Indiana Property Tax Changes in 2026: What Homeowners and Investors Need to Know

New property tax credits and deductions are taking effect in 2026 for Indiana homeowners and real estate investors. Here is what you should know about these changes and how they may affect your bottom line.

Indiana’s property tax landscape is shifting significantly in 2026 following comprehensive reforms signed into law in 2025. Whether you own your home, manage rental properties, or operate a business with real estate holdings, these changes deserve your attention. While the new law aims to provide meaningful relief for taxpayers, it also introduces complexities that property owners should understand.

One of the most immediate changes for homeowners is a new property tax credit equal to ten percent of your property tax bill, capped at three hundred dollars annually. This credit applies automatically if you have a homestead deduction filed with your county. In addition, the state is phasing in increases to the supplemental homestead deduction, shifting from a flat deduction to a larger percentage-based deduction that will continue growing through 2031. Over time, a greater share of your home’s assessed value will be shielded from property taxes. Homeowners aged sixty-five and older may also qualify for an additional credit of one hundred and fifty dollars.

For rental property owners, properties in the two percent tax cap category are now eligible for a new deduction starting at six percent of assessed value in 2026, increasing annually through 2031. This is welcome news for real estate investors who have watched their property tax bills climb alongside rising assessed values in recent years. However, it is important to evaluate how these deductions interact with local tax rates, which may adjust as municipalities adapt to reduced revenue.

Business owners should also take note of a dramatic increase in the exemption threshold for business personal property tax. Previously, the exemption applied only to businesses with assets valued at eighty thousand dollars or less. Beginning with the 2026 assessment date, that threshold jumps to two million dollars. Additionally, the thirty percent floor on depreciation for assets placed in service after January 1, 2025, has been eliminated, allowing businesses to depreciate equipment more fully and lower their property tax obligations.

While these reforms offer clear benefits, they come with a trade-off. To address potential revenue shortfalls, the new law authorizes municipalities to set their own local income tax rates.Some communities across Indiana are already making budget adjustments in anticipation of reduced property tax revenue, including cuts to parks, maintenance, and public safety services. The savings you see on your property tax bill may be partially offset by changes in local income taxes. Take less of an analytical approach to conclude and more of an informative approach for this paragraph.

Navigating these changes can be complex, particularly if you own multiple properties or operate a business with significant real estate holdings. The experienced attorneys at

McNeelyLaw can help you understand how the new property tax laws affect your specific situation and advise you on strategies to minimize your overall tax burden. Contact us today to discuss your options.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.