Charlestown Mayor Treva Hodges says a big part of what keeps her city of roughly 9,000 residents connected is community events, like festivals, children’s camps and popup events at parks.
Some of that could look different next year.
The Charlestown City Council passed a 2026 budget last month that included cuts across the board compared to this year, except for police. The parks department took the biggest hit with a $115,000 cut, followed by around $70,000 from city maintenance.
Hodges said that will mean fewer free events next year, and the city may have to charge fees for the ones it hosts. It will likely mean shorter park hours and less overtime for maintenance staff, which could be a big deal if there’s a lot of snow.
These changes come as Charlestown and other local taxing units like governments and school districts make decisions about what they can afford as they anticipate the squeeze of Senate Enrolled Act 1, a measure passed by Indiana lawmakers this year. Proponents say it was aimed at providing property tax relief.
The legislation provides a 10% credit to homeowners’ tax bills, up to $300. So a final tax bill of $3,000 — after other deductions are applied — will get an additional $300 off.
It also adds new property tax credits for seniors, people with disabilities and disabled veterans. It phases out standard homestead deductions, but increases supplemental homestead deductions. Lawmakers behind the measure say two-thirds of homeowners will see lower bills next year.
SEA 1 and a related bill also significantly increase what business owners can claim as exemptions.
That’s not where the tax changes end.
The law also restructures local income taxes in the coming years, giving local municipalities the power to impose their own. Counties currently set that rate, and revenue is distributed to the cities and towns.
Local officials are concerned about receiving less than expected in property taxes, funding that’s used for services and quality-of-life amenities.
At the same time, some say the new upcoming local income tax structure won’t bring in enough revenue, which they say could also mean cuts to services in the future.
In Charlestown, Hodges and other local leaders took a conservative approach to this year’s budget process ahead of the changes in property tax revenue next year. Along with the legislation, they’ll lose out on uncollectible revenue due to property tax caps.
“We are assuming the worst,” she said. “We're assuming what the state is telling us is going to happen, and if it ends up being better than that, and we have a little extra money, great. But the opposite is not an option.”
She said it’s been difficult to navigate what these changes mean for local communities. Future impacts are based on projections, and there could be changes to the law before some things take effect.
To her, the question isn’t how much Charlestown could lose out on. It’s what challenges communities are facing during this frustrating transition process.
“And I guarantee you, every single community is going to say the biggest challenge is trying to figure out what's happening and how bad it's going to be, because it's all over the place,” Hodges said in September.
Lawmakers say it’s needed
Indiana state lawmakers who helped push the measure forward say property owners need relief.
Republican Senate Majority Leader Chris Garten, a coauthor of the legislation, said in a statement to LPM News that it’s expected to bring $1.3 billion in tax relief statewide over the next three years and “a fundamental shift toward accountability for Hoosier taxpayers.”
He said according to fiscal models from the Indiana Legislative Services Agency, Clark County is estimated to get an overall increase of more than $16 million in property taxes in 2026, with Floyd County in Southern Indiana bringing in around $8 million more over three years.
“This data shows that we can deliver real property tax relief without cutting vital public services,” he said in the statement.
The law also calls for the Indiana Department of Local Government and Finance to maintain a property tax transparency portal for taxpayers to compare what they'd pay under a new proposed tax rate.
Republican Rep. Ed Clere, who cosponsored the bill, said if a local government gets less in revenue under SEA 1 than it projected getting, that’s not a loss.
He said between SEA 1 and the related House Enrolled Act 1427, taxing units will still see increases in property tax revenue, it just may not happen as quickly as they hoped. He calls it a “decrease in the increase.”
“Local government, including cities, towns, counties and schools, will still receive more property tax revenue over the next several years,” he said. “It just won't be as much as they were expecting.”
He pointed to, in some cases, significant increases in local budgets since 2020.
“I'm concerned that many local elected officials have become accustomed to an unsustainable rate of property tax increase,” Clere said. “And that's a big part of SEA 1: trying to create more balance, and it does that.”
Clere said he’d be skeptical of local units raising or imposing new taxes to try to increase revenue from the property tax decreases.
An April report from the Indiana Legislative Services Agencies shows Jeffersonville’s net levy with SEA 1 and HEA 1427 is estimated to be about $747,000 lower next year than if that legislation wasn’t in effect. But it’s still estimated to get around 6.2% more in property tax revenue in 2026 compared with 2025.
New Albany is estimated to see around $743,000 less for 2026 than they would if the laws were not in place, but still a 4.6% increase in property tax revenue from 2025 to 2026.
Advocates to seek changes
Some people say they want to see changes.
Paul Helmke is a professor at the O'Neill School of Public and Environmental Affairs at IU Bloomington. He also served three terms as mayor of Fort Wayne.
He said residents’ property tax bills could be lower, but they may have to pay more in income taxes. And, either way, they could lose some local services.
“I'm not even sure this is going to be the great savings for property taxpayers that the legislature and state officials sold it as,” he said. “They could easily end up paying more in income taxes than they save in property taxes.”
Matt Greller is CEO at Accelerate Indiana Municipalities, or Aim, an organization that advocates for municipalities at the statehouse and provides resources to help communities succeed.
He said the law will provide some property tax relief for most taxpayers, but that will depend on where they live. He also said it means about two-thirds of cities will see “significant reductions” in income tax revenue compared with what they’re seeing today.
The measure eliminates the current local income tax structure in the next several years, replacing it with a system that would allow municipalities to adopt their own starting in 2027 for the 2028 tax year.
Right now, counties impose a county-wide rate. That revenue is distributed to local units, depending on their tax levy.
Clark County’s rate is 2%.
In 2024, Floyd County increased its overall local income tax rate from 1.39% to 1.89%.
Under the new legislation, counties and the municipalities within them will be able to adopt their own rates, to a limit.
Counties can impose up to 1.2% for general expenditures, and lower rates for fire and EMS and things like solid waste districts.
Larger municipalities will also be able to impose their own up to 1.2% rate for expenditures.
Greller said these local rate numbers should be adjusted: Most counties can operate on much less than 1.2%, but cities may need a higher rate. His organization has been working on a list of recommendations to present to the general assembly for consideration in changing the law. That includes asking lawmakers to adjust the rate-split between cities and counties.
“We're hopeful that we can get that done and make sure that cities have the revenue they need to provide the services that our residents expect,” he said.
WVPE News reported earlier this month that Republican state Sen. Linda Rogers said she would consider changes to the local income tax portion of the law.
Greller met with Indiana officials in Speedway last week to discuss concerns and solutions, part of a series of meetings hosted by Aim across the state, which included Jeffersonville.
SEA 1 also capped the tax rate for fire territories created after Jan. 1 of this year at $0.40 per $100 of assessed value. That led to the Jeffersonville City Council voting to stop a territory with Utica and Utica Township, as officials said it wasn't possible to fund at that rate. The territory drew criticism ahead of passage earlier this year from local government and school district leaders who said it would eat into their tax revenue.
Coverage of Southern Indiana is funded, in part, by Samtec Inc., the Hazel & Walter T. Bales Foundation, and the Caesars Foundation of Floyd County.
