If you read last year that Indiana's current local income tax (LIT) rates expire December 31, 2027, that date is no longer correct. House Enrolled Act 1210-2026, signed by Gov. Mike Braun on March 12, 2026, delays SEA 1's LIT overhaul by one year. The Department of Local Government Finance's July 17, 2026 memo confirms it: current LIT ordinances now expire January 1, 2029, new ordinances may be adopted starting July 1, 2028, and collections under the new structure begin in 2029, with distributions in 2030.
Nobody is adopting new-structure rates this fall. Counties are negotiating instead, and one deadline lands this month. For background, see our March explainer and the mid-2026 scoreboard.
What HEA 1210 changed in IC 6-3.6
In the 2026 edition of IC 6-3.6, revisor's notes show P.L.157-2026 (HEA 1210) moving SEA 1's (P.L.68-2025) effective dates to July 1, 2028, or January 1, 2029. Pre-delay analyses such as Baker Tilly's SEA 1 summary still show the old December 31, 2027 expiration; treat it as replaced.
Until then, current law governs: an expenditure rate up to 2.5% (2.75% in Marion County) under IC 6-3.6-6-2, plus a property tax relief rate up to 1.25% under IC 6-3.6-5-6. The Indiana Capital Chronicle describes the overhaul as cutting the total cap to 2.9% from 3.75%.
The 2029 structure: county components plus a municipal rate
From July 1, 2028, the county fiscal body is the sole adopting body (IC 6-3.6-3-1); in Marion County, the City-County Council. It may adopt these components, totaling no more than 2.9%:
- Up to 1.2% for county services
- Up to 0.4% for fire protection and EMS providers
- Up to 0.2% for nonmunicipal units such as townships and libraries
- Up to 1.2% for municipal services in towns that cannot adopt their own rate, or that chose to be treated that way
The first three components together cannot exceed 1.7%. Cities and towns with at least 3,500 residents get their own authority under the new IC 6-3.6-6-22. "Beginning after December 31, 2028," their fiscal body may impose up to 1.2% on its residents. Under HEA 1210, any municipality of 3,500 or more may instead opt to be treated as a small town (IC 6-3.6-6-23).
What goes away: PTRC, certified shares, and LIT councils
- Property tax relief credits (PTRC). IC 6-3.6-1-3(b) says any property tax relief rate under IC 6-3.6-5 expires December 31, 2028, and the chapter itself expires the same day (IC 6-3.6-5-7). These credits apply before the circuit breaker caps; Jay County Auditor Emily Franks told her council in July that the county's 0.60% relief rate reduces its circuit-breaker losses (The Commercial Review).
- Certified shares, public safety, and economic development splits. Replaced by the component rates above.
- LIT councils. IC 6-3.6-3-6 is repealed effective July 1, 2028, ending population-weighted voting by cities and towns.
The 0.3% homestead-credit LIT (IC 6-3.6-6-3.1) now terminates after December 31, 2028, one year later than the 2027 cutoff in our July explainer.
Warning
Under the future IC 6-3.6-3-4(c), a county's expenditure rate continues past 2028 "only if the adopting body adopts an ordinance to renew" it on or before October 1, 2028. Miss that date and only a debt-service minimum survives until a new rate takes effect January 1, 2030.
This fall's deadline: MUST taskforces by October 1, 2026
New IC 6-3.6-3-13 lets each county, before October 1, 2026, convene a Municipal Unit Strategic Taskforce (MUST): one county council representative plus each city and town fiscal officer, seeking a unanimous agreement on splitting the county-services and municipal-services rates. Fire/EMS and nonmunicipal units are excluded. DLGF must report agreements to the Legislative Council before December 1, 2026. Accelerate Indiana Municipalities notes the agreements are nonbinding inputs to the 2027 debate.
Counties already moving:
- Shelby County. In May, the council hired Financial Solutions Group to set up its MUST (Shelbyville News).
- Jay County. In July, the council appointed Faron Parr to its MUST and voted to move forward with changing two current rates, which require a public hearing before adoption (Commercial Review): public safety from 0.25% to 0.35%, and the levy freeze rate from 0.2% to 0.1%.
- Lawrence County. The taskforce set its first meeting for August 28 and posted a baseline LIT analysis (City of Bedford).
- Jefferson County. The council named Pam Crozier as its appointee and scheduled the MUST meeting for September 28 (Madison Courier).
Senate Tax and Fiscal Policy Chair Travis Holdman told the Capital Chronicle he wants counties, cities, and towns to "come up with a plan they would recommend to us"; AIM's Amy Krieg called it "a multi-year discussion." Expect more changes in the 2027 session.
The decision timeline at a glance
| Date | What happens | Source |
|---|---|---|
| Before Oct. 1, 2026 | Counties may convene a MUST | IC 6-3.6-3-13 |
| Before Dec. 1, 2026 | DLGF reports MUST agreements to Legislative Council | IC 6-3.6-3-13 |
| Before Aug. 1 each year, from 2027 | County and municipal fiscal officers report LIT-backed debt service to DLGF | IC 6-3.6-3-2.5 |
| July 1, 2028 | New adoption framework takes effect | P.L.157-2026 |
| Oct. 1, 2028 | Last day for county renewal ordinances and for municipal ordinances to take effect Jan. 1, 2029 | IC 6-3.6-3-3, -3.3, -4 |
| Dec. 31, 2028 | Property tax relief rates and the homestead-credit LIT end | IC 6-3.6-1-3; 6-3.6-6-3.1 |
| Jan. 1, 2029 | 2.9% structure and municipal rates apply | IC 6-3.6-6-2, -22 |
| Dec. 31, 2031 | Rates start expiring each year unless readopted | IC 6-3.6-6-2(e) |
What to do now
- Check your current rate. Marion County's combined rate is 2.02% in the DOR's Departmental Notice #1. For most Indiana residents, withholding follows the county where you lived on January 1, not the county where you work.
- Find out whether your county has a MUST. DLGF says MUST meetings fall under the Open Door Law; our budget hearing guide covers how to follow them.
- Know whether your county has a relief rate. If your county uses PTRC, your property tax bill loses that offset after 2028 unless the legislature changes the law. Check your credits with property lookup and your district rate.
- Look at the full household picture. Weigh SEA 1 relief such as the $300 homestead credit against LIT, and claim your income tax deductions.
Marion County readers: see our Marion LIT coverage.