners’ bills are expected to be cheaper in 2026 than in 2025. Altogether, homeowners would see about $1.3 billion in relief over three years.
Conversely, local governments could have about $1.5 billion less to spend over the next three years. Without a revenue replacement option, leaders have warned that employee salaries, public infrastructure projects and other services could be curbed.
The bill still has loud opponents who say the bill doesn’t go far enough to provide homeowner relief and is too complicated.
That includes Lt. Gov. Micah Beckwith. In an X post Saturday, he said Braun should veto the bill and call a special session to pass legislation that “the average Hoosier can understand without hiring army of lawyers and accountants.” 1If Braun were to veto the bill, the General Assembly could override his decision with a simple majority vote in both the House and Senate.
“I’ve heard criticism about how complicated this bill is,” Sen. Scott Baldwin, R-Noblesvile, said Monday on the floor. “I stipulate it’s very complicated, but with a complicated system, it begs to demand a complicated solution.”
The governor and legislative leaders have for weeks gone back and forth on SB 1’s contents. Last week, the House struck a compromise with Braun by passing an amendment increasing some immediate relief.
Homeowners have felt the pinch after property tax bills spiked thanks to market-driven assessed value increases during the pandemic-era housing boom. In 2023, property tax bills increased by an average of 17%, according to an analysis by tax expert Larry DeBoer.
SB 1’s headline measure is a 10% tax credit, with a maximum impact of $300. 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 House’s plan also includes a previously introduced proposal to reform how the state collects property taxes, a contentious charter school revenue-sharing bill and credits for vulnerable Hoosier taxpayers.
The potential property tax revenue in Indiana’s 92 counties over the next three years is expected to be reduced by more than $1 billion under the plan. But the bill also includes changes and additions to the state’s local income tax system, which local government leaders could use to combat drops in property tax revenue.
Critics of the property tax bill say local governments will simply raise income taxes to make up the difference. Rep. Ed DeLaney, D-Indianapolis, last week said the bill would allow local governments to raise income taxes by three times more than the amount homeowners would save in property taxes.
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