Indiana property taxes provide the greatest overall income to the state, with almost all of the proceeds going to fund local government and schools.
Taxing Authorities are government entities granted the right to levy taxes. Below is a list of taxing districts, those appearing in red text represent districts all properties are taxed by, the remaining list is a sampling of additional districts that could apply depending on the property location.
- School District
- Library District
- Health & Hospital District
- Transportation District
- Drainage District
- Conservancy District
Each taxing district determines their tax rate annually as part of the budget process. Because of the variety of taxing authorities, property tax rates vary significantly between townships and counties. The sum of the rate is totaled by the county board of commissioners and submitted to the state government for approval.
The county assessor determines the value of the property. The county then applies the tax rate to the value to determine the amount of taxes for which the property will be billed. Tax rates are measured in dollars per $100 of assessed value, so they are effectively percentages.
Property tax rates in Indiana are capped, or limited, as follows:
- 1% of value for residential
- 2% of value for rental and farmland
- 3% of value for all other types
Indiana pays taxes in arrears (similar to the income tax you pay on April 15th being for the previous year’s income.) Payments are made semi-annually in May and November. Many mortgage companies collect the tax as part of the monthly mortgage payment (escrow) and remit the funds to the county on behalf of the mortgage holder.
Distribution of Taxes
The County Treasurer collects property taxes for all taxable parcels in the county. The County Auditor then distributes the applicable funds to each taxing district as the tax was applied.
Exemptions and Deductions
Exemptions and deductions are dollar amounts that qualifying property owners can subtract from the assessed value of their property, before the tax bill is calculated. Tax rates are applied to reduced property value. Homeowners must apply for these exemptions at their County Auditor’s office.
Below is a list of the most common exemptions:
- Homestead - $35,000 or 50% of the gross assessed value of the property, whichever is less. Property must be residential, occupied by the owner, and the owner's primary residence, rental property and second homes are not eligible.
- Mortgage - $3,000. Available to owners of real property or mobile homes who have mortgages.
- Age 65 and over exemption - worth up to $12,480. Homeowners must have income of less than $25,000
- Blind or disable exemption- $12,480
- Veterans - worth between $12,480 and $24,960. Property owner must be a veteran
- Improvements - exemptions for making particular kinds of improvements to property, such as rehabilitation of old property or additions of particular energy systems (solar, wind powered, hydro-electric).
If you don't pay property taxes the state has established a series of steps to handle "tax delinquency." The taxpayer who pays late must pay a penalty. If taxes are not paid for a year, the property is subject to auction at a tax sale, held by the county. Delinquent property taxes are paid by the bidder. The bidder then has a lien on the property. The original owner can clear his or her title to the property by paying the bidder the bid plus another penalty. If this payment is not made, the bidder becomes the new owner of the property.