Senate Enrolled Act 1 is the most significant overhaul of Indiana's property tax system in over a decade. Signed into law in 2025, it will save homeowners $1.3 billion in property taxes over three years, according to Indiana House Republicans — and the first wave of changes hits your 2026 tax bill.
Whether you own a home in Marion County, farmland in Tippecanoe County, or rental property in Allen County, SB 1 changes the math on what you owe. Here's a breakdown of every provision and what it means for you.
New 10% Homestead Credit
Starting with property taxes payable in 2026, every homestead property in Indiana receives a new annual credit equal to 10% of your tax liability, up to a maximum of $300 (IC 6-1.1-20.6-7.7). Taxes approved by voters in a referendum are not counted when calculating the credit.
This is a credit, not a deduction — it comes directly off your tax bill rather than reducing your assessed value. If your property tax bill (with no referendum taxes) would otherwise be $2,500, this credit reduces it to $2,250. Because 10% of $3,000 is $300, once your non-referendum liability reaches $3,000 you receive the full $300.
Tip
This credit is automatic. You don't need to apply for it — your county auditor applies it to every property that already has the homestead deduction. If you haven't filed your homestead deduction yet, do so immediately to ensure you receive this credit.
Supplemental Homestead Deduction Increase
The supplemental homestead deduction is increasing on a phase-in schedule set by IC 6-1.1-12-37.5(c), applied to the assessed value left after the standard deduction (by year taxes are payable):
- 2026: 40% (up from 37.5% in 2025)
- 2027: 46%
- 2028: 52%
- 2029: 57%
- 2030: 62%
- 2031 and beyond: 66.7%
The supplemental deduction can never exceed 75% of the home's gross assessed value. At the same time, the standard homestead deduction is phasing down under IC 6-1.1-12-37(c): $48,000 for taxes payable in 2026, $40,000 in 2027, $30,000 in 2028, $20,000 in 2029, $10,000 in 2030, and zero from 2031 on.
By 2031, the standard deduction is gone and the supplemental deduction (66.7% of the full assessed value) does all the work — sheltering two-thirds of a home's assessed value from taxation.
What This Means in Dollars
For a home assessed at $200,000 in Hamilton County:
Under 2025 rules (37.5% supplemental): $48,000 standard deduction + $57,000 supplemental = $105,000 total deduction. Net taxable value: $95,000.
Under 2026 rules (40% supplemental): $48,000 standard deduction + $60,800 supplemental = $108,800 total deduction. Net taxable value: $91,200.
That's a $3,800 reduction in taxable value in year one. Your savings equal that reduction times your local tax rate — at a hypothetical rate of $2.00 per $100 of assessed value, $76 a year, before the new 10% credit.
4% Limit on Local Levy Growth
Local levies are not frozen, but their growth is capped. Indiana limits how much each local unit's maximum permissible levy can grow each year using the maximum levy growth quotient. For 2024 and 2025, a temporary formula took 80% of the normal growth result and capped it at 4% (IC 6-1.1-18.5-2(e) and (f)), and SEA 1 extended that limit through 2026. The State Budget Agency certified the quotient for 2026 at 4.000%.
This matters because faster levy growth could claw back some of the homeowner savings from the new credits and deductions. The 4% limit holds down how much local units can grow their levies while the relief phases in.
Note
The limit applies to maximum permissible levies for civil taxing units and school operations funds. Voter-approved referendum levies are approved separately. The temporary 4% limit expires after 2026 — see how the levy growth quotient works for 2027 and beyond.
New Rental Housing and Farmland Deduction
For the first time, rental housing and farmland receive a meaningful property tax deduction. These property types have historically received little in the way of tax relief.
The new deduction applies to property in the 2% circuit breaker category — non-homestead residential (including rentals), long-term care, and agricultural land — and phases in under IC 6-1.1-12-47(c) (by year taxes are payable):
- 2026: 6%
- 2027: 12%
- 2028: 19%
- 2029: 25%
- 2030: 30%
- 2031 and beyond: 33.4%
For landlords with rental property in Indiana, this is a significant development. In a hypothetical example, a $300,000 apartment building with no other deductions would receive an $18,000 deduction for taxes payable in 2026, growing to $100,200 by 2031.
For agricultural landowners, this stacks with the already favorable agricultural assessment methodology, which values farmland based on soil productivity rather than development potential. Indiana House Republicans estimate the law saves farmers roughly $125 million over three years.
Business Personal Property Exemption
The 2025 legislative session expanded the business personal property tax exemption (IC 6-1.1-3-7.2), which is based on the total acquisition cost of a business's personal property in a county:
- Through the 2025 assessment date: Businesses with less than $80,000 in business personal property in a county are exempt
- 2026 assessment date and beyond (taxes payable in 2027): The threshold rises to $2 million
Personal property includes equipment, machinery, furniture, and other non-real-property business assets. This primarily benefits small businesses that previously paid property tax on their equipment.
Senior and Disabled Credit Conversion
Several existing property tax deductions for seniors and disabled homeowners are converting from deductions to credits starting in 2026:
- The Over-65 deduction becomes a $150 credit (IC 6-1.1-51.3-1)
- The Blind or Disabled deduction becomes a $125 credit (IC 6-1.1-51.3-2)
- Over-65 eligibility is broader: the income limits rise to $60,000 (single) and $70,000 (joint), from the old deduction's $30,000 and $40,000 limits (adjusted for inflation since 2023), and the old deduction's $240,000 assessed value cap does not apply to the credit
Credits are generally more valuable than deductions because they reduce your tax bill dollar-for-dollar, regardless of your tax rate. A $150 credit saves you exactly $150. The old deduction's value varied by tax rate — in low-rate areas, the deduction was worth less.
We cover the senior and disabled credit changes in detail in our complete guide to the new senior credits.
Property Tax Transparency Portal
SB 1 requires the Indiana Department of Local Government Finance to develop and maintain a Property Tax Transparency Portal on its website, available to taxpayers by January 1, 2026 (IC 6-1.1-30-20). The portal lets taxpayers:
- Compare the tax liability on their current tax statement with their potential liability under a proposed tax rate
- Provide feedback to the DLGF and local units
The portal is designed to give homeowners more visibility into how local government spending decisions translate to their tax bills.
Referenda Timing Change
School operating referenda, school safety referenda, and referenda on controlled (capital) projects must now be held during general elections only (IC 3-10-9-3(b)). Previously, these referenda could be held during primary elections, which have lower voter turnout.
SB 1 also revised the required ballot language for school operating referenda (IC 20-46-1-10). The question must state the maximum tax rate and annual levy, and how much the annual tax bill on a median residence in the school district would increase. If the school corporation held an operating referendum in the previous five years, the ballot must also say when and whether it passed. This makes it easier for voters to understand what they're approving.
What Should You Do Now?
1. Verify Your Homestead Deduction
The new 10% credit and the increased supplemental deduction only apply if you have the homestead deduction on file. Use AribaTax's Property Lookup to check your current deductions, or contact your county auditor.
2. Check Your Assessment
With assessed values rising across the state, make sure your property isn't over-assessed. The new credits and deductions won't fully offset an inflated assessment. Read our guide to how assessments work and consider using our Tax Appeal Automation to check your property against comparable sales.
3. Understand Your Tax Bill
When your 2026 bill arrives, verify that the new SB 1 credits and the increased supplemental deduction appear. Learn how to read your Indiana property tax bill line by line so you can confirm everything is applied correctly.
4. Know Your Deadlines
Don't miss payment deadlines — the savings from SB 1 won't help if you're paying penalties on late payments.
Related Reading
- Indiana homestead exemption guide — Full details on the standard and supplemental deductions
- All Indiana exemptions and deductions — Every tax break available
- Property tax rates by county — How your county's rate compares
- How to appeal your assessment — Step-by-step Form 130 guide
Find Your County
Look up your property to see how SB 1 affects your specific tax bill:
- Marion County — Indianapolis
- Hamilton County — Carmel, Fishers
- Allen County — Fort Wayne
- Lake County — Gary, Hammond
- St. Joseph County — South Bend
- Hendricks County — Plainfield, Brownsburg