With SB 1 reshaping deductions and credits, a lot of Indiana homeowners want a way to estimate their 2026 bill before it arrives. The good news: roughly two-thirds of homeowners are expected to see a 2026 bill lower than their 2025 bill. The better news: the calculation, while it has several steps, is something you can follow on your own kitchen table.
This guide walks the math start to finish, then runs a full worked example. Treat the result as an estimate — your district tax rate is the single biggest variable, and it differs from one taxing district to the next.
The Five Steps
Estimating your bill follows a fixed sequence. Each step feeds the next.
- Gross assessed value (AV) — your property's total assessed value.
- Subtract deductions — standard homestead, supplemental homestead (40% in 2026), and any others you qualify for.
- Net AV — what remains after deductions.
- Net AV times district tax rate — produces your gross tax.
- Apply the circuit-breaker cap, then the $300 homestead credit — to get your final bill.
Let's take them one at a time.
Step 1 and 2: Gross AV minus deductions
Start with your gross AV from your assessment notice. Then subtract your deductions. For a homestead, the two big ones are the standard homestead deduction and the supplemental homestead deduction, which under SB 1 is 40% in 2026 (it rises in later years, reaching approximately 66.7% by 2030). Note that the mortgage deduction has been repealed, so it no longer reduces your AV.
Step 3 and 4: Net AV times the rate
Subtracting deductions from gross AV gives your net AV. Multiply that by your district tax rate to get your gross tax. Tax rates vary widely by taxing district, so use the rate printed on your own bill or statement — not a statewide average.
Step 5: The cap, then the credit
Two final protections apply, in order:
- Circuit-breaker caps limit your bill to a percentage of your gross AV: 1% for a homestead, 2% for other residential and farmland, 3% for commercial. We cover these in depth in property tax caps and circuit breakers explained.
- The $300 homestead credit then comes off the result. SB 1 created a new homestead credit equal to 10% of your liability, capped at $300. Details are in our $300 homestead credit guide.
Tip
Order matters. The circuit-breaker cap is applied first — it limits your gross tax to the cap percentage of gross AV. Only after the cap is the $300 homestead credit subtracted. Applying them in the wrong order will overstate or understate your estimate.
A Worked Example
Consider a homestead with a gross AV of $250,000 in a district with a tax rate of 2.5% (expressed as $2.50 per $100 of net AV). The numbers below are illustrative — your real figures come from your own notice and bill.
| Step | Calculation | Result |
|---|---|---|
| Gross AV | Starting value | $250,000 |
| Standard homestead deduction | Subtract | -$48,000 |
| Supplemental deduction (40% of remainder) | 40% x $202,000 | -$80,800 |
| Net AV | $250,000 - $48,000 - $80,800 | $121,200 |
| Gross tax | $121,200 x 2.5% | $3,030 |
| Circuit-breaker cap (1% of gross AV) | 1% x $250,000 | $2,500 |
| Bill after cap | Lesser of gross tax and cap | $2,500 |
| $300 homestead credit | 10% of liability, max $300 | -$300 |
| Estimated bill | $2,500 - $300 | $2,200 |
In this example, the homestead cap is binding: the gross tax of $3,030 is reduced to the 1% cap of $2,500, and then the $300 credit brings the estimate to $2,200. A property in a lower-rate district might fall below the cap entirely, in which case the gross tax — not the cap — is the starting point for the credit.
Why two-thirds of homeowners come out ahead
The combination of a larger supplemental deduction, the binding homestead cap, and the new $300 credit is what drives the estimated two-thirds of homeowners to a lower 2026 bill than 2025. The credit alone can be worth up to $300 off the final number for any homestead with a liability of $3,000 or more.
Watch the Variables
Your estimate is only as good as its inputs:
- District rate swings the gross tax the most. Use your actual rate.
- Deduction eligibility — confirm your homestead deduction is on file; without it you lose both the supplemental deduction and the credit.
- Property class sets which cap applies (1% / 2% / 3%).
- Gross AV itself may have moved due to trending or a cost-schedule reset; verify it is correct.
To compare rates across the state, see Indiana property tax rates by county 2026. For a professional overview of the reform, the KSM SB 1 summary is a useful reference, and the DLGF publishes the official deduction and rate materials.
Find Your Property
Plug your real numbers in by starting with your parcel. Open the Indiana property explorer or go straight to a county like Marion County to pull your gross AV, classification, and district.
Our property lookup tool gathers the inputs this calculation needs in one view. If your estimate comes in high because your gross AV looks inflated, our tax appeal service can challenge the assessment behind it.