The Hamilton County Council has approved an ordinance that would increase the county’s homestead property tax credit, effectively lowering property taxes for some residents, but at the same time would increase the county’s income tax.
To be implemented, the ordinance must be approved by at least 51 percent of the vote shares on the county’s Local Income Tax Council, which includes representatives from the county council and eight communities. Each community represented on the LIT has a share of votes that reflects its population.
The county council holds 6.25 percent of LIT votes. The other communities and their share of the votes are Arcadia, .44 percent; Atlanta, .20 percent; Carmel, 28.71 percent; Cicero, 1.53 percent; Fishers, 28.49 percent; Noblesville, 20.03 percent; Sheridan, .89 percent; and Westfield, 13.36 percent.
The ordinance calls for raising the county income tax by .1 percent annually and using the revenue from that additional income tax to go toward the county’s homestead property tax credit.
The ordinance states that the new tax rate would first be applicable in 2024 and would continue until it is rescinded or modified. Hamilton County Councilmember Brad Beaver, who came up with the plan, said the intention is for the county tax to stop increasing after five years, and to accompany a state income tax reduction.
State lawmakers in 2022 voted for a gradual income tax reduction over seven years. During this year’s session, however, they amended that to speed up the time frame, and now the individual state income tax rate will decrease incrementally from the current 3.15 percent to 2.9 percent over four years.
Beaver said the county’s income tax increase would essentially offset the state’s tax reduction, so county residents wouldn’t pay more overall than they have been.
He said the primary goal is to offer relief to senior homeowners through the homestead property tax credit. During a presentation of the ordinance to the Westfield City Council, Beaver said throughout the county, assessments continue going up. That means property taxes are rising even though the rates are not.
“The county has not raised rates in over a dozen years,” he said. “It’s my feeling that the people that are impacted the most through the double-digit (assessment) increases we’ve had over the last two to three years — who is mostly impacted by this is retired people on a fixed income.”
Beaver said the income tax increase and homestead credit increase would be phased in at the same rate. By the end of the process, he said, the county would have an annual revenue increase of $53 million to apply to the homestead property tax credit. That credit is available to people who own and live in a home on land not exceeding one acre. Rentals, commercial property and farmland are not eligible.
Beaver said about 105,000 households applied for the county’s homestead credit in 2022.
In response to an email asking for clarification, Beaver said the county’s property tax is less than 10 percent of the total property tax throughout Hamilton County, so adjusting that part of the equation wouldn’t make a big difference to individual homeowners. The homestead credit would have a bigger impact on those who qualify.
He plans to talk to the governing bodies of each of the LIT community members to answer questions about the proposed ordinance. Beaver said it would need approval from a majority of the county’s LIT by Oct. 1 to take effect in 2024.
