The Maximum Levy Growth Quotient: The Obscure Number That Will Shape Your 2027 Indiana Tax Bill

Every July, a memo from the Indiana State Budget Agency quietly sets the ceiling on how fast nearly every local government in the state can grow its property tax levies the following year. Almost nobody reads it. But the maximum levy growth quotient (MLGQ) does more to determine the total property taxes Hoosiers pay than any assessment notice — because Indiana is a levy-controlled state, and the MLGQ is the control.

The 2027 number matters more than usual. SEA 1's temporary 4 percent cap expires after this year's bills, lawmakers spent two sessions arguing about replacing the formula behind the quotient, and school referendum politics now hang off the same machinery. The State Budget Agency has historically certified the quotient around July 1 — see its past MLGQ memos — so the official 2027 figure should land within weeks of this writing. Here is the primer to read before it does.

What the MLGQ actually does

Indiana caps each civil taxing unit's maximum permissible levy — the total property tax dollars it may raise — and lets that maximum grow each year by the MLGQ. Under the long-standing formula in IC 6-1.1-18.5-2, the quotient is built from a six-year average of growth in Indiana nonfarm personal income, with a statutory ceiling of 6 percent.

The mechanics produce a result that surprises most taxpayers:

• Levies are fixed first. Counties, cities, townships, libraries, and most other units budget up to their maximum levy.
• Rates are derived, not chosen. The tax rate is simply the certified levy divided by the district's net assessed value.
• So when AV rises faster than levies, rates fall. A 12 percent jump in your county's assessed value with a 4 percent levy cap means the rate must drop — the levy cannot grow faster than the quotient allows.

That is why a big Form 11 increase does not automatically mean a proportionally bigger bill: what it changes is your share of a capped pie. Your bill goes up sharply only when your AV outpaces your neighbors', when overlapping units stack levy increases, or when voter-approved referendum levies sit outside the cap. (Assessment appeals still matter — they fix your share and your circuit breaker exposure — but the MLGQ governs the pie itself.)

Where the number has been, and where 2027 starts

Recent history of the quotient:

Per the DLGF's June 2025 memo on legislation affecting local budgeting, SEA 1 extended the 1.04 cap "through the 2025 Pay 2026 budget cycle" — meaning the cap is gone for 2027, and the quotient reverts to the underlying six-year formula. The Legislative Services Agency's fiscal analysis last year estimated that formula would produce roughly a 5.7 percent quotient for 2027 absent any change. After two years pinned at 4 percent, that step-up is exactly what worried lawmakers — and what produced the reform fight described next.

The four-factor formula that was proposed — and did not pass

Here is where 2025's coverage created lasting confusion, so let's be precise about what is and is not law.

As part of the Senate Republican property tax package alongside SB 1, Senate Bill 9 (2025) proposed replacing the statewide six-year income formula with a per-county MLGQ built from four economic indicators, weighted 20 to 30 percent each, according to the LSA fiscal note:

The bill would also have made school corporations "civil taxing units" subject to the MLGQ beginning in 2027 — a significant expansion of levy controls — and required the Budget Agency to compute and publish a separate quotient for every county. LSA estimated the new formula would have produced county quotients of roughly 3.4 to 4.5 percent for CY 2027 (versus about 5.7 percent under current law) and trimmed statewide levies by an estimated $151 million in that first year.

SB 9 died in committee. And SEA 1, the omnibus that did pass, did not absorb the four-factor formula — the DLGF's own post-session guidance describes SEA 1's MLGQ changes as the 1.04 cap extension plus a sunset of a special add-on quotient for certain growing municipalities, nothing more. County fiscal briefings after the session said the same thing: after 2026, the existing six-year formula resumes. So if you see "Indiana's new four-factor levy formula" cited as current law, it is not — it remains a proposal, one that resurfaced in modified form in the 2026 session (SB 81 proposed MLGQ adjustments for high-AV-growth communities and an MLGQ-based cap on school operating referendum growth) and that the property tax interim study committee is positioned to revisit for 2027.

What SEA 1 did change about levy growth

While the formula survived, SEA 1 tightened the system around it in ways that bite from 2027 onward:

• Excess levy appeals are mostly gone. Starting with 2026-pay-2027 budgets, units can no longer file consolidation, extension-of-services, or three-year-growth appeals to exceed their maximum levy — only annexation and emergency grounds remain. School transportation and bus replacement levy appeals were eliminated as well.
• A public-vote speed bump arrives in 2030. Beginning with budgets adopted after December 31, 2028, a unit that wants to raise its levy above the prior year's must adopt an ordinance after a dedicated public hearing; if it does not, its tax rate is reduced to offset AV growth. That converts silent levy growth into a recorded political act.
• Schools and the referendum channel. With normal levy growth constrained, operating referendums — which sit outside the caps — become the main escape valve, which is why May's school referendum results and the new charter sharing rules for referendum dollars are now part of the same story.

Why your 2027 bill depends on this number

Pull the threads together and the 2027 bill for a typical homeowner is set by four interacting forces:

1. The MLGQ certified this summer — the ceiling on levy growth for nearly every unit on your bill
2. Your 2027 assessed value — including cyclical reassessment effects in many counties
3. The SEA 1 deduction restructuring — the 46 percent supplemental deduction and shrinking standard deduction reshaping the homestead base
4. Local choices — referendums, replacement local income taxes, and whether units levy to their maximum

The first force is the quiet one. If the certified 2027 quotient lands near the LSA's ~5.7 percent estimate, local levies get their biggest allowed jump since 2023, partially offsetting the relief homeowners expect from the deduction phase-in. If lawmakers revive a tighter formula for later years, the squeeze shifts to local budgets instead — the trade-off at the center of SEA 1's whole architecture.

The bottom line

The MLGQ is the rare property tax number that is set once, statewide, and touches every bill. For 2027: the 4 percent era is over, the old six-year income formula is back unless the legislature says otherwise, LSA's earlier work suggests a quotient near 5.7 percent against reform proposals that would have held counties to 3.4-4.5 percent — and the official answer arrives from the State Budget Agency around July 1. We will break down the certified figure, and what it means county by county, when it publishes.

Related reading

• Indiana SB 1 property tax reform: the full overview
• Homestead deductions in 2027: the 46% supplemental step
• Interim study committee: the 2027 reform agenda
• May 2026 school referendum results
• Circuit breaker caps, explained