Property Tax Caps
Indiana property tax caps limit the amount of property taxes to 1% of property values for homesteads (owner-occupied), 2% for other residential property and farmland, and 3% for all other property. The caps provide a dual benefit to taxpayers. All taxpayers benefit from the predictability the caps provide. In addition, taxpayers who would otherwise pay above the cap receive direct property tax relief in the form of a tax credit (known as a “circuit breaker credit”) that reduces the bill to the capped amount.
The amount of the credit for each property type is outlined below. The credit is the amount that exceeds the stated percentage.
- Homestead exceeds 1%
- Residential property exceeds 2%
- Long-term care property exceeds 2%
- Agricultural land exceeds 2%
- Nonresidential property exceeds 3%
- Business Personal Property exceeds 3%
Note: An individual real estate assessment may contain a variety of cap allocations.
Note: Property taxes imposed after being approved by the voters in a referendum or local public question shall not be considered for purposes of calculating a person’s credit. In other words, the voter-approved taxes are outside the property tax caps.
Note: A person does not need to file an application for the Property Tax Cap credit. It will automatically be applied to the property tax statement. This credit has nothing to do with the Homestead deduction. A taxpayer desiring to have a Homestead deduction must have an approved Homestead deduction on file in the Auditor’s office.
- Consists of dwelling, garage, 1 acre of land
- Has a homestead deduction on file
Residential Property- 2%
- Single-family dwelling that is not part of a homestead and 1 acre of land
- A building that includes 2 or more dwelling units (includes apartment buildings)
- Any common areas shared by the dwelling units, including land that is a common area
- Land on which the building is located
- Land rented or leased for the placement of a manufactured home or mobile home, including common areas shared by the manufactured homes or mobile homes
Long-Term Care- 2%
- Used for the long-term care of an impaired individual
- Health facility licensed under Indiana Code, or housing allowed to use the term “assisted living”
- Independent-living home that, under contractual agreement, serves not more than 8 individuals
Agricultural Land- 2%
- Land assessed as agricultural land under the real property assessment rules and guidelines of the Department of Local Government Finance
Nonresidential Property- 3%
- Real property that is not a homestead, or residential property
- Commercial land and improvements not considered Residential Property
- Yard improvements not part of a homestead
- Agricultural Improvements
Business Personal Property- 3%