How Do Property Taxes Work When You Buy a House in Indiana?

Quick answer: In Indiana, property taxes are billed a year behind: the assessed value set on January 1 becomes the bill you pay the following year, in installments due May 10 and November 10. Deductions and the 1% homestead cap keep most owner-occupied bills down. Mark Dietel Realty walks Central Indiana buyers through the numbers before closing.

Key takeaways

Indiana property taxes are paid in arrears: the January 1 assessment becomes next year's bill, due May 10 and November 10.
For taxes payable in 2026, a homestead gets a $48,000 standard deduction plus a supplemental deduction of 40% of the remaining assessed value (Indiana Code 6-1.1-12-37 and 6-1.1-12-37.5).
Senate Enrolled Act 1 (2025) added a homestead credit on 2026 bills — the lesser of 10% of the bill or $300 — and reshapes the deductions each year through 2031.
Constitutional caps limit the bill to 1% of gross assessed value for a homestead, 2% for other residential property, 3% for everything else; voter-approved referendum levies sit outside the caps.
Deductions do not follow the house automatically after a sale — the new owner has to establish them, generally by January 15.

How are property taxes calculated on an Indiana home?

Your county assessor sets an assessed value for the property each January 1. Deductions are subtracted from that value, the remainder is multiplied by your taxing district's rate, and credits and Indiana's constitutional caps are applied last. The Department of Local Government Finance (DLGF) oversees the whole process statewide.

The assessed value is meant to reflect market value-in-use, and county assessors update it annually using recent sales in your area — a process Indiana calls trending. Each spring, the assessor mails a Notice of Assessment (Form 11); the Indiana Association of REALTORS notes these go out by April 30. If you think the value is wrong, the Form 11 lists how and when to appeal to the county assessor.

Two houses with the same price in Greenwood and Bargersville can still owe different taxes, because rates are set by taxing district — the stack of county, township, city or town, school corporation, and library units that serve that address. The DLGF publishes every district's certified rate each year.

What does "paid in arrears" mean for your first year?

Indiana bills property taxes one year behind. The value set on January 1, 2025 produced the bills due in 2026; the January 1, 2026 value produces the 2027 bills. So the first bills you pay in your new house are still based on the seller's assessment history, not on what you just paid for the home.

Installments are due May 10 and November 10 each year. When the date lands on a weekend the deadline moves to the next business day — in 2026 the spring installment was due May 11, per the Indiana Association of REALTORS' assessment guide (March 2026). Most buyers with a mortgage never write these checks directly: the lender collects a slice of the estimated tax with each monthly payment and pays the county from escrow.

Arrears billing is also why tax time at closing runs backward from what most buyers expect: the seller owes you for the months they owned the home but were not yet billed for. That credit is called proration, and we cover it below.

Which deductions lower an Indiana homestead bill in 2026?

For taxes payable in 2026, an owner-occupied Indiana homestead gets a $48,000 standard deduction off its assessed value, then a supplemental deduction equal to 40% of whatever remains. Senate Enrolled Act 1 (2025) also created a new homestead credit on 2026 bills: the lesser of 10% of the bill or $300.

SEA 1 rebuilds this system in stages. The standard deduction shrinks each year while the supplemental percentage grows, and by 2031 the two are replaced by a single deduction of two-thirds of a homestead's assessed value, per the Indiana Association of REALTORS and the DLGF's May 27, 2026 legislation memo. Here is the schedule:

Source: DLGF memo, "Legislation Affecting Deductions, Credits, and Exemptions" (May 27, 2026); Indiana Code 6-1.1-12-37 and 6-1.1-12-37.5.

A "homestead" here means your principal place of residence, and the deductions do not transfer automatically when a home sells — here is how to file the homestead deduction in Marion or Johnson County. Second homes, rentals, and investment properties do not qualify. Indiana also offers separate deductions for homeowners over 65, veterans with disabilities, and others — the county auditor can tell you which apply to you.

What are Indiana's property tax caps?

Indiana's constitution caps a property's total tax bill as a share of its gross assessed value: 1% for a homestead, 2% for other residential property and agricultural land, 3% for other real and personal property. Voters added the caps to Article 10, Section 1 of the Indiana Constitution in November 2010.

The caps are a ceiling, not the bill itself. In many Central Indiana districts the math on a homestead lands below the 1% line once deductions are applied. One important exception: levies that voters approve in a public referendum — usually for school construction or operating funds — are collected outside the caps, per the DLGF's circuit breaker fact sheet. In a district with an active school referendum, your bill can legitimately exceed 1% of gross assessed value.

The homestead cap is one more reason the paperwork matters. The same house is capped at 1% when it is a filed homestead and 2% when it is not — that single status change can swing the ceiling on the bill by thousands of dollars a year. It is also the most common reason a new owner's bill comes in higher than the seller's ever was.

How does property-tax proration work at an Indiana closing?

Because Indiana bills in arrears, the seller has usually lived in the home for months that have not been billed yet. At closing, the title company calculates the seller's unbilled share — typically from the last paid installment through the closing date — and the seller credits it to the buyer. The buyer then pays the bills when they arrive.

Proration is a term of the purchase agreement, not a law of nature. How it is calculated — and whether it is based on the most recent bill or an estimate of the next one — is negotiated in the offer. In our experience across the Southside and Johnson County, proration is one of the most commonly misread lines on a settlement statement, so ask your agent or the title company to walk you through it before signing.

If you escrow, your lender will also collect a cushion of a few months' taxes up front. That money is yours, held to pay future bills — it is not a tax.

What does this look like in Central Indiana?

Here is a hypothetical example. Say you buy a home in Greenwood, Indiana for $330,000 — right at Johnson County's August 2026 median sales price of $330,000, per MIBOR data published by the Indiana Association of REALTORS — and the assessed value matches the price. As a filed homestead on the 2026 bill cycle, the math runs like this:

Note what the deductions do: barely half of the home's value — $169,200 — is actually taxed. Without homestead status the full $330,000 would be taxed and the cap ceiling would be 2%, or $6,600. The district rate is the missing variable, and it genuinely varies across Marion County, Johnson County, and every township line; the DLGF publishes the certified rates, and we can pull the exact figure for any address you are considering.

When this doesn't apply

This article describes an owner-occupied homestead. The math is different if you are buying a rental or investment property (2% cap, no homestead deductions), a second home, or a home through certain land contracts. New construction runs on its own track: the land and the improvements are assessed as they are completed, so the first years of bills can move around more than a resale's. Buyers in districts with active school referendums should expect bills above the capped amount, and buyers over 65 or with a VA disability rating may qualify for additional deductions this article does not cover. Finally, SEA 1's phase-in means the specific figures here are for the 2026 bill cycle — the deduction mix changes every year through 2031.

What to do next

Before you write an offer, look at the property's current tax bill and deduction status — not the ZIP code average. We pull the county tax record, the district rate, and any referendum levies for every home our buyers seriously consider, and we will show you what the bill looks like once your homestead deductions are in place. Call or text Mark Dietel Realty at (317) 426-9911 or start at markdietelrealty.com. We have offices in Southside Indianapolis, Greenwood, and Bloomington.

Frequently asked questions

When are Indiana property taxes due?

May 10 and November 10 each year, moving to the next business day when the date falls on a weekend — in 2026 the spring installment was due May 11. Counties mail bills in advance, and most homeowners with a mortgage pay through their lender's escrow account rather than directly.

Will my assessment jump to my purchase price after I buy?

Not automatically. Indiana assessors update values through annual trending, which uses recent sales across your area rather than repricing your single home to its sale price. Your purchase does become one of the sales in that data, so values in a rising neighborhood drift upward over time.

What is a Form 11 and what should I do with it?

The Notice of Assessment your county assessor mails each spring — by April 30, per the Indiana Association of REALTORS. It states your new assessed value and explains how to appeal. Read it every year; the appeal window is tied to that notice, and a wrong value quietly inflates every future bill.

Do I pay a full year of property taxes at closing?

No. The seller credits you for their unbilled months through proration, and if you escrow, the lender collects a few months of cushion up front. You then pay the regular installments as they come due, using the seller-era assessment for your first year in the house.

How can I estimate the taxes on a house before I offer?

Start with the current bill on the county's property record, then redo the math with your own status: homestead deductions if you will live there, none if you will not. Apply your district's certified rate from the DLGF and check the 1% cap. We run this for our buyers on request.

What happens if I miss an installment?

Indiana counties add statutory penalties to late installments, and long-running delinquency can eventually send a property toward tax sale. If you escrow, the lender pays on time as long as your account is funded. If you pay directly, put May 10 and November 10 on your calendar.

Are property taxes deductible on my income taxes?

Sometimes, within federal limits, and Indiana also has state provisions that change from time to time. That is a question for your CPA or tax preparer, not your real estate agent — bring your closing statement and your property tax bills to your next tax appointment.

This is general information, not legal or tax advice — confirm your situation with a closing attorney, CPA or lender. Figures reflect the 2026 bill cycle under SEA 1-2025 and change in later years.