Lawmakers propose funding homestead property-tax credits with higher local income taxes, raising revenue questions for Indiana counties
At a Sept. 29, 2026 town hall in Warsaw, three Republican legislators pitched using local income-tax increases to finance a phased-in 100% homestead property-tax credit for owner-occupied homes; proponents say most counties have capacity, while local officials warned of service cuts and homeowners worried about affordability.
About 300 people attended the Sept. 29, 2026 meeting in Warsaw where Sen. Ryan Mishler and two other high-ranking lawmakers outlined proposals aimed at eliminating property taxes on owner-occupied homes. Mishler described a local-option approach: counties could raise their local income-tax rate and use that revenue to provide a full credit on homestead property taxes phased in over five years. He said all but 14 counties now have the capacity to cover the credit and gave Kosciusko County as an example, saying it would need to replace roughly $44 million in homestead property-tax revenue.
The crowd included local officials and homeowners who pushed back, citing potential cuts to services. The briefing also noted statewide context: owner-occupied homes generated nearly $4.1 billion of the $10.6 billion in property taxes billed in 2025, according to a Legislative Services Agency report. Another Republican proposal mentioned at the event would instead try to eliminate property taxes by expanding the state sales tax to many services; one sponsor said he hopes to pursue further steps in the 2027 legislative session.
BusinessIndy examines this development and its implications for Indiana businesses and communities using the linked sources.
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