Bait & Switch: Property Tax "Relief" Bill Will Increase Your Taxes

Your local income taxes may increase by $1.1 billion each year.

Dear neighbor,

This week at the Statehouse, we’ve been working on Senate Bill 1—the majority’s plan for property tax relief. People’s property taxes vary by area, assessed value and more since a lot of variables are involved. Across the board, inflation has increased homeowners’ assessed values, doubling or tripling bills for some homeowners. House Democrats’ mission has been to help you cover these large increases.

On Wednesday, the House majority changed its plan. Their proposal still includes tax breaks for businesses, potential increases in local income taxes, insignificant savings for homeowners and diverting money to charters.

Here are my concerns with the updated version of Senate Bill 1, which passed out of the House on Thursday.

Concerns with the Majority’s Property Tax Proposal

• 67% of homeowners will see some savings on their property tax bill, with a maximum credit of $300. These savings will be balanced out with potential local income tax increases, and some homeowners will get no money off their bill but see a local income tax increase.

• Local income taxes will potentially increase by $1.1 billion each year. Counties can impose a local income tax of 2.9%, and cities and towns can impose a rate of 1.2% within that 2.9%.

  • An individual making $50,000 could pay an additional $600 per year.

• Local governments will lose $1.4 billion. Police, fire, EMS, public libraries and other locally funded services will have their budgets gutted.

  • Tippecanoe County will lose $26.3 million by 2028.

• Public schools will lose $744.4 million by 2028. The dollars they do get will be shared with charters in some school districts. If Tippecanoe County votes for a referendum, those referendum dollars could go to charters in our area.

  • Schools won’t get a share of local income taxes, so they’ll be unable to recover the property tax revenue they’ll lose.

  • West Lafayette School Corporation will lose $3.1 million over the next three years.

• Businesses receive massive property tax cuts since they’ll be exempt from taxes on their equipment. Businesses also don’t pay local income taxes. Homeowners’ bills will cover the cost for big businesses.

  • The property tax burden could continue to shift to homeowners since businesses are paying less than their fair share. Homeowners are paying 58.4% of Indiana’s property tax revenue, while commercial and industrial companies are paying 39.3%.

• No savings for renters or first-time homebuyers.

  • Renters will pay more in local income taxes and get none of the savings since they’re not homeowners. This will affect many of the young people living in Tippecanoe County.

• The bill phases out significant deductions that are currently in law for disabled veterans.

This bill is a tax hike in disguise, plain and simple. Our schools and public safety will be between a rock and a hard place—raise local income taxes or have their budget slashed. We still have no clue how federal funding changes will affect our state and local governments.

I’m thankful some Hoosiers might get some savings, but this bill falls short of curtailing property tax bill increases. This is not the best that we can do. House Democrats proposed over 20 changes to this bill. Our goal was to provide as many homeowners with relief as possible while preserving local services. All of our proposals were voted down.

House Democrats’ Attempt To Provide Relief

• Providing an additional $300 to cover the expenses that come with home ownership, like insurance and utilities. Homeowners would get up to $600 a year.

• Increasing the renter’s deduction from $3,000 to $5,000 for individuals.

• Creating a first-time homebuyer’s tax deduction, so that young people can get a little relief in their first year in their new home. We also proposed a first-time homebuyers’ down payment grant program with awards of $25,000.

• Freezing property tax bills for veterans with moderate to severe service-related disabilities.

• Capping increases in the property tax bills of qualifying seniors at 1% each year.

Here’s a side-by-side comparison of the two plans:

America is staring down a recession and stagflation thanks to the tariffs that have been put in place. This means the cost of clothes, food, and goods for working Hoosier families will wildly increase. Why are we forcing local governments to tax Hoosiers at a higher level? House Democrats have fought all session to lower the cost of living for Hoosiers, and this tax scam will do the exact opposite. Hoosiers need real relief, and SB 1 doesn't cut it.

The Senate has filed a motion to agree with the changes, so the bill heads to Gov. Mike Braun to sign or veto. House Democrats will continue fighting for lower taxes, property tax relief for those who need it and for the needs of our public schools, police, fire and EMS.

As always, please reach out to my office at h26@iga.in.gov with any questions, comments or concerns.

The House Democratic Caucus Speaking Out About SB 1 this Thursday

In service,

State Rep. Chris Campbell