CARMEL, IN — Hoosier homeowners are seeing property tax relief in 2026, but local governments across the state are facing tighter budgets as a result.
Indiana Senate Bill 1, signed into law by Gov. Mike Braun in April, provides homeowners with a 10% reduction or up to $300 off their property tax bills.
While the measure was designed to help Hoosiers manage housing costs, city leaders say the cuts are straining local finances.
Carmel Mayor Sue Finkam said the law is leaving her city with difficult choices.
“There's about $9 to $10 million difference,” Finkam said. “So that's a significant decrease in available funding.”
Finkam, who pledged a net-zero budget when she took office in 2024, has proposed increases of 10% for Carmel Fire and 8% for police in her 2026 budget.
“Our community has said number one, that is their priority. So, therefore, those things that make up public safety are absolutely funded,” she said.
Other departments, however, are facing steep reductions. Carmel’s offices of community services, finance and economic development could see cuts ranging from 11% to 62%, which may include layoffs.
“We've been looking for every opportunity we can find to save dollars and improve the level of service,” Finkam said.
Some residents have expressed concerns online about cuts to public works and community services, warning that such reductions are a “red flag.”
Finkam acknowledged those worries but emphasized that taxpayers will see lower bills over the next several years, and the city is working to ensure a level of service residents have become accustomed to.
“Our taxpayers are going to have decreased taxes to pay over the next four to five years,” she said. “For those of us who have to manage the budget on the other side, we’re trying to do everything we can to save dollars but still deliver a really high quality of product.”
Looking ahead, Finkam warned that without a replacement for lost property tax revenue, such as local income taxes, many Indiana cities and towns could face long-term challenges.
“The revenue loss is unsustainable for most cities and towns in Indiana without a replacement revenue,” she said. “The state of Indiana has tried to offer that up as a local income tax in 2028. But I believe that as it stands right now, we have to have that other replacement revenue or we are not going to be able to serve the residents at the same level we have been.”
The city council will consider Carmel's budget before being brought for a vote for full implementation.
