Most homeowners in Indiana have no idea how much money they’re leaving on the table. Seriously. Indiana’s homestead laws can cut your property tax bill by thousands of dollars every year. But you have to know the rules.
Right now, Indiana is in the middle of the biggest property tax shakeup in decades. The laws changed in 2025. The changes hit your tax bill in 2026. And if you’re not paying attention, you could miss out.
What Is a Homestead Deduction?
A homestead deduction is a discount on your property taxes. Pretty simple! The state of Indiana lets you lower the “assessed value” of your home before taxes are calculated. A lower assessed value means a smaller tax bill.
Think of it like a coupon for your property taxes. You just have to apply for it.
Your home’s assessed value is basically what the county says your property is worth. The homestead deduction reduces that number. So instead of paying taxes on the full value, you pay taxes on a smaller amount.
Basic Homestead Laws in Indiana
Who Qualifies?
Wondering if this applies to you? Here’s the good news. Most Indiana homeowners qualify.
To get the homestead deduction, you need to meet a few basic rules. First, the property must be your primary residence. That means the home where you actually live. Second, you need to own the property or be buying it under a contract where you pay the taxes. Third, the property must be in Indiana.
You can also qualify if you’re buying your home on a land contract. That’s when you’re paying the seller directly instead of a bank. As long as the contract says you’re responsible for property taxes, you’re likely eligible.
Mobile homes and manufactured homes count too. They don’t have to be assessed as real property to qualify. So even if your home isn’t on a permanent foundation, you might still be in.
The One Homestead Rule
Okay, this one is important. You can only claim one homestead deduction. Ever. You and your spouse together are limited to one.
It doesn’t matter if you own two homes. The deduction only applies to your primary residence. That’s the home where you actually live most of the year.
This is where a lot of people get into trouble. They buy a new home and forget to cancel the deduction on the old one. Indiana tracks this. And they will catch it.
The Big 2026 Changes You Need to Know
Hold on, this part is really important. Indiana passed a major new law in 2025. It’s called Senate Enrolled Act 1, or SEA 1. Governor Mike Braun signed it in April 2025. The changes started showing up on 2026 tax bills.
Here’s what’s different now.
The Standard Deduction Is Shrinking
The standard homestead deduction used to be up to $48,000 off your home’s assessed value. That number is going down now. In 2026, it dropped to $40,000. It keeps dropping each year until it hits zero in 2030.
Wait, don’t panic yet. There’s more to know.
The Supplemental Deduction Is Growing
At the same time the standard deduction shrinks, a second deduction called the supplemental deduction is growing. In 2026, it covers 40% of your home’s value after the standard deduction is applied. By 2031, it’ll cover 66.7%.
So the two parts move in opposite directions at the same time. The goal is to keep overall tax savings roughly similar or better for most homeowners.
The New 10% Tax Credit
Here’s where it gets interesting. Starting with your 2026 tax bill, you automatically get a credit equal to 10% of what you owe in property taxes. This credit is capped at $300 per year.
You don’t have to apply for it. It shows up automatically on your bill.
So simple! If your property tax bill is $2,000, you get $200 knocked right off. If your bill is $5,000 or more, you get the full $300 credit.
According to state officials, about two-thirds of Indiana homeowners will pay less in property taxes in 2026 compared to 2025.
Special Credits for Seniors and Veterans
Indiana didn’t forget about older homeowners and veterans. There are extra savings available if you qualify.
The Over-65 Credit
If you’re 65 or older and own your home, you might qualify for an extra $150 credit on your 2026 property tax bill. This is on top of the standard 10% credit.
The income limit matters here. Your adjusted gross income from two years ago must be $60,000 or less if you filed single. It’s $70,000 or less if you filed jointly with a spouse.
You do need to apply for this one. The form is called State Form 43708. You can get it from your county auditor. If you were already getting the old Over-65 deduction, your county may switch you automatically. But check with your county auditor to be sure.
Veterans with Disabilities
This one’s probably the most important benefit many veterans aren’t claiming. Indiana expanded benefits for veterans with service-connected disabilities in 2025.
Veterans who served at least 90 days and received an honorable discharge may qualify for huge deductions. Depending on your disability rating, the deduction can cover 50% to 100% of your home’s assessed value. That’s potentially a massive reduction in your tax bill.
Penalties for Homestead Fraud
Most people don’t realize how strict Indiana is about this. Claiming a homestead deduction you don’t deserve is considered fraud. The consequences are real.
If you’re caught with an ineligible homestead deduction, you can be charged back taxes for up to three years. On top of that, there’s a civil penalty of 10% of the additional taxes you owe. That’s not a small number.
Think of it like getting caught cheating on your taxes. Except the state has a whole database to catch you.
Here’s the situation many homeowners fall into. They move to a new home and apply for a homestead deduction there. But the old deduction on their previous home doesn’t disappear automatically. Suddenly they have two homestead deductions on two different properties.
That’s fraud, even if it was an honest mistake.
Indiana law requires you to notify your county auditor within 60 days when your property is no longer eligible. You have to file something called an Ineligible Homestead Certification form. Don’t skip this step.
How to Apply for the Homestead Deduction
Good news: applying is pretty easy. Here’s what you need to do.
First, get the application form from your county auditor’s office. You can often apply online, in person, or by mail. Every county in Indiana has an auditor’s office that handles this.
Second, fill out the form with your property information. You’ll need to provide your Social Security number and driver’s license number. Your spouse’s information is required too, even if their name isn’t on the deed.
Third, submit it on time. Applications are typically due by January 15 of the year your taxes are due. For example, to get the deduction on your 2026 tax bill, you needed to apply by January 15, 2026.
Here’s the great part. Once you apply and are approved, you don’t have to reapply every year. The deduction stays as long as your situation doesn’t change.
When You DO Need to Reapply
You’re not alone if this confuses a lot of people. There are a few situations where you must file again.
You need to reapply if the deed on your property changes. You also need to reapply if you get married or divorced and your marital status changes. And you need to reapply if you move and the property is no longer your primary residence.
If you refinanced your home recently, double check that your deduction is still properly applied. Some refinances change how a deed is recorded, which can affect your deduction status.
How to Check If Your Deduction Is Applied
Honestly, this is the part most people skip. But you should check your property tax records to make sure your homestead deduction actually shows up.
You can do this a few ways. Visit your county’s property tax website and look up your parcel number. Your tax bill should show the deductions applied. If you don’t see the homestead deduction listed, contact your county auditor right away.
Indiana also now has a property tax transparency portal. It launched January 1, 2026. You can use it to compare your current and past tax bills and see how the new law affects you. Look for it through the Indiana Department of Local Government Finance (DLGF) website at in.gov/dlgf.
Frequently Asked Questions
Can I get the homestead deduction if I rent out part of my home? You can still qualify if you live in the home as your primary residence. But only the portion of the home you occupy counts as the homestead.
What if my home is in a trust? You may still qualify if you have a beneficial interest in the property and it’s your primary residence. Talk to your county auditor or a real estate attorney to confirm your situation.
Do I need to reapply for the new 10% homestead tax credit? No. The new 10% credit for 2026 is applied automatically to your bill if you already qualify for the homestead deduction. You don’t have to do anything extra.
What if I bought my home in 2025 or recently refinanced? You should confirm that your homestead deduction is properly on file. Changes in ownership or title can affect your deduction. Contact your county auditor to verify.
Can active military members keep their homestead deduction if they’re stationed out of state? Yes. Indiana law specifically protects active military members who are transferred outside the state. You must submit a copy of your transfer orders to the county auditor to keep the deduction.
Is the homestead deduction the same in every Indiana county? The state law sets the rules, but applications are handled by each county auditor. The process may vary slightly by county, so check with your local auditor’s office.
Final Thoughts
Now you know the basics of Indiana homestead law in 2026. The rules changed significantly, and the changes are mostly good news for homeowners. Lower bills, automatic credits, and extra savings for seniors and veterans.
But the savings only come if you take action. Make sure your homestead deduction is on file. Notify your county auditor if anything changes. And look out for the new property tax transparency portal so you can track your bill year over year.
When in doubt, your county auditor is your best resource. They handle these applications every day and can answer your specific questions for free.
Stay informed. Your wallet will thank you.
References
- Indiana Code § 6-1.1-12-37 – Standard Homestead Deduction: https://law.justia.com/codes/indiana/title-6/article-1-1/chapter-12/section-6-1-1-12-37/
- Indiana Department of Local Government Finance – Deductions and Credits: https://www.in.gov/dlgf/deductions-and-credits/
- AARP Indiana – Property Tax Aid and Over-65 Credit Guide: https://ptaconsumers.aarpfoundation.org/taxpayer-states/indiana/
- AARP – What to Know About Indiana’s 2025 Property Tax Law: https://www.aarp.org/states/indiana/indiana-property-tax-law/
- Purdue Extension – Property Tax Reform: Phasing Out, Phasing In: https://extension.purdue.edu/news/2025/09/property-tax-reform-phasing-out-phasing-in.html
- Indiana Property Tax Benefits Form (State Form 51781): https://forms.in.gov/Download.aspx?id=6015
