New Laws in Indiana and When They Take Effect

New laws in Indiana over the last few sessions have lowered the individual income tax rate to 2.95% for 2026, put automated speed cameras in highway work zones, banned student cell phone use during class, tightened third-grade reading standards, restructured how counties fund local public health, and strengthened protections around sealed eviction records. Unless a bill says otherwise, each of these took effect on July 1 of the year it passed.¹

Lower Individual Income Tax Rate

Indiana’s flat income tax rate is 2.95% for tax year 2026.² It drops again to 2.9% for tax year 2027.³ Both steps come from House Enrolled Act 1002, passed in 2022, which set a phased schedule down from the 3.23% rate that had held for years.

Cuts after 2029 are conditional. The state budget agency has to confirm that general fund revenue grew at least 3.5% in each of several consecutive fiscal years before the next reduction is triggered. If those revenue targets are hit, the rate can keep falling by 0.05 percentage points at a time, potentially as late as 2044.³ Employers should be updating withholding at each step so employees see the change in their paychecks rather than at tax time.

Full Tax Exemption on Military Pay

House Enrolled Act 1034 removed state income tax on military pay entirely, starting with the 2024 tax year. Active-duty service members, reservists, and National Guard members can exclude 100% of their military income from Indiana adjusted gross income. Before this change, the exemption applied only to pay earned during mobilization and deployment. The new version covers all branches with no deployment condition.

Automated Speed Cameras in Highway Work Zones

House Enrolled Act 1015 created a pilot program letting the Indiana Department of Transportation install automated speed cameras in highway work zones.⁴ A camera only flags a driver going at least 11 miles per hour over the posted work zone limit, so minor fluctuations above the limit don’t trigger a notice.⁵

When a camera catches a violation, the registered vehicle owner gets a civil notice by mail. A first offense is a written warning. Repeat violations carry escalating civil penalties set under the work zone speed control chapter of the code. These are civil fines against the vehicle owner, not moving violations, so they don’t hit your driving record or insurance. Unpaid notices can be sent to collections.

Move Over or Slow Down for Disabled Vehicles

Indiana’s Move Over or Slow Down law now covers any stationary vehicle on the roadside with hazard lights flashing, not only emergency and utility vehicles. If you approach one, you have to change into a lane farther from the vehicle when it’s safe. If you can’t change lanes, you have to slow to at least 10 miles per hour below the posted speed limit.⁶

Penalties depend on what kind of vehicle you passed:

Failing to move over or slow down for a stationary police car, fire truck, or ambulance is a Class A infraction. If your failure causes serious bodily injury, catastrophic injury, or death to someone operating or working with that emergency vehicle, the charge becomes a Level 6 felony.
Violations involving tow trucks, utility service vehicles, and road maintenance crews are a Class B infraction.
Passing a disabled vehicle displaying hazard lights without moving over or slowing down is also a Class B infraction.⁷

A Class B infraction can carry fines up to $1,000. A Class A infraction allows fines up to $10,000. A Level 6 felony carries potential imprisonment of six months to two and a half years.

Cell Phones Banned During Class

Senate Bill 185 requires every public school district and charter school in Indiana to adopt a policy prohibiting students from using wireless communication devices during instructional time.⁸ The rule reaches cell phones, tablets, smartwatches, and anything else capable of wireless communication unless the device is part of an approved lesson.

Teachers keep the authority to allow use for a specific educational purpose or a medical need. Each district writes its own enforcement rules, so consequences vary from temporary confiscation to formal discipline. Schools are expected to publish their specific policy for parents and students at the start of the year.

Third-Grade Reading Requirements

Senate Enrolled Act 1 changed both what elementary teachers must know and what happens when a student cannot read at grade level. All teachers holding a Pre-K through fifth-grade or special education license must earn an early literacy endorsement by the time of their license renewal on or after July 1, 2027. Instructional coaches at schools where fewer than 70% of students pass the IREAD assessment need the endorsement starting July 1, 2025.⁸

On the student side, third graders who cannot demonstrate reading proficiency after three attempts at the state reading assessment are retained in third grade. Exceptions apply to students who have already been held back once, students with disabilities, certain English learners, and students who pass the math portion of the statewide assessment while receiving supplemental reading instruction. Districts have to provide intensive reading support, including summer programs, before retention takes effect. Parents can expect more frequent progress updates in first through third grade, and the IREAD result now carries significantly more weight than it used to.

Health First Indiana Local Public Health Funding

Senate Enrolled Act 4 created Health First Indiana, a voluntary partnership that changes how county health departments receive state money. Counties that opt in get a grant to deliver core public health services, with a minimum of $350,000 and additional amounts based on population size and health vulnerability.⁹

The core services a participating county agrees to provide include childhood lead exposure screening, sanitation inspections of public buildings, student health partnerships with schools, tobacco prevention, and review of suicide, child fatality, and overdose reports. Opting in does not shift any authority from the local health department to the state. The county keeps operational control and commits to delivering the funded services. Whether residents notice a change depends on whether their county opted in; those that did are expanding preventive screenings, wellness programs, and disease surveillance, while counties that opted out continue at existing funding and service levels.¹⁰

Automatic Sealing of Eviction Records

Senate Enrolled Act 142, effective July 1, 2025, strengthened eviction record sealing. Courts now automatically seal eviction cases that were dismissed, resulted in a judgment for the tenant, or where a judgment against the tenant was later overturned on appeal. The tenant doesn’t need to file anything for those automatic sealings.

Tenants who have paid off a money judgment from an eviction can petition to have the record sealed. Where a final order was entered but no money judgment was involved, sealing becomes available seven years after the judgment date. If you have been turned down for a rental because of a past eviction that ended in your favor, the court record may already be sealed or eligible for sealing under these provisions.

Why Most Changes Land on July 1

Unless a bill specifies a different date, every new Indiana statute takes effect on July 1 following the year it passes the General Assembly.¹ Because sessions typically end in the spring, that gives residents, employers, and state agencies several months between passage and enforcement to update policies and learn the new rules. A bill can take effect immediately only if it contains a declaration of emergency, which is uncommon.¹¹

1
Indiana General Assembly. Indiana Code 1-1-3-3 – Effective Dates
2
Indiana Department of Revenue. Rates, Fees, and Penalties
3
Indiana General Assembly. Indiana Code 6-3-2-1 – Imposition of Tax; Tax Rate
4
LegiScan. Indiana HB1015 – 2023 Regular Session
5
Indiana General Assembly. Indiana Code Title 9 – 9-21-5-11
6
Indiana Department of Transportation. Move Over or Slow Down
7
Indiana General Assembly. Indiana Code Title 9 – 9-21-8-35
8
Indiana Department of Education. Literacy Development
9
Indiana Department of Health. About – Health First Indiana
10
Indiana General Assembly. Senate Bill 4
11
Indiana General Assembly. Indiana Code 1-1-3.1-3 – Acts Containing Declaration of Emergency