The homestead deduction, the 1% cap, the 2026 changes, and how to file so you pay less.
Indiana property taxes on a primary residence are capped at 1% of the home's gross assessed value, and the homestead deduction lowers what you're taxed on. For 2026 the standard homestead deduction is $48,000, there's a 40% supplemental deduction on the remainder, and a new automatic 10% credit applies to qualifying homesteads. The key action for new owners: file your homestead deduction within about 4–6 weeks of closing.
Your bill is based on your home's assessed value, reduced by deductions, then multiplied by your local tax rate, but for a primary residence there's a hard ceiling.
The homestead deduction is the main way Indiana homeowners lower their bill. It only applies to your primary residence, and for 2026 it comes in two parts plus a new credit:
| Benefit | 2026 detail |
|---|---|
| Standard homestead deduction | $48,000 subtracted from assessed value (2026) |
| Supplemental deduction | 40% of the remaining value after the standard deduction |
| 1% cap | Caps the tax at 1% of gross assessed value |
Figures are general guidance and updated regularly, ask us for today's numbers in your target area.
2026 brought homeowner-friendly updates worth knowing about:
The deductions aren't automatic on a purchase, you have to file for the homestead deduction with your county after you close. Do it within about 4–6 weeks of closing so it applies for the next billing cycle.
It's a simple form filed with the county auditor, but it's easy to forget in the shuffle of moving. We remind every client, missing it can cost you real money.
Because Indiana property taxes are paid in arrears, taxes are prorated between buyer and seller at closing so each pays for the portion of the year they owned the home. Your closing statement will show the adjustment, we'll walk you through it so it makes sense.
| Step | Amount |
|---|---|
| Gross assessed value | $300,000 |
| Less standard homestead deduction | − $48,000 |
| Subtotal | $252,000 |
| Less supplemental deduction (40%) | − $100,800 |
| Net taxable assessed value | $151,200 |
| Then: local rate applied, minus the new 10% credit | varies by district |
| Hard ceiling (1% cap on a homestead) | $3,000 |
Figures are general guidance and updated regularly, ask us for today's numbers in your target area.
The deductions cut the taxable value roughly in half before your local rate is even applied, and the 1% cap puts a hard ceiling on the result for a primary residence.
Yes. If you believe your assessed value is too high, for example it does not reflect your home's condition, or comparable homes nearby are assessed materially lower. Indiana has an appeal process through your county.
Buying, selling, investing, or just curious what your home's worth, reach out and one of us, a real person, texts or calls you right back.