Tax Planning · The Lithos Blog
The headlines promised historic relief. The law delivers real savings — but the math works differently than most homeowners think, and two quiet catches can erase the benefit entirely. Here is the calm, accurate version.
What Actually Happened
In April 2025, Indiana signed Senate Bill 1 into law — a sweeping rework of how homestead property taxes are calculated. The first bills fully shaped by the new rules are the ones Hamilton County homeowners are paying in 2026, and the state projects roughly $1.3 billion in homeowner savings over three years, with about two-thirds of homeowners seeing a lower 2026 bill than their 2025 bill.
Here is the thing, though. The headlines and the mailers have created some genuine confusion about how the savings actually work — and in a county where home values have climbed as fast as ours, the difference between the myth and the math matters. Let me decode it the way I would for a client sitting across the table: no drama, no shortcuts, just the real mechanics.
If you want the fast, do-this-now version instead, we built a companion piece: the SB 1 Relief Checklist. This article is the deep explanation behind that checklist.
Property tax is one of the few bills you pay for as long as you own your home. A law that reshapes it touches your monthly budget, your equity, your estate plan, and — if life ever goes sideways — your family's ability to keep the house. Understand it once, benefit every year.
The Headline Numbers
Myth vs. Math
A popular version of this story says every homeowner gets a $300 flat credit plus a 10% credit on top — $750 on a typical $4,500 Hamilton County bill. That is not how the law reads. Let me clarify, because the difference changes your budget math.
"$300 off the top, then another 10% off the rest. Stack them both."
$4,500 bill → $300 + $450 = $750 in credits
The credit is 10% of your homestead tax bill, up to a maximum of $300. One credit, one cap.
$4,500 bill → 10% = $450, capped at $300
$2,400 bill → 10% = $240 (under the cap)
There are genuinely stackable credits — but they are targeted: an additional $150 credit for homeowners 65 and older and $125 for blind or disabled homeowners, and these credits deliver real savings even if your bill already sits at Indiana's constitutional tax caps. For most working-age homeowners in Carmel, the realistic SB 1 benefit is up to $300 a year — meaningful, worth claiming, and worth being honest about.
Try Your Own Numbers
Enter the annual property tax amount from your homestead bill. This is an educational estimate of the new credits only — your actual bill also reflects assessed value, deductions, local rates, and the constitutional caps.
Educational illustration only, based on the credit structure in SEA 1 as summarized by the Indiana Senate and CPA analyses. Blind or disabled homeowners may qualify for a further $125 credit. County auditors apply these credits automatically — you do not file anything to receive them.
The Part Nobody Reads
While the new credit gets the headlines, SB 1 also rebuilds the deductions that determine your taxable value in the first place. The familiar standard homestead deduction phases out, and a percentage-based supplemental deduction ramps up in its place.
| Taxes Payable In | Standard Homestead Deduction | Supplemental Deduction (% of AV) |
|---|---|---|
| 2025 | Up to $48,000 | 37.5% |
| 2026 | Up to $40,000 | 40% |
| 2027 | Up to $30,000 | 46% |
| 2028 | Up to $20,000 | 52% |
| 2029 | Up to $10,000 | 57% |
| 2030–2031 | Phased out | Rising to roughly two-thirds of assessed value |
Schedule as summarized by KSM and Indiana statehouse reporting; percentages continue stepping up through 2031.
A flat $48,000 deduction shrinks in relative terms every year your home appreciates. A percentage-based deduction scales with your assessed value — which, in a county where values have risen sharply since 2022, generally works in the homeowner's favor over time.
Two honest caveats. Assessed values keep moving with the market — SB 1 changes credits and deductions, not your assessment. And the same law reshapes local income tax authority, so counties and cities adjusting to lower property tax revenue may lean on other levers. Relief is real; "bills only go down" is not a promise anyone should make you.
The Two Catches
Every homestead benefit in this law rides on one administrative fact: your homestead deduction is properly filed and current with the county auditor. Certain life events can quietly disrupt it — refinancing that changes how the home is titled, moving the home into a trust without the right paperwork, or a marriage or divorce that altered the deed. Five minutes on your county's assessor portal — or one call to the auditor's office after any title change — protects every dollar this article describes.
Your bill is built on your assessed value, and the new law leaves assessments untouched. If your home is assessed above what comparable sales support, you are paying tax on a number bigger than your home is worth — credits and all. The remedy is an appeal on Form 130 to your county's PTABOA. The anchor deadline is June 15: if your Form 11 assessment notice was mailed before May 1, you file by June 15 of that year; if it was mailed later, by June 15 of the year your tax bill goes out. Certain objective errors can be corrected up to three years back.
The Layer Most People Miss
Here is where this stops being a tax article and becomes a family one. If your home is titled in your individual name alone and you pass away, it generally moves through probate — a public, slow, and often expensive process. During that window, homestead status can be disrupted at exactly the moment your family can least absorb a bigger tax bill.
Indiana families typically address this with structures like a revocable living trust paired with a transfer-on-death deed, joint tenancy with right of survivorship, or a TOD beneficiary designation — each with its own trade-offs around control, taxes, and Medicaid look-back rules. The right structure depends on your situation, which is why this decision belongs with a licensed Indiana estate attorney. The wrong time to discover a titling problem is during the hardest year of your family's life.
Property tax bills do not pause when life changes. A coordinated plan usually has four layers: term life insurance so the household can keep paying the mortgage and taxes; disability income protection if a long illness or injury interrupts earnings; proper titling so homestead status survives transitions; and an estate plan that keeps the house out of probate. The tax math goes to your CPA; the titling goes to your attorney; the cash-flow layer that holds it all together is a conversation we are glad to have.
Your Next Step
Now you know how SB 1 actually works: one 10% credit capped at $300, targeted extras for seniors and disabled homeowners, a deduction engine rebuilding itself through 2031, and two catches — homestead status and assessment accuracy — that decide whether you actually collect. The follow-through lives in our companion piece: the SB 1 Relief Checklist — five verifiable actions, an appeal-season timeline, and the questions we hear most from Hamilton County homeowners. Progress over perfection: read this once, then go check your homestead status today.
These resources support the facts and research referenced throughout this article.
News coverage of the final property and income tax plan sent to Gov. Braun, including the multi-billion-dollar three-year homeowner savings estimate.
Read the coverageCPA-firm breakdown of the 10% / $300 homestead credit, the $150 over-65 credit, and the deduction phase-down through 2031.
See the analysisThe state's official guide to Form 130, the June 15 deadlines, the PTABOA, and the Indiana Board of Tax Review.
Open the fact sheetThe Senate's own summary: $1.3 billion in relief, stackable credits for seniors and disabled Hoosiers, and the two-thirds-of-homeowners projection.
Read the summary
Dr. Saha works with families, business owners, and aspiring entrepreneurs on financial education, wealth strategy, real estate, and entrepreneurship — helping people build stronger foundations and make confident decisions. Meet the author →
Next step
SB 1 touches your tax bill, your home's title, and your family's protection plan all at once. That is exactly the kind of layered decision we help families think through — education first, no pressure.
