Indiana school districts could lose half a billion dollars over the next three years in the latest plan to cut property taxes for Hoosier homeowners.
House Republicans unveiled their proposal last week, moving closer to Gov. Mike Braun’s push for property tax relief. It passed out of committee and the full House will take it up next.
The proposal call for changes to start in 2026, when all districts could lose a combined 2.8% in local revenue compared to current law. The greatest impact on schools is in 2028, with an estimated reduction of more than $266 million in total property tax revenue, according to the nonpartisan Legislative Services Agency.
The legislation now includes controversial language from Senate Bill 518 that would require local property tax revenue to be shared between traditional public school districts and charter schools starting in 2028. It's projected charter schools would receive about $4.6 million more in operations fund distributions than they would under current law.
School district leaders have voiced concerns throughout the legislative session, warning of significant revenue loss under all three Republican-led tax proposals.
South Bend Community Schools would lose the most, around $22.5 million during the period.
Three Central Indiana school districts, in particular, would face major budget shortfalls under the House plan.
Hamilton Southeastern Schools and Carmel Clay Schools would each lose more than $21 million between 2026 and 2028. Indianapolis Public Schools would see a reduction of about $5.6 million.
IPS officials projected more than $96 million will be lost in property tax revenue from 2026 to 2032 under the full changes outlined in SB 1, including a requirement to divide operation tax funds with elligible charter schools.The FSA fiscal estimates of those changes are not yet available.
While the House proposal reduces the overall revenue loss compared to Braun’s original plan, it nearly doubles the projected losses under the Senate version of the legislation.
Rachel Fradette is the WFYI Statehouse education reporter. Contact Rachel at rfradette@wfyi.org.