The Indiana Senate passed a bill on Monday that provides some property tax relief to Hoosiers, but it falls short of some lawmakers’ and Gov. Mike Braun’s expectations.
Senate Bill 1, a top priority for Senate Republicans, was approved by a vote of 37 to 10. The bill, which senators referred to as a “work in progress,” limits how much local governments can raise their property tax levies each year, among other provisions.
According to a fiscal analysis, the bill’s current form would provide $1.4 billion in tax relief over the next three years.
Sen. Travis Holdman, R-Markle, described the SB 1 debate as “thoughtful” and “policy-based,” but lawmakers will continue to work with the House and the governor’s office to find a solution.
“I admit that, perhaps, it is imperfect,” Holdman said on Monday about SB 1.
The dissatisfaction with the current bill stems from the Senate’s Committee on Tax and Fiscal Policy amending the original version of SB 1 last week, removing some of the key components of Gov. Mike Braun’s property tax plan, such as proposals to increase the homestead standard deduction and cap property tax increases at 2-3% per year.
Lawmakers said the changes were intended to provide relief to property taxpayers while also balancing the concerns of local governments and school districts, which would have lost tens to hundreds of millions of dollars in the first year under Braun’s plan. Property taxes are a major revenue source for local governments.
In addition to limiting the amount of property tax revenue collected by local governments, the bill now restricts tax referendums to general elections.
SB 1 also authorises Indiana counties to establish a program that allows taxpayers to defer up to $500 per year on their property tax bills.
It would also provide a tax credit for first-time homebuyers and allow more Hoosiers to benefit from tax credits and deductions available to disabled veterans and seniors 65 and older.
But the committee’s changes to Braun’s plan drew sharp criticism on whether it goes far enough for taxpayers.
“Hoosiers deserve a property tax system that will give them relief from the catastrophic rise we’ve seen in the last few years,” Lt. Gov. Micah Beckwith, a Republican, said in a statement following Senate committee changes last week. “This is about what the people need, not what the government needs.”
Braun initially took a different tone last week, stating that the bill took “steps in the right direction” while still advocating for “broad and immediate reductions” for homeowners.
In a post on X on Monday, the governor was more vocal about his dissatisfaction with SB 1 and reiterated his call for local governments to bear the revenue losses.
“This bill has a long way to go before it gets my signature,” Republican Senator Braun wrote on X. “And restoring meaningful tax cuts would be a step in the right direction.”
Bill heads to the House
As SB 1 passed on Monday, no senator appeared to be completely satisfied with it. Senate Democrats criticised the SB 1 bill for failing to include renter relief and warned that when combined with a property-tax sharing bill in the Senate, it could harm public schools.
Senate Republicans, on the other hand, have expressed a desire to hold local governments accountable for how they manage local taxes.
“I am going to vote for the bill today because it is a tax cut,” said Sen. Mike Gaskill (R-Pendleton). “It’s probably not my first choice of how I’d like to deal with property taxes, but it is a cut.”
In the second half of the legislative session, the bill will be subject to committee hearings and proposed changes by House lawmakers.
House Speaker Todd Huston, R-Fishers, stated last week that the House has been focused on moving the state budget forward, but he had already met with mayors about the bill.
“We’ll take a look at it and see what the Senate did and continue our very productive conversations with the governor and land the plane in the right spot at the end of the day,” Huston said.
