Property Taxes6 min read

Indiana SB 1 Property Tax Reform: What Changes for Homeowners in 2026

Indiana's SB 1 is the biggest property tax reform in years. New 10% homestead credit, increased supplemental deduction, levy freeze, and expanded senior benefits — here's what it means for your tax bill.

By AribaTax Team

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 delivers an estimated $1.3 billion in savings for homeowners over three years — 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.

$1.3BEstimated homeowner savings over 3 years

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.

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 would otherwise be $2,500, this credit reduces it to $2,250. If your bill is $4,000 or more, you receive the full $300.

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:

  • 2026: 40% (up from 35%)
  • 2027: 44%
  • 2028: 48%
  • 2029: 53%
  • 2030: 60%
  • 2031 and beyond: 66%

By 2031, the standard homestead deduction ($48,000) plus the supplemental deduction (66% of the remainder) will shelter roughly 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 the old rules (35% supplemental): $48,000 standard deduction + $53,200 supplemental = $101,200 total deduction. Net taxable value: $98,800.

Under 2026 rules (40% supplemental): $48,000 standard deduction + $60,800 supplemental = $108,800 total deduction. Net taxable value: $91,200.

That's a $7,600 reduction in taxable value in year one alone, saving roughly $150-$230 depending on your local tax rate.

Local Levy Freeze

For 2026, local governments cannot increase their tax levies above 2025 levels. This is a one-year freeze that prevents local taxing units from raising levies to offset the new deductions and credits.

This matters because without the freeze, some of the homeowner savings from the new credits and deductions could be clawed back through higher levies. The freeze ensures that the relief actually reaches your tax bill in 2026.

The levy freeze applies to operating levies only. Debt service levies for bonds already issued are not affected, and voter-approved referenda levies may still proceed.

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 phases in:

  • 2026: 13.3%
  • 2027: 16.7%
  • 2028: 20%
  • 2029: 23.4%
  • 2030: 26.7%
  • 2031 and beyond: 33.4%

For landlords with rental property in Indiana, this is a significant development. A $300,000 apartment building would receive a $39,900 deduction 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 farmers are expected to save $116 million through 2027 from the combined provisions.

Business Personal Property Exemption

SB 1 expands the personal property tax exemption for businesses:

  • 2026: Businesses with less than $1 million in personal property are exempt
  • 2027 and beyond: 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 and inventory.

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 with expanded eligibility
  • The Blind or Disabled deduction converts to a dollar credit
  • Eligibility requirements have been loosened to allow more individuals to qualify

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 launch a Property Tax Transparency Portal. This online tool will allow taxpayers to:

  • Compare their current tax bill with proposed tax rate changes
  • See how levy increases would affect their specific property
  • Provide feedback to state and local officials on proposed rate changes

The portal is designed to give homeowners more visibility into how local government spending decisions translate to their tax bills.

Referenda Timing Change

Tax referenda — local votes on whether to approve additional property tax levies for schools, public safety, or infrastructure — must now be held during general elections only. Previously, referenda could be held during primary elections, which have lower voter turnout.

The new rule also requires clearer language on the ballot, explicitly noting the tax impact on a median-valued home in the district. 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.

Find Your County

Look up your property to see how SB 1 affects your specific tax bill:

View all 92 counties

#property-tax#sb1#reform#indiana#homestead#levy-freeze

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