INDIANAPOLIS (WISH) — The Indiana Senate early Tuesday morning agreed with the House to send an overhaul of the state’s property taxes to the governor’s desk.

The vote was 27-22.

Gov. Mike Braun says he will sign the measure when it gets to his desk.

The measure could cost the state $1.5 billion over the next three years, and cost school corporations and cities tens of millions of dollars. A document from the General Assembly lists just how much each government entity would change as a result of the passage of Senate Bill 1.

The bill would let homeowners claim a property tax credit of up to 10% of their total bill, to a maximum of $300. Disabled veterans could claim additional credits of $250, and, for older Hoosiers on fixed incomes, that credit would be $150.

House Republicans say two-thirds of Hoosier homeowners would qualify for the credits.

Farmers are expected to save $116 million in taxes, with an adjustment to the agricultural land assessment formula for two years. The bill was designed to reduce the assessed value of farmland to cut property taxes, Republicans say.

The bill also would address property taxes for businesses. Republicans say, for 2026 property taxes, any business with less than $1 million in personal property would be exempt from the tax. For 2027 and beyond, any business with less than $2 million in personal property would be exempt from the tax. The bill also would removes the existing 30% depreciation floor for personal property placed in service after Jan. 1 this year.

The bill also would decrease the amount of local income taxes that local governments can collect, reducing the cap from 3.75% to 2.9%, a reduction of $1.9 billion across the state in local income taxes revenue capacity.

Republicans also said the bill would prohibit local governments “with high debt from pursuing any new debt-backed projects unless they go through the controlled project procedures that give local taxpayers a say in the matter.”

Also for local governments, the bill would prohibit them from bonding against more than 25% of their local income tax distribution for debt issued after May 10 this year.

The measure would also require local referendums on property taxes to be only during November general elections, thereby garnering higher voter turnouts.

Braun faces pressure from Lt. Gov. Micah Beckwith to veto it.

Beckwith on Saturday called on Braun to veto the tax reform bill. He argued in a social media post that no one understands the bill, and the governor should call a special session to demand the legislature pass a measure “that the average Hoosier can understand without hiring army of lawyers and accountants!”

Meanwhile, Democrats as well as some business experts and educators say the measure will force local governments to raise income taxes in two or three years.

Senate Bill 1 drew massive protests at the Statehouse on Monday.

Some school districts, including Indianapolis Public Schools, switched to e-learning days due to the high number of teachers taking the day off to go to an Indiana State Teachers Association rally at the Statehouse.

Statement

“This is historic property tax relief. Senate Bill 1 cuts property taxes for most Hoosier homeowners, farmers, and businesses, limits future tax hikes, and makes the tax system fairer, more transparent, and easier to understand.
 
“Real property tax relief was a core promise of my Freedom and Opportunity Agenda and with the collaborative leadership of our legislators, we are delivering real savings and protections for taxpayers. I look forward to signing the bill as soon as I receive it.”

Indiana Gov. Mike Braun, Republican