2007 Property Tax Relief
(HB1478)
Submitted by Gary Malone, Executive Partner

The 2007 Indiana General Assembly recently enacted legislation to provide Indiana property taxpayers with possible future reductions in local property taxes. The legislation also provides local government with potential relief from the Circuit Breaker Tax Credit and the potential for additional revenues for public safety.

Property tax relief for most Indiana counties comes from increases in local option income taxes (COIT or CAGIT), which can either be used to cap future increases in property tax levies or can provide for reductions in property tax rates through uniform property tax credits or additional homestead credits. These new income taxes may be adopted by a COIT Council in non-CAGIT counties or by the County Council in CAGIT counties at rates of up to 1% for property tax relief and up to .25% if applied to public safety. Beginning in 2008, no growth in property tax levies will be permitted unless a 1% local option income tax rate is adopted for property tax reductions.

The legislation creates a nine-member County Control Board to oversee budgets and tax rates of all taxing units within the county, unless prevented from doing so by action of the County Council. The Control Board reviews the five-year capital plans of all taxing units and must approve all controlled projects with a cost greater than $7 million.

The Circuit Breaker Tax Credit is increased from 2% to 3% for all real and personal property, except residential homesteads, beginning in 2010. The Circuit Breaker Tax Credit may not reduce school tuition support levies. Counties impacted by the Circuit Breaker may seek additional relief from a state circuit breaker board with the adoption of a financial plan.

Future issues of Footnotes will explain the new rules in greater detail. If you have any questions regarding the new rules, please contact us at footnotes@umbaugh.com.