Indiana's New Senior and Disabled Property Tax Credits: What Replaces the Old Deductions

If you're an Indiana homeowner age 65 or older, or if you have a disability, your property tax benefits are changing in 2026. Senate Bill 1 converts several long-standing deductions into dollar credits and expands who qualifies.

For most eligible homeowners, the new credits are worth more than the old deductions. But the transition isn't automatic knowledge — you need to understand what changed and verify that your county applied the new rules correctly.

Deductions vs. Credits: Why It Matters

This distinction is the key to understanding the change.

Deductions reduce your assessed value. The tax savings depend on your local tax rate. A $14,000 deduction in a high-rate district might save you $350, while the same deduction in a low-rate district might save only $150.

Credits reduce your tax bill dollar-for-dollar. A $150 credit saves you exactly $150, regardless of where you live.

For homeowners in lower-rate areas, the new credits are often more valuable than the old deductions. For homeowners in the highest-rate areas, the math is closer — but the credits also come with expanded eligibility, which means more people qualify.

What Changed: Over-65 Benefits

The Old Over-65 Deduction (Pre-2026)

Previously, qualifying seniors received a deduction of the lesser of $14,000 or half the assessed value remaining after the homestead deduction. Eligibility required:

• Age 65+ by December 31 of the assessment year
• Combined adjusted gross income of $40,000 or less
• Assessed value of $240,000 or less
• Active homestead deduction

For details on the old rules, see our complete exemptions and deductions list.

The New Over-65 Credit (2026 and Beyond)

Starting with property taxes payable in 2026, the over-65 deduction converts to a $150 annual credit applied directly to your tax bill. Key changes:

• Expanded income eligibility — More seniors now qualify than under the old income limits
• Dollar-for-dollar savings — The credit reduces your bill by exactly $150 regardless of tax rate
• Automatic conversion — If you were already receiving the over-65 deduction, your county auditor should convert you to the new credit automatically

Who Benefits More Under the New System?

Seniors in low-rate areas benefit more. If your old $14,000 deduction was saving you less than $150 per year (which happens at tax rates below roughly $10.70 per thousand), the new $150 credit is an upgrade.

Seniors in high-rate areas may see a modest reduction. If your old deduction was saving you $200+ per year (tax rates above $14.30 per thousand), the flat $150 credit is worth slightly less. However, the expanded eligibility means more seniors in these areas now qualify who didn't before.

For a home in Lake County with higher tax rates, the old deduction might have been worth $210. The new $150 credit is a $60 reduction in that specific benefit — but this is partially offset by the other SB 1 provisions (the new 10% homestead credit, increased supplemental deduction, and levy freeze).

For a home in Boone County or Hendricks County with lower rates, the old deduction might have been worth only $120. The new $150 credit is a $30 improvement.

What Changed: Disabled Homeowner Benefits

The Old Blind or Disabled Deduction (Pre-2026)

Previously, qualifying disabled homeowners received a deduction of the lesser of $12,480 or half the assessed value. Eligibility required:

• Legally blind or disabled
• Active homestead deduction
• Combined adjusted gross income of $17,000 or less

The New Disabled Credit (2026 and Beyond)

The blind or disabled deduction similarly converts to a dollar credit. The same logic applies: the credit provides a fixed dollar reduction to your tax bill rather than a variable reduction based on tax rate.

Eligibility requirements have been adjusted to allow more individuals to qualify.

The Combined Impact with Other SB 1 Changes

The credit conversion doesn't happen in isolation. SB 1 also provides:

• 10% homestead credit (max $300) — every homestead gets this
• Increased supplemental deduction — up from 35% to 40% in 2026
• Local levy freeze — prevents levies from increasing in 2026

For a qualifying senior with a $150,000 home in Johnson County:

Old system: Homestead deductions reduce taxable value to ~$66,600. Over-65 deduction reduces it further by ~$14,000 to ~$52,600. At a $20/thousand rate, tax is ~$1,052.

New system (2026): Homestead deductions at the higher supplemental rate reduce taxable value to ~$61,200. No over-65 deduction (converted to credit). At a $20/thousand rate, gross tax is ~$1,224. Then subtract the $150 over-65 credit and up to $122 from the 10% homestead credit. Net tax: ~$952.

In this example, the senior pays roughly $100 less under the combined new system.

How to Verify Your Credits Are Applied

When your 2026 tax bill arrives, check for the following:

1. Confirm the Over-65 or Disabled Credit Appears

Your tax bill should show the new credit as a line item reducing your gross tax amount. If you see the old deduction listed instead of the new credit, contact your county auditor — your record may not have been updated.

2. Verify the 10% Homestead Credit

As a homestead property owner, you should also see the new SB 1 homestead credit (10% of liability, max $300). This is separate from and in addition to the senior/disabled credit.

3. Check the Supplemental Deduction Rate

The supplemental homestead deduction should be calculated at 40% for 2026, up from 35%. If your bill still shows 35%, flag it with your auditor.

4. Review for Errors

Learn how to read your Indiana property tax bill line by line so you can spot any discrepancies.

If You Didn't Previously Qualify

SB 1 expanded eligibility for the over-65 credit. If you are 65 or older and were previously told you didn't qualify for the over-65 deduction due to income or assessed value limits, check again. The new thresholds may include you.

To apply:

1. Contact your county auditor's office
2. Provide proof of age (driver's license, birth certificate)
3. Provide income documentation if required
4. The credit should apply to your next tax bill after approval

Disabled Veteran Benefits Are Separate

The disabled veteran deduction — which provides up to $24,960 for partially disabled veterans and full exemption for 100% disabled veterans — is a separate program and is not affected by the SB 1 credit conversion. Veterans should continue to claim that deduction as before.

Related Reading

• Indiana SB 1 property tax reform — full breakdown
• All Indiana exemptions and deductions
• Indiana homestead exemption guide
• How to read your property tax bill
• When Indiana property taxes are due

Find Your County Auditor

File applications or verify your credits with your county auditor:

• Marion County — Indianapolis
• Lake County — Gary, Hammond
• Allen County — Fort Wayne
• Hamilton County — Carmel, Fishers
• Vanderburgh County — Evansville
• Monroe County — Bloomington

View all 92 counties