Property Tax "Relief" Bill Will Increase Your Taxes

Dear neighbor,

Last week at the Statehouse, the House passed Senate Bill 1—the majority’s idea of property tax relief.

People’s property taxes vary by area, assessed value and the complexities of local taxation. Across the board, inflation has increased homeowners’ assessed values, doubling those on average. House Democrats’ mission has been to help you avoid more large increases.

On Wednesday, the House majority reacted to public criticism by passing what appears to be a major change. However, their proposal still includes tax breaks for businesses, potential increases in local income taxes, insignificant savings for homeowners and diverting money to charter schools.

Here are my concerns with the updated version of Senate Bill 1, which passed out of the House on Thursday.

Concerns with the Majority’s Property Tax Proposal

• 67% of homeowners will see some savings on their property tax bill, with a maximum credit of $300. These savings will be offset by potential local income tax increases. Some homeowners will pay more when you add the local income tax increase to the property tax bill.

• Local income taxes will potentially increase more than property tax savings each year. Counties can impose a local income tax of 2.9%, and cities and towns can impose a rate of 1.2% within that 2.9%. Many units do not yet tax that high.

• Young and lower-income individuals who rent will be adversely impacted since they could see increases in their income tax but have no property tax to be reduced.

• Local governments will lose $1.4 billion. Police, fire, EMS, public libraries and other locally funded services will have their budgets gutted unless local income taxes are used to backfill.

• Marion County will lose $75.7 million by 2028.

• Public schools will lose $744.4 million in expected revenue by 2028. In some school districts, dollars they do get will be shared with charters.

• Schools won’t get a share of local income taxes, so they’ll be unable to recover any property tax revenue they’ll lose.

• Indianapolis public schools will lose $14 million in expected revenue over the next three years and an additional $92 million in revenue sharing with charter schools between 2028 and 2032.

• MSD Washington Township will lose over $13 million in expected revenue over the next three years and MSD Wayne Township will lose $11.5 million in expected revenue over the next three years.

• No savings for first-time homebuyers.

Our counties will be between a rock and a hard place—raise local income taxes or have their budget slashed. This makes the bill a tax hike in disguise, plain and simple.

We still have no clue how federal funding changes will affect our state and local governments.

I’m thankful some Hoosiers might get some savings on one of their tax bills, but this bill falls short. This is not the best that we can do. House Democrats proposed over 20 changes to this bill. Our goal was to provide as many homeowners with relief as possible while preserving local services. All of our proposals were voted down.

The Senate has filed a motion to agree with the changes, so the bill will likely head to Gov. Mike Braun to sign or veto soon. House Democrats will continue fighting for lower taxes, property tax relief for those who need it and for the needs of our public schools, police, fire and EMS.

As always, please reach out to my office at h86@iga.in.gov with any questions, comments or concerns.