The Indiana property tax cap limits your annual property tax bill to a fixed percentage of your property’s gross assessed value: 1% for a primary residence, 2% for rental and agricultural property, and 3% for commercial and other property. The limits are written into Article 10, Section 1(f) of the Indiana Constitution and applied through a “circuit breaker” credit that appears automatically on your bill.1Indiana General Assembly. Constitution of the State of Indiana (as Amended 2024)2Indiana General Assembly. Indiana Code 6-1.1-20.6-7.5 – Calculation of Credit The cap is a percentage, not a dollar freeze, so the ceiling moves when your assessed value moves, and voter-approved referendums can add tax on top of it.
What the Cap Looks Like in Dollars
Indiana uses three tiers, based on how the property is used rather than what sits on the lot.3Department of Local Government Finance. Tax Bill 101
- 1% — Homestead (primary residence). A home with a gross assessed value of $200,000 has its total property tax capped at $2,000 per year.
- 2% — Other residential and agricultural. Rental houses, apartment buildings, farmland, and long-term care facilities. A $200,000 rental is capped at $4,000.
- 3% — Commercial, industrial, and personal property. Office buildings, warehouses, factories, and business equipment. A $1,000,000 commercial property is capped at $30,000.
Every taxing unit that levies on your parcel (county, city, school district, library, and others) stacks its rate into one combined bill. When that combined bill would exceed the constitutional percentage of your gross assessed value, the circuit breaker credit automatically reduces it to the cap. You don’t apply for it.2Indiana General Assembly. Indiana Code 6-1.1-20.6-7.5 – Calculation of Credit
The word doing the work in each tier is “gross.” The cap percentage is always measured against gross assessed value, before any deductions. Deductions still matter because they reduce the taxable value the tax rate is applied to, but they don’t change where the ceiling sits.
Why Your Bill Can Still Go Up
The cap holds the rate. It does not hold the dollars. Two mechanisms drive most Indiana bills higher year over year even with the circuit breaker in place.
Annual Trending of Assessed Values
Indiana assessors update assessed values every year through a process called trending. They study recent sales in your neighborhood and apply a factor that brings your assessment in line with current market value.4Department of Local Government Finance. Annual Adjustment of Assessed Values5IN.gov. What Is Trending If your home’s gross assessed value moves from $200,000 to $230,000 because nearby sales support it, the 1% cap now permits up to $2,300 in tax instead of $2,000. Same percentage, higher ceiling. In neighborhoods where values have been climbing, trending is the single biggest reason bills go up.
Voter-Approved Referendums
The other reason a bill can exceed the cap is a local referendum. When school districts or municipalities put bond issues or operating levies on the ballot and voters say yes, Indiana Code 6-1.1-20.6-9.9 excludes that debt from the circuit breaker calculation.6Indiana General Assembly. Indiana Code Title 6 Taxation 6-1.1-20.6-9.9 The resulting tax is added on top of the cap, and all taxpayers in the district pay it. The Department of Local Government Finance sets the rate increase language that appears on the ballot before the vote.7Indiana Department of Local Government Finance. Controlled Project Referendum
If your homestead bill looks higher than 1% of gross assessed value, check for a referendum line item on the statement. That’s almost always what pushed it over.
Deductions and Credits That Lower What You Owe
The cap sets the outer limit. Deductions and credits usually bring the bill in well under it.
Standard Homestead Deduction
If you own and live in your home, the standard homestead deduction removes 60% of your assessed value or $48,000, whichever is less.8Indiana General Assembly. Indiana Code Title 6 Taxation 6-1.1-12-37 On a $200,000 home the cap of $48,000 applies. On a $70,000 home, 60% works out to $42,000, and you get that lower figure. File once with your county auditor, and the deduction stays in place until your ownership or residency changes.9Indy.gov. Apply for a Homestead Deduction
Supplemental Homestead Deduction
After the standard deduction comes off, Indiana applies a second percentage reduction to what’s left. For taxes due in 2026 that rate is 40%.10Indiana General Assembly. Indiana Code 6-1.1-12-37.5 – Supplemental Deduction The legislature has scheduled it to grow: 46% in 2027, 52% in 2028, 57% in 2029, 62% in 2030, and 66.7% from 2031 onward. It can’t remove more than 75% of gross assessed value in total.
Stacking the two on a home assessed at $250,000: the standard deduction takes off $48,000, leaving $202,000. The 2026 supplemental rate of 40% removes another $80,800. Taxable value: $121,200. The tax rate applies only to that figure.
Mortgage Deduction
If you carry a mortgage on your Indiana home, you can claim a deduction equal to the lesser of $3,000, half the assessed value, or the remaining loan balance. For most homeowners, that’s a flat $3,000. File with your county auditor and refile after refinancing.
Over 65 Credit and Senior Circuit Breaker
Homeowners 65 and older have two separate benefits. The basic over-65 credit knocks $150 off the tax bill if adjusted gross income is $60,000 or less ($70,000 for joint filers). A surviving spouse at least 60 and not remarried can qualify under the same income limits.11Indy.gov. Apply for Over 65 Property Tax Credit
The more valuable one is the over-65 circuit breaker credit, which caps the annual increase in your homestead tax at 2% over the prior year’s liability. This is a personal cap on year-over-year growth that sits alongside the constitutional caps, and it’s one of the few tools that limits dollar growth directly when trending pushes assessed values up. Same income limits, and you must have qualified for the homestead standard deduction the year before.11Indy.gov. Apply for Over 65 Property Tax Credit
Disabled Veteran Deductions
Veterans with a service-connected disability of at least 10% from wartime service can deduct $24,960 from assessed value. Veterans who served at least 90 days and are either totally disabled or over 62 with at least a 10% VA rating can claim a separate $14,000 deduction if the home’s assessed value is under $240,000. Both can be claimed together for a combined $38,960. Surviving spouses of eligible veterans or service members killed in action may also qualify.12Indiana Department of Veterans’ Affairs. Disabled Veteran Property Tax Deduction
Blind or Disabled Credit
Homeowners who are blind or have a disability and use the property as their primary residence can claim a $125 annual credit. You’ll need documentation from a physician or a Social Security disability determination, and the deadline to apply is January 15 of the year the taxes are first due.13Indy.gov. Apply for Blind or Disabled Person’s Credit
Appealing an Assessment You Think Is Too High
Because the cap is a percentage of assessed value, the assessment is where most of the leverage lives. If your value jumped and you don’t think it matches what your property would actually sell for, Indiana gives you a formal path to challenge it.
Deadlines and the Form to File
The starting point is the Form 11 (Notice of Assessment) your county or township assessor mails you.14Department of Local Government Finance. Notice of Assessment of Land and Improvements (Form 11) To appeal, file a Form 130 with the county assessor. The deadline is June 15 of the assessment year if the Form 11 went out before May 1, or June 15 of the following year if it was mailed on or after May 1.
One rule works strongly in your favor. If the assessor raised your value by more than 5% over the prior year, the burden of proof shifts to the county or township assessor rather than sitting on you.15Department of Local Government Finance. Property Tax Assessment Appeals Fact Sheet
Evidence That Helps
A formal appraisal isn’t required, though the Indiana Tax Court has noted that a properly prepared appraisal trended to the correct valuation date is the strongest evidence.15Department of Local Government Finance. Property Tax Assessment Appeals Fact Sheet Recent sales of comparable properties, offers to purchase, your own property’s sale price, and for income properties, capitalized income and expense data all count.
The Steps After Filing
Your appeal first goes to the county’s Property Tax Assessment Board of Appeals (PTABOA). If you disagree with its decision, you have 45 days to appeal to the Indiana Board of Tax Review, which must hold a hearing within nine months and issue a decision within 90 days after that hearing. From there, you can petition the Indiana Tax Court within 45 days, and ultimately the Indiana Supreme Court.16Indy.gov. The Property Assessment Appeals Process
The cap will keep doing its job in the background while an appeal is pending. Winning a lower assessment simply lowers the ceiling the cap is measured against, and in most cases, lowers what you actually pay.