IndianaHB 1427First Regular Session 124th General Assembly (2025)HouseWALLET

Department of local government finance.

Summary

Increases the threshold that applies to public works projects for which the department of natural resources may use its employees to perform the labor and supervision for the project. Removes the sunset of provisions that authorize the sale of bonds at a negotiated sale. Amends provisions pertaining to the investment of public funds in certain depositories. Requires the fiscal officer (rather than the executive) of a political subdivision to upload certain contracts to the Indiana transparency website (website). Permits the political subdivision to identify an individual other than the fiscal officer to upload contracts to the website. Provides that the change to the agricultural base rate in Senate Bill 1 does not apply for the January 1, 2025, assessment date to land in inventory. Repeals the increase in the personal property tax exemption for the 2025 assessment in Senate Bill 1, but retains the increase of the personal property tax exemption to $2,000,000 for the 2026 assessment date and thereafter. Removes an exception to provisions added in Senate Bill 1 exempting depreciable personal property placed in service after January 1, 2025, from the 30% minimum valuation floor if property tax revenue that is attributable to the depreciable personal property is pledged as payment for bonds, leases, or other obligations. Repeals the local property tax credits for veterans enacted in Senate Bill 1 and reinstates the property tax deductions in current law for veterans that were expired under Senate Bill 1. Provides that the personal property online submission portal (portal) may be used to file a personal property return until 2026. Repeals (effective January 1, 2026) the provision requiring the establishment of the portal and makes corresponding changes. Adds requirements for the filing of a petition for review of land values. Amends a provision pertaining to the assessment of solar land. Provides for the assessment of community land trust property and a property tax credit for community land trust property. For purposes of public utility companies, specifies that the period of time that a taxpayer may file an objection with the department of local government finance (DLGF) is not later than 15 days after the notice is postmarked. Provides, for particular calendar years, that all or part of a building is deemed to serve a charitable purpose and is exempt from property taxation if it is owned by certain nonprofit entities. Establishes a maximum entry fee per unit that may be charged by a continuing care retirement community to qualify for the property tax exemption. Adds, for particular calendar years, continuing care retirement communities, small house health facilities, and qualified residential treatment providers to the list of exempt entities for purposes of another property tax exemption. Provides that the DLGF may (as opposed to shall) adopt certain rules with respect to property of an exempt organization used in a nonexempt trade or business. Amends the requirements that must be satisfied to receive a property tax exemption for property used by a for-profit provider of early childhood education. Establishes a partial property tax exemption for an employer that provides child care on the employer's property for the employer's employees and certain other employees. Amends certain notice and procedural provisions applicable to proceedings before the Indiana board of tax review. Clarifies the deadline for submitting amended certified net assessed value amounts. Specifies the calculation of the maximum permissible property tax levy for certain units that fail to comply with certain budget and tax levy review and adoption procedures. Adds provisions that: (1) require the DLGF to increase the maximum permissible property tax levy for certain qualifying municipalities for property taxes first due and payable in 2025 to include all debt service levies of the qualifying municipality for property taxes first due and payable in 2025; (2) specify that the adjustment is a one time and permanent increase; (3) modify the: (A) local income tax trust account threshold percentage of a county that contains a qualifying municipality (for purposes of determining whether the county shall receive a supplemental distribution); and (B) certified share allocation determination for a qualifying municipality; and (4) prohibit the use funds from the state general fund to make up certain local income tax related shortfalls. Provides temporary one time increases for the maximum permissible ad valorem property tax levies for Shelby County and the Shelby County solid waste management district. Provides that the county treasurer is not required to mail or transmit a statement for property that is exempt from taxation and does not have a reported assessed value. Requires the DLGF, in a manner determined by the DLGF, to include on the coupon page of each property tax statement educational information regarding the eligibility and procedures for various property tax benefits available to certain taxpayers. Provides that a tract or item of real property owned by a political subdivision may not be sold at a tax sale. Removes a provision requiring the county executive to provide an annual report to the legislative council concerning certain tax sales. Provides that property tax assessment board of appeals members' terms must be staggered for a two year period and begin on January 1. Provides that a property tax payment made by a check processing company received after the due date for the property taxes is considered to be made on or before the due date if the taxpayer provides reasonable evidence that the payments were made on or before the due date. Reestablishes the deduction for aircraft entitling a taxpayer to a deduction from the assessed value of abatement property in each year in which the abatement property is subject to taxation for ad valorem property taxes. Provides a sales tax exemption for sales by agricultural commodity trade associations made at the state fair. Provides certain sourcing rules for the adjusted gross income of an investment partnership. Defines "investment partnership" and other related terms. Specifies that an electing entity or pass through entity shall be permitted to claim a credit for taxes withheld or paid on the entity's behalf. Allows an electing entity to make elections to claim certain state tax liability credits and sets forth requirements that apply to those elections. Expands the physician practice ownership tax credit against state tax liability to practicing physicians (instead of only primary care physicians) who have an ownership interest in a physician practice and meet other eligibility criteria. Limits the total amount of physician practice ownership tax credits that may be awarded in a state fiscal year. Specifies that a volunteer fire department that applies to the county adopting body for a distribution of local income tax revenue that is allocated to public safety purposes must do so through the fiscal officer of the unit served by the department. Allows the Fountain County council to adopt a resolution to make a one time transfer from the county jail revenue fund to the county general fund to be used for specified purposes. Allows revenue generated from a special purpose local income tax rate in Starke County to be used to operate and maintain the county jail and related facilities. Increases the amount of the local collection assistance fee. Provides a presumption of reasonable cause exception to the penalty for failure to file a return in the case of certain small partnerships. Amends the provisions to conform to the reasonable cause exception applicable to the failure to file penalty available under federal tax procedures (IRS Rev. Proc. 84-35, 1984-1 C.B. 509). Authorizes numerous local units to impose food and beverage taxes. Allows the town of Shipshewana to increase its food and beverage tax. Removes language excluding transactions that occur at a historic hotel from the Orange County food and beverage tax and amends provisions that apply to the uses of the tax revenue. Repeals provisions authorizing the imposition of food and beverage taxes in Wayne County. Reallocates the amounts of revenue received from the Vanderburgh County innkeeper's tax that is deposited in certain funds. Authorizes certain counties to impose an innkeeper's tax under separate enabling statutes. Allows Brown County to increase its innkeeper's tax rate. Prohibits the deposit or transfer of money in an innkeeper's or food and beverage tax fund into any other fund, or deposit or transfer of money from any other fund into an innkeeper's or food and beverage tax fund. Requires a local unit that imposes a food and beverage tax (as part of its required annual reporting) to provide to the state board of accounts a consolidated financial statement for the preceding year. Requires the state board of accounts to: (1) determine whether or not local units imposing a food and beverage tax, and other entities that receive a distribution of food and beverage tax revenue, are in compliance with current reporting requirements and applicable statutory requirements; and (2) submit a report of its findings to the legislative council. Provides for a reduction of the percentage of gross revenue to be paid to a unit of local government by a holder of a cable franchise. Requires the office of the secretary of family and social services to apply to the United States Department of Health and Human Services for an amendment to each home and community based services Medicaid waiver for certain eligibility criteria related to asset limit thresholds. Specifies that certain school corporation property tax referenda are eligible to be on the ballot in an election held in the fall of 2025. Applies certain access to financial data requirements to charter schools. Restores language in a provision amended by Senate Bill 1 regarding optional revenue sharing with charter schools. Specifies that a minimum population for application of certain provisions concerning: (1) the assessment of industrial facilities; (2) the general government of counties; and (3) the division of powers of certain counties; is 450,000 (instead of 400,000). Allows a county fiscal body to make loans of money for not more than 10 years (rather than five years under current law) and issue notes for the purpose of refunding those loans. Allows a person who is: (1) engaged in the business of renting or furnishing, for periods of less than 30 days, certain lodging facilities located within an economic development district; and (2) liable for a special benefits assessment for the property; to charge a fee of not more than $1 per night. Provides that the northwest Indiana regional development authority must be reimbursed for amounts deposited in the blighted property demolition fund not later than July 1, 2027 (instead of July 1, 2026). Requires local units to make semiannual fire service reports to the state fire marshal which, in turn, is required to submit the data reported to the legislative council. Provides for funding for cultural institutions. Urges the legislative council to assign to the appropriate interim study committee the task of studying certain issues relating to property exempt for charitable purposes. Amends a 2025 law requiring certain disclosures concerning appointed officers to provide that if an appointed board is a subgroup of an elected body that is appointed entirely: (1) from the body's elected members; and (2) by a member or members of the elected body; the appointed board may publish a board member's name and elected title in the board's meeting notice or agenda with a link or web address to the website where information of each board member's appointment and term is published. Removes provisions enacted by HEA 1001-2025 that: (1) treated the local government investment pool as a financial institution; and (2) considered the seven day yield published weekly by the treasurer of state to be a quote for purposes of the law governing the deposit and investment of public funds. Provides that money in the Pokagon Band Tribal-state compact fund is continuously appropriated for the purposes of the fund. Provides that funding to a local board of health from the local public health fund may only be used for Indiana residents who are lawfully present in the United States. Resolves conflicts.

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Bill Overview

Analyzed Economic Effects

77 provisions identified: 41 benefits, 20 costs, 16 mixed.

Higher Medicaid asset limit for couples

Beginning July 1, 2025, Indiana must seek a higher Medicaid asset limit for spouses both applying for home and community-based services waivers. The couple's limit equals twice the single-person asset limit. The agency must request federal approval before September 1, 2025. The higher limit takes effect only after federal approval; the law does not establish that approval has occurred.

Property tax savings for land-trust homeowners

Qualified community land trust homeowners get a credit equal to 30% of their net property tax due. Qualified owners must meet the land-trust rules, including income no higher than 80% of area median income. The credit applies to assessment dates after December 31, 2025.

Childcare providers gain property tax relief

For assessments after December 31, 2025, for-profit early childhood providers can qualify for property-tax relief while serving children under six, including infants. The property must be owned by the provider or an affiliate and used mainly for these services. Providers need Level 3 or 4 Paths to QUALITY standards, or comparable national accreditation, and age-appropriate lessons including reading. The law removes the educational-primary-purpose test and enrollment-based proration, but excludes property receiving a homestead standard deduction. Providers do not have to pass savings on to families.

Cross-state tax credits for pass-through businesses

Beginning January 1, 2025, electing pass-through businesses can claim a credit for qualifying income taxes paid to another state. Resident-owner credits require shares calculated before state allocation and a substantially similar credit from the other state. Nonresident-owner credits cover qualifying Indiana income from the business. Calculations use the lower of Indiana's applicable rate or the other state's maximum individual income tax rate. The owner must qualify for the other-state tax credit, and the business must elect on its original return.

More business property escapes property tax

For 2026 and later assessments, qualifying business personal property is exempt when its countywide acquisition cost is under $2 million. The backing provision sets an under-$80,000 limit for assessment dates before 2026. Its amendments apply retroactively from January 1, 2025. The limit uses purchase cost, not current market value, and savings depend on local tax rates.

Public health access for lawful residents

Local public health funds can serve Indiana residents who are lawfully present in the United States. This replaces the former limit to U.S. citizens. The law does not specify a particular service or payment amount.

Lower taxable values for land-trust homes

For assessment dates after December 31, 2025, qualifying community land trust land keeps its assessed value from when the trust acquired it. After the initial assessment, a home's assessed value cannot exceed the ground lease's maximum sale or transfer price. The home must be the qualified owner's primary residence and have ground-lease affordability restrictions.

Lower lodging tax cap in Parke

Parke County's lodging tax ceiling falls from 8% to 5% for stays under 30 days. The county loses its special authority to charge the higher rate. Guests pay less where the former rate exceeded 5%; the provision does not state the county's actual rate.

Trust-owned homes keep property tax deductions

Beginning January 1, 2025, qualifying trust-owned homes keep specified property-tax deductions beyond the former limits. The law removes the January 1, 2025 assessment-date cutoff and January 1, 2027 expiration. The occupant must otherwise qualify and have a beneficial interest in the trust. A rent-free occupancy right under a qualified personal residence trust created by the occupant also qualifies.

Veterans keep two property tax deductions

Beginning January 1, 2025, the law continues two veteran deductions without the former assessment-date limit or January 1, 2027 expiration. The $24,960 deduction covers honorably discharged wartime veterans with a service-connected disability of at least 10%. The $14,000 deduction requires 90 days of service, honorable discharge, and total disability or age 62 with at least 10% disability. That deduction has a $240,000 assessed-value limit, with special rules for later improvements. Qualifying surviving spouses also remain eligible; both deductions reduce assessed value, not taxes dollar-for-dollar, and require ownership, disability records, and filing.

Businesses can claim owners' tax credits

Beginning January 1, 2025, electing pass-through businesses can claim eligible operating, assigned, or passed-through tax credits for direct owners. The election must appear on the original return and cover all eligible credits and all direct owners. Each owner's amount cannot exceed the available credit or tax tied to that owner; credit-year timing rules also apply. Separately handled owner-tax, other-state-tax, and withholding credits are excluded, and owners retain credits otherwise available to them.

Lower taxable values for business equipment

Depreciable personal property placed in service after January 1, 2025, gains relief from the 30% minimum valuation rule. Pledging its property-tax revenue for bonds, leases, or other obligations no longer triggers that minimum by itself. The minimum still applies in existing tax-increment areas whose base assessed value was set before January 1, 2025. Actual tax savings depend on the property's value and local tax rates.

Counties gain higher short-stay tax limits

Beginning July 1, 2025, one county lodging-tax chapter raises the allowed rate from 5% to a hard ceiling of 8%. It covers stays under 30 days but excludes campsites in state or federal parks or forests. A separate county authority allows up to 8% on short-stay lodging, in addition to state sales tax. That authority excludes rentals of 30 days or more and residence-hall stays by students earning college credit from an institution in the county. Counties must choose to levy these taxes; both authorities end January 1, 2047.

Higher municipal food tax ceiling

Beginning July 1, 2025, the law lets a municipality covered by this specific tax authority raise its food and beverage tax. Its fiscal body must adopt an ordinance, and the rate cannot exceed 2% of gross retail income. The increase starts on the law's delayed schedule after adoption. The ordinance expires January 1, 2047.

Lodging tax options expand in two counties

Beginning July 1, 2025, LaGrange and Boone counties have authority to tax covered lodging stays under 30 days at up to 8%. Each county must have adopted an innkeeper's tax under the prior law before July 1, 2025. LaGrange can exceed 5% but not 8%, in addition to state sales tax; Boone's existing rate and collection rules continue until amended. Rentals of 30 days or more and qualifying college-credit student residence-hall stays are excluded. Both chapters end January 1, 2047; the law does not automatically set either county's rate at 8%.

Veterans lose two property tax credits

The law repeals separate $150 and $250 yearly property-tax credits for disabled veterans and qualifying surviving spouses. The former $150 credit required 90 days of service and total disability, or age 62 with at least 10% disability. The former $250 credit required wartime service and a service-connected disability of at least 10%. Both required honorable discharge and covered qualifying homes owned or bought under a recorded contract.

Physician tax credits face annual limits

Beginning January 1, 2025, physician-owned practices must apply after June 30 of the credit year and by June 30 the next year. Applications need a certified physician-owner list and supporting information; taxpayers must attach state approval to their returns. Approval follows filing order, subject to a $10 million statewide cap each fiscal year beginning July 1, 2025. For taxable years beginning in 2025, only the credit portion for July 1 through December 31 counts toward the cap.

Clearer property bills and payment protections

Property-tax payments through check processing companies count as timely when taxpayers provide reasonable proof of payment by the due date. This applies when a payment lacks a postmark or another accepted verification method. For real property statements provided after December 31, 2025, coupon pages must explain eligibility and application steps for specified tax benefits. The information covers three disabled-veteran deductions and the credit for people age 65 or older; it does not change benefit amounts.

Aircraft owners keep unused-deduction tax credits

People entitled to either named veteran property-tax deduction can use its unused portion toward aircraft excise tax. The credit equals 7% of the deduction left after property-tax and vehicle-excise use, capped at aircraft excise tax due. The law removes the former limit tied to the deductions' expiration. Claimants must first file the county auditor's certified statement with the state revenue department.

Disabled homeowners can combine tax credits

Eligible blind residents and residents with disabilities can receive a $125 yearly property-tax credit alongside another specified property-tax credit. The law removes the former ban on receiving both. The home must be their main residence and owned or bought under a contract recorded with the county recorder. Claimants must file the required statement and eligibility records with the county auditor.

More options for property assessment appeals

Tax appeal filers can wait or seek court review when the Indiana Board of Tax Review misses specified deadlines. These include no hearing within one year of a proper petition or a missed decision deadline. Before a hearing, filers must request one in writing and wait 60 days, with extensions for specified party actions. The board must admit an appraiser's report unless a rule other than hearsay bars it. The board still decides the report's weight, and neither change guarantees a lower tax bill.

Property owners can challenge land values

Beginning July 1, 2025, owners seeking review of county land values must petition within 45 days of the assessor's decision. The petition must state objections and include signatures from the smaller of 100 county property owners or 5% of owners. The county auditor sends the petition and supporting data to the Department of Local Government Finance. The assessor and first 10 petitioners get at least five days' hearing notice; review does not guarantee lower values.

Tax-free agricultural sales at State Fair

Beginning July 1, 2025, qualifying agricultural commodity sales at the Indiana State Fair are exempt from state sales tax. The seller must be a federally tax-exempt agricultural or horticultural organization or business league. Sales must raise money for its nonprofit purpose. At the sale, the association must be registered as a retail merchant or establish that registration is unnecessary.

Wayne County meal tax chapter ends

Beginning July 1, 2025, the law repeals the chapter governing Wayne County's food and beverage tax. This ends that chapter's county tax authority. It does not establish the net change in customer charges, including any taxes under separate local authority.

Small partnerships get filing penalty relief

Beginning January 1, 2025, qualifying partnerships with 10 or fewer partners get presumed reasonable cause for late or incomplete IT-65 returns. Partners must be individuals other than nonresident aliens, or individuals' estates, with matching ownership shares across every partnership item. All partners must report their shares on timely returns, and the partnership cannot elect the specified federal consolidated audit proceedings. A married couple filing jointly counts as one partner; IT-65 relief also removes the related Schedule K-1 penalty.

Boone tourism funds gain spending safeguards

Beginning July 1, 2025, Boone County must create a tourism commission because it adopted an innkeeper's tax before that date. The tourism fund pays commission expenses, and the county fiscal body reviews and approves its annual budget. A commission member who knowingly approves an unlawful transfer commits a Level 6 felony. A recipient who knowingly uses transferred money for an unlawful purpose also commits a Level 6 felony.

More local contracts become publicly visible

Beginning July 1, 2025, charter schools count as public schools under the referenced public-records law. Local officials must post covered fire and emergency medical service contracts on Indiana's transparency website within 60 days, regardless of cost. The local executive body can name another person by ordinance or resolution to upload contracts and complete the required attestation. Committees made entirely of elected-body members can use a simpler notice format when appointed by members of that body. Their notice or agenda must list each appointed officer's name and elected title and link to the required online information.

Starke County can fund jail upkeep

Starke County can use revenue from the authorized tax to operate and maintain its jail and related facilities. These uses are added to the tax's existing allowed jail purposes. The provision sets no new tax amount.

Schools keep fall referendum ballot access

School corporations that adopted a referendum resolution by June 30, 2025, remain eligible for a fall 2025 ballot. This protection applies despite conflicting law or 2025 amendments. Voters still decide the question; the law itself does not approve a tax or spending proposal.

Gary authority gets more reimbursement time

Beginning July 1, 2025, Gary's development authority has until July 1, 2027, to receive reimbursement for its covered deposits. The former deadline was July 1, 2026. Reimbursement must come from the fund after June 30, 2025, and does not require budget committee review.

Natural Resources can handle larger projects

Beginning July 1, 2026, Indiana’s Department of Natural Resources can complete larger public works projects without awarding a contract. Its engineering division must estimate costs at $600,000 or less, up from the former limit of less than $300,000. The department must buy materials, use its employees, and use equipment it owns or leases. Projects must involve structures, improvements, or facilities under its control.

Video providers pay lower franchise fees

Beginning with calendar year 2026, older video franchises pay a lower fee percentage on gross revenue. For franchises issued before January 1, 2026, the December 31, 2025 rate drops by one percentage point. The rate cannot fall below 1%. New franchises initially issued by the Indiana Utility Regulatory Commission after December 31, 2025, have a 4% fee cap. Providers do not have to pass savings on to customers.

Local governments keep negotiated bond sales

Listed local governments can continue selling bonds through negotiated sales without the former July 1, 2025 cutoff. Public sales remain an option. Covered refunding bonds must replace or redeem outstanding bonds for which no funds are available.

Local issuers keep flexible bond sales

The law removes 2025 expiration limits on negotiated bond sales for covered special districts, housing authorities, parks, and capital-improvement issuers. Public sales remain available, and many changes begin July 1, 2025. Housing-authority bonds, notes, and warrants need fiscal-body approval after a public hearing and cannot sell below face value. Covered park, county capital-improvement, and specified authority public bond sales also cannot fall below face value. The specified authority must publish sale notices; other applicable issuance and sale requirements remain.

Some counties gain easier fund access

Beginning January 1, 2026, eligible counties face lower trust-account thresholds for supplemental distributions. Thresholds are 12.5% in 2026, 10% in 2027, 7.5% in 2028, 5% in 2029, 2.5% in 2030, and 1% from 2031 onward. Distributions equal the adjusted account balance above that percentage of certified distributions. The balance adjustment accounts for supplemental or special distributions not already counted. Counties need at least four cities or towns, each exceeding 40,000 residents under the latest federal decennial census. At least one must also meet the qualifying-municipality definition in IC 6-1.1-18.5-31(d).

Water projects keep bond sale options

Beginning July 1, 2025, covered water-resource bond issuers retain public or negotiated sale options beyond the former cutoff. Public sales must bring at least face value. The law removes the former sale window ending June 30, 2025.

Missed budget deadlines slow levy growth

Covered local taxing units face lower property-tax levy growth the year after missing required budget and levy filing deadlines. Covered public libraries face this rule when their proposed budget growth also exceeds the allowed levy growth rate. Missed city, town, or county budget review and adoption deadlines trigger a similar rule. The formula allows 80% of the otherwise permitted growth above the prior levy limit. If required information is filed for the next budget year, the later calculation treats the reduction as never having applied. This limits levy growth, but does not guarantee a lower household tax bill.

County lodging tax authority expires

The county lodging-tax chapter identified in this provision expires January 1, 2047. Its tax authority and related rules end on that date. The provision does not specify a replacement tax or the resulting change in lodging prices.

County lodging taxes support tourism funds

Beginning July 1, 2025, LaGrange County must place receipts from its covered lodging tax in a tourism promotion fund. Its executive must create a tourism commission; transfers require written requests and spending requires county appropriations. LaGrange's chapter ends January 1, 2047. Separate county fund rules direct lodging-tax receipts to tourism and tourism-related public safety, while preserving pledges to bonds issued before July 1, 2025. Related commission rules require an odd number of tourism-involved members and county appropriations before expenses are paid.

Full aircraft deduction for qualifying businesses

Eligible businesses can deduct 100% of qualifying aircraft assessed value each year the aircraft faces property tax. Businesses must have Indiana corporate headquarters or be subsidiaries at least 80% owned by such an entity. Aircraft must carry only cargo or have no more than 90 passenger seats, with a federally certified Part 121 or scheduled Part 135 operator. Claims use prescribed personal property returns; eligible amended returns can cover tax years 2019 through 2024. County auditors can carry unused deductions forward and reduce the balance as amounts are used.

More receipts go toward visitor promotion

The county treasurer deposits local tax receipts generated by a 2.5% rate into the convention and visitor promotion fund. Beginning January 1, 2026, the required deposit rises to receipts generated by a 3% rate. This changes how tax receipts are divided, not the tax rate charged to visitors.

Parke County keeps lodging tax arrangements

Beginning July 1, 2025, Parke County keeps its existing tourism fund, commission, lodging-tax rate, and collection procedures until amended. This continuity applies because the county adopted its lodging tax before that date. Current commission members finish their terms. Later vacancies and appointments follow the chapter's rules.

Switzerland lodging taxes fund tourism projects

Beginning July 1, 2025, Switzerland County's new fund rules apply if it adopted an innkeeper's tax before that date. Receipts tied to a rate up to 5% go to tourism promotion; receipts from any rate above 5% go to a tourism capital fund. Capital money can support a riverfront park, festival grounds, economic development, tourism, and related bonds or leases. Transfers require written commission requests, and revenue pledged to bonds issued before July 1, 2025, remains pledged until paid. The county must create a tourism commission with an odd number of tourism-involved members and county-approved spending. Previously appointed members finish their terms.

Tax relief for employer child care

Beginning January 1, 2026, qualifying employer-owned child-care property is exempt from property tax. The facility must be on the employer's property, licensed by Indiana's Division of Family Resources, and meet state capacity standards. Employers can operate it directly or through a qualifying contract. Serving another business's employees requires an agreement between the employers; businesses that operate child-care facilities cannot claim this exemption. Employers do not have to offer care or pass savings to workers.

Temporary tax relief for nonprofit care

Qualifying nonprofit care facilities receive property-tax exemptions for taxes first due in 2025 or 2026. One exemption covers all or part of buildings used by specified retirement, health, residential care, and child-services treatment providers. Another covers otherwise taxable tangible property owned by Indiana nonprofit corporations operating specified retirement, small-house health, or residential treatment facilities. A qualifying continuing care retirement community must charge an entry fee no higher than $500,000 per unit. Both exemptions end January 1, 2027; savings are not required to reach residents.

Utilities get revised assessment objection deadlines

Public utilities have 15 days after the state sends a tentative assessment notice to object and request a preliminary conference. The former rule allowed 10 days after the utility received the notice. The change affects utility assessment disputes, not household filing duties.

Optional nightly fee for lodging guests

Beginning July 1, 2025, qualifying lodging businesses can charge up to $1 per person per night for stays under 30 days. The property must be in an economic enhancement district. The business must owe a special benefits assessment on the property and use the fee to pay it. Charging the fee is optional.

Additional local meal taxes face caps

The covered city and town tax chapters allow food and drink taxes in 0.25% steps, capped at 1%. They cover qualifying food or drinks consumed at a merchant-provided location or on merchant-provided equipment. Purchases exempt from state sales tax are excluded to the extent of that exemption. The city must pass a supporting resolution, hold a separate tax hearing, and adopt an ordinance; collections start after the following month ends. Both chapters end January 1, 2047; the supplied provisions do not identify the city or town.

False deduction claims face lasting penalties

Intentionally making a false statement to obtain an unearned deduction under IC 6-1.1-12-13 or IC 6-1.1-12-14 is a Class B misdemeanor. The law removes the offense's former time limit tied to those deductions' expiration. It does not change eligibility or benefit amounts for people who qualify.

Four towns gain meal tax authority

Beginning July 1, 2025, Centerville, Cambridge City, Greens Fork, and Milton can adopt food and drink taxes. Each town must pass a supporting resolution, hold a separate tax hearing, and adopt an ordinance. Taxes start after the end of the month following ordinance adoption. Cambridge City and Milton use 0.25% steps with a 1% cap; the supplied provisions give no Centerville or Greens Fork rate. Cambridge City excludes state-sales-tax-exempt purchases to the extent of that exemption; Milton calculates its tax without state sales tax.

Local meal taxes cover specified purchases

Beginning July 1, 2025, meal-tax coverage rules apply in Richmond, Hagerstown, Fountain City, and Dublin. They cover paid food or drinks served for consumption at merchant-provided locations or using merchant-provided equipment. Richmond's rule and a separate town rule also specify heated foods, mixed ingredients, utensils, and some off-site service. State sales-tax exemptions carry through to the extent stated in each rule. These provisions define taxable purchases but do not state local tax rates.

Orange County taxes more resort meals

Beginning July 1, 2025, Orange County's food and beverage tax covers purchases formerly excluded at the historic hotel and riverboat. Coverage also reaches related hotel-enterprise properties, including golf courses. Purchases exempt from state sales tax remain exempt. Customers pay the county tax on newly covered transactions, and merchants must collect it.

School cultural funding can raise taxes

Beginning July 1, 2025, school corporations in more counties qualify to fund cultural institutions through an optional property tax. Eligible counties contain a consolidated city or had more than 175,000 but fewer than 700,000 residents in the 2020 census. The annual cap is $0.005 per $100 of assessed value: $5 per $100,000. Multi-county schools can tax only their territory in the qualifying county; proceeds stay in a separate cultural fund. The levy sits outside the operating-levy limit, and institutions must file the required affidavit at least 30 days before requesting funds.

Switzerland County can tax stays more

Beginning July 1, 2025, Switzerland County can levy up to 8% on short-stay lodging, on top of state sales tax. The county must have adopted an innkeeper's tax before that date and must choose the rate. Its existing rate and collection procedures remain until amended. Rentals of 30 days or more are excluded. Residence-hall stays are also excluded for students earning college credit from an institution in the county.

Three cities gain meal tax authority

Beginning July 1, 2025, Shelbyville, New Haven, and Madison can adopt food and drink taxes after separate public hearings. Each city must pass an ordinance; authority alone does not start the tax. New Haven's rate must use 0.25% steps and cannot exceed 1%; the supplied provisions give no Shelbyville or Madison rate. Start dates depend on the later of the ordinance date and the end of the month following adoption. Shelbyville and New Haven exclude purchases to the extent they are exempt from state sales tax.

Towns can add food purchase taxes

A covered town can tax food and drink purchases in 0.25-percentage-point steps, up to 1%. It must hold a separate hearing devoted to the tax, adopt an ordinance, and send it to the state revenue department. Purchases become taxable after the later of the ordinance's date or the last day of the following month. Revenue is limited to transit, tourism, infrastructure, and related bonds, leases, or obligations. The tax and chapter end July 1, 2047.

Veteran vehicle credits retain property limits

Certain disabled-veteran vehicle excise credits remain unavailable to veterans who own property eligible for either named veteran property-tax deduction. The law removes wording that tied this restriction to those deductions' expiration. Military service, discharge, disability, and documentation requirements still apply.

Required corrections to business property returns

A one-time correction rule applies retroactively to January 1, 2025. It covers 2025 business property returns filed on or after April 15, 2025, claiming exemptions above $80,000 under the affected SEA 1 rules. Those taxpayers had to file amended returns by May 31, 2025. They could not claim more than the exemption allowed by HEA 1427.

County population rules narrow special coverage

Beginning July 1, 2025, special county executive districting and election rules cover populations above 450,000 and below 700,000. The former lower threshold was above 400,000. A separate county eligibility definition uses the same narrowed range, excluding counties above 400,000 through 450,000. Counties above 185,000 and below 300,000 retain separate opt-in rules for county executive arrangements.

Cities face meal tax spending limits

Beginning July 1, 2025, Shelbyville's permitted uses cover historic properties, parks, and economic development; New Haven's cover parks and tourism. Richmond's uses cover parks, trails, and Whitewater Gorge; Madison's cover parks, economic development, and tourism. A separate city rule limits spending to economic development and parks, including land purchases, and expires January 1, 2047. A town rule limits spending to Wayne County Strategic Plan development projects, excluding infrastructure. Receipts can secure related debt; Shelbyville, New Haven, and Madison can count distributions as added revenue in that year's budget.

Local tourism tax money faces limits

Beginning July 1, 2025, local governments cannot transfer money into or out of their innkeeper's or food and beverage tax funds. Boone County can no longer pledge visitor-promotion money toward obligations financing a sports and recreation facility. The related county fiscal-body approval provision is also removed. Counties receiving food and beverage tax revenue under the covered chapter can fund parks and parking improvements supporting tourism, public safety, and economic development. Storm water, sidewalk, and street improvements are no longer listed as eligible uses.

Nonresident investors get income sourcing rules

For tax years beginning after December 31, 2025, qualifying partnership investment income generally goes to a nonresident partner's home state. Partnerships must meet asset and income tests and cannot be securities dealers; the 90% income test allows three qualifying years out of five. Income instead faces business-income allocation when investments serve, relate directly to, or use working capital from an Indiana business. Receipts allocated outside Indiana leave the sales-factor denominator; apportioned receipts remain included and are assigned to the entity's home state.

Business owners get tax payment choices

Businesses electing pass-through tax can calculate resident owners' income shares before or after Indiana allocation, using one method for all. Nonresident shares must use income after allocation. Electing and non-electing entities can label qualifying payments as pass-through tax or withholding and request refunds of excess payments. Non-electing entities must report owner credits, capped at the greater of tax due on the owner's share or their portion paid. Electing entities cannot label less than their own tax bill as pass-through tax.

Business property filing portal ends

For personal property returns filed on or after January 1, 2026, taxpayers must file with the township or county assessor. The law ends the state online submission portal and its related fee provisions. Filers lose that online channel, but the portal's fees also end.

Charter schools face new transparency duties

Beginning July 1, 2025, charter schools must follow state rules on access to local school financial data. They also become subject to rules for buying, providing, and renting course materials. These changes add school duties but do not establish a direct household payment.

Counties get longer tax-backed loan terms

County fiscal bodies can borrow for up to 10 years, rather than five, to carry out county powers. They can pledge county tax revenue over those 10 years to repay the loans. Outstanding loans under this authority cannot exceed 5% of the county’s current-year tax levy. That levy calculation excludes taxes for debt service and lease rentals.

Local governments get revised banking boundaries

Most covered local boards must place public funds in a designated depository within the county containing their principal office. Cities, towns, and specified hospitals are excluded from that rule. Cross-county school corporations can limit their depository area to territory in the county containing their main office. When two or fewer local institutions will accept public money, boards can use the rules for choosing outside-area depositories. These rules govern public money, not household bank accounts.

Public investment deposits ease, reporting shrinks

Beginning July 1, 2025, designated public officers can deposit funds into the local government investment pool without the former investment procedures. The pool no longer must publish its seven-day yield weekly. The law also removes its treatment as an outside financial institution and its yield as a required quote. These changes concern public investments, not personal investment accounts.

Pending appeals change county value reports

County auditors must exclude property value from annual certified totals when an assessment appeal remains unresolved at submission. An auditor can ask the state finance department to include that value for the calendar year. The rule changes local reporting, not the owner's assessment or tax bill directly.

Qualifying towns gain permanent levy room

Qualifying municipalities can seek a permanent increase in their property-tax levy limit for taxes due in 2025. Their county must contain at least four municipalities with more than 40,000 people each. The municipality's levy-to-assessed-value comparison must fall in the statewide lowest 20th percentile. Its legislative body must approve the petition, and its executive must submit it by July 1, 2025. The increase includes all municipal debt-service levies and carries into 2026 and later years, despite the section expiring June 30, 2030.

Shelby gains one-time property-tax levy room

Shelby County and its solid waste district can seek one-time property-tax levy-limit increases for taxes due in 2026. Petitions must reach the state finance department by September 1, 2025. The county petition needs county fiscal-body approval; the district petition needs county executive approval. Each increase equals the lesser of its 2025 maximum or adopted levy, minus its state-certified 2025 levy. Both sections expire June 30, 2028; added revenue capacity can increase taxpayer costs.

School districts can share charter funding

Beginning July 1, 2025, an Indiana school corporation can give a charter school a proportionate share of its operations fund. A majority of the school corporation’s governing body must approve the transfer. Transfers are optional, and the law sets no dollar amount. A transfer gives the charter school more operating money while leaving less in the school corporation’s fund for other uses.

Boone tourism funds gain facility options

Beginning July 1, 2025, Boone County deposits receipts from lodging-tax rates up to 8% into its tourism promotion fund. Spending is limited to conventions, visitors, and tourism, while qualifying pledges made before that date remain binding until debts are paid. Transfers to the commission's treasurer require its written request. The commission can also pledge fund money for local-government sports and recreation facilities that support tourism, conventions, or special events. Such pledges require county fiscal-body approval after a properly noticed public hearing where interested people can speak.

Fountain County can redirect jail reserves

Before January 1, 2026, Fountain County could approve one transfer of excess jail-fund reserves to its general fund. The money is limited to county emergency management services. Before approving the transfer, the council had to adjust its local income tax rate to no more than jail needs required. The council had to find excess reserves and a need for transfer, then state the amount and date in its resolution.

Landowners face revised assessment calculations

For January 1, 2025 only, the specified base rate using a 9% capitalization rate does not apply to certain land. Separately, regional solar land base rates exclude utility-classified land assessed at the agricultural base rate on the prior assessment date. These changes alter valuation inputs rather than setting a new tax rate. The supplied provisions do not establish whether resulting assessments rise or fall.

Local revenue formulas change, backstops end

For qualifying municipalities in covered counties, the 2026 certified-share formula includes 54.5% of their certified 2025 debt-service and lease-rental levy. That levy adjustment expires January 1, 2027. Allocations for 2027 and 2028 use 70% of the formula's STEP THREE amount. Separately, state general fund money cannot cover shortfalls in the specified county reserve accounts or certified distributions.

Tourism and convention funding shares shift

Beginning July 1, 2025, the covered tourism capital fund receives receipts generated by a 3.5% rate through 2025. That allocation rate becomes 3% for 2026 through 2028, then 4% beginning January 1, 2029. The convention center operating, capital improvement, and financial incentive fund receives receipts generated by a 2% rate through 2028. Its allocation rate falls to 1% beginning January 1, 2029. These are rates used to divide receipts among funds, not stated changes to customers' overall tax rates.

Sponsors & Cosponsors

Sponsor

Craig Snow
Republican • House

Cosponsors

Cherrish Pryor
Democratic • House
Dave Heine
Republican • House
David Niezgodski
Democratic • Senate
Eric Bassler
Republican • Senate
Harold Slager
Republican • House
J.D. Ford
Democratic • Senate
Linda Rogers
Republican • Senate
Lonnie Randolph
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 236 • No: 45

House vote • 4/24/2025

Rules Suspended. Conference Committee Report 1: adopted by the House

Yes: 69 • No: 23

Senate vote • 4/24/2025

Rules Suspended. Conference Committee Report 1: adopted by the Senate

Yes: 37 • No: 13

Senate vote • 4/15/2025

Third reading: passed

Yes: 41 • No: 8

House vote • 2/18/2025