Indiana lawmakers are preparing to study the state's property tax assessment system ahead of the 2027 legislative session, responding to ongoing concerns from residents about the stability of property values. The Interim Study Committee on Fiscal Policy has been assigned to address the general topic, with an Oct. 14 hearing scheduled to discuss alternatives to the current annual adjustment process and the use of cost tables in property assessment.
Property taxes are a consistent point of contention for Indiana lawmakers, even though the state does not receive revenue from them; rather, legislators write the rules that govern them. Many residents, including those who spoke at a recent Tuesday night property tax event, agree that the property assessment system needs a revamp to provide more stability in values, which significantly impact tax bills. At the event, however, there was no discussion about how to achieve this.
While some advocate for the complete elimination of property taxes, this approach is deemed unfeasible. Eliminating $10.6 billion in taxes without replacement would have disastrous impacts on local services and debt. Property taxes provide stable revenue for local governments, unlike income and sales taxes which tend to drop during economic recessions, while services such as police and schools still require consistent funding.
Instances were cited where homes saw their assessed value grow by double-digit percentages year after year. One such case in 2022 led to a successful appeal after a private appraisal showed a difference of approximately $95,000 compared to the county assessment. However, not all residents can afford to pay for an independent appraisal to challenge their assessment.
In the 2026 legislative session, three bills concerning property assessment were filed, but none advanced to a hearing. House Bill 1238, authored by Rep. Ryan Dvorak, D-South Bend, was noted for its focus on the issue. It proposed limiting assessed value changes for owner-occupied homesteads to only when a property is sold. This proposal carried a significant cost, estimated to reduce gross assessed values statewide by $34 billion, which would necessitate increases in tax rates and shift tax burdens from homesteads to other properties, including rentals, farms, and businesses. Another bill had sought to establish a special property assessment task force, but legislative leaders ultimately assigned the matter to the existing Interim Study Committee.
Legislative hesitation to tackle the assessed value issue may stem from a desire to avoid a repeat of history. In 1997, the Indiana Tax Court ruled Indiana’s “true tax value” assessment system unconstitutional. That system relied on subjective cost schedules and formulas that failed to accurately measure fair market value or property wealth equitably, resulting in unfair assessments across the board. As a consequence, Indiana was compelled to adopt a market value system that uses verifiable data, such as the value of similar properties that have recently sold, to determine assessed values, regardless of a homeowner’s intent to sell. Lawmakers are now hoped to consider smaller changes that could limit the annual growth of assessed value, fostering a more stable system instead of one prone to significant year-to-year fluctuations.
