Indiana property tax: caps, rates and the homestead deduction

How is an Indiana property tax bill calculated?

The county assessor sets a gross assessed value, using mass appraisal. Each year, sales data is used to adjust values so they track the market (DLGF Citizen’s Guide). The county auditor then subtracts deductions to reach the net assessed value. DLGF sets each local unit’s rate by dividing its approved levy by its net assessed value. The calculation is: net assessed value ÷ 100 × total rate, then credits come off.

Rates are quoted per $100 of net assessed value. The total rate is the sum of all units in your tax district: county, township, city, school corporation, library and special districts.

What are the 1%, 2% and 3% caps?

DLGF says the caps are part of the Indiana Constitution (Article 10, Section 1). If your tax after credits is above the cap, the auditor gives a “circuit breaker” credit for the excess.

A homestead is your principal residence: the dwelling, a garage and up to one acre of surrounding land. A property must receive the homestead standard deduction to get the 1% cap. Taxes approved by voters in a referendum for a building project or extra school operating funds are exempt from the cap.

What is the homestead deduction after the 2025 law?

Senate Enrolled Act 1 (2025) changed the deduction, retroactive to January 1, 2025. DLGF’s May 2026 memo repeats the schedule as current law. Two deductions apply to a homestead:

1. Standard deduction (IC 6-1.1-12-37), by assessment date.
2. Supplemental deduction (IC 6-1.1-12-37.5): a percentage of the value left after the standard deduction, by the year taxes are payable. It may not exceed 75% of gross assessed value.

Before 2025, the standard deduction was the lesser of 60% of assessed value or $48,000. A new supplemental homestead credit also starts in 2026: the lesser of 10% of the homestead’s tax or $300, applied automatically. Referendum taxes are not counted.

Apply once with the county auditor, on or before January 15 for the next bill. You do not reapply each year, only if you sell or the title changes (DLGF). Buyers can also apply on the sales disclosure form. If you stop living in the home, tell the auditor within 60 days. From July 1, 2026, a person who fails to do so shall owe the extra tax plus a 10% civil penalty (HEA 1210, 2026).

Are there credits for seniors, disabled owners and veterans?

• Over 65 credit: up to $150, with income limits of $60,000 (single) and $70,000 (joint). Since 2026 the owner must live on the property.
• Over 65 circuit breaker: limits yearly increases to 2% for eligible seniors (Tax Bill 101). For 2027 bills, income limits are $61,680 (single) and $71,960 (married).
• Blind or disabled credit: up to $125.
• Veterans: a 100% deduction for totally disabled veterans, a $250 credit for veterans 62 or older with a disability of 10% or more, and a $350 credit for a service-connected disability of 10% or more.

County auditors take these applications. Marion and St. Joseph counties also offer a county option circuit breaker credit; ask the Marion County Auditor whether it applies to your bill.

Example: a $300,000 home in Indianapolis

This is an illustration, not a quote. It assumes a gross assessed value of $300,000, the 2025 pay 2026 rate for Indianapolis Center Township (tax district 101) of 2.7291 per $100, and no deductions other than the homestead ones. The seven Indianapolis township districts range from 2.6830 to 2.7291 in the same DLGF table.

The cap decides the result here. Your bill depends on your district, referendum taxes and county credits. Find your district on the Marion County rate charts.

The phase-out matters too. On the same $300,000, the net assessed value falls to $140,400 for taxes payable in 2027 and to $99,900 by 2031. Because DLGF divides each unit’s levy by net assessed value, a smaller base means a higher rate for the same levy.

For the other costs of buying, see closing costs in Indiana and Indiana’s transfer fees. Lenders often collect property tax monthly through an escrow account. The Indianapolis guide covers the city.

When is the tax due, and how do you appeal?

If you pay within 30 days after the due date and owe no back taxes on the parcel, the penalty is 5%. Otherwise it is 10%. To appeal, contact your county assessor; Indiana law does not require an appraisal. A notice mailed on or after May 1 carries a later deadline, so check the date on your Form 11.