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Bill Summary · HB 1168

Summary of HB 1168 (Indiana, 2026 Session)

Purpose and Intent

HB 1168 proposes to expand and formalize a property tax deduction for veterans who have been rated by the U.S. Department of Veterans Affairs (VA) as individually unemployable (IU). The bill applies to both the veteran and, in certain cases, the surviving spouse. The effective date is July 1, 2026, with implementation impacting property tax statements beginning in 2027.

Key Provisions

  • Targeted deduction amount: Up to $14,000 can be deducted from the assessed value of real property, a mobile home not assessed as real property, or a manufactured home not assessed as real property that the individual owns (or is purchasing under contract) for property tax purposes.

  • Eligibility for individuals (per subsection a):

    • Military service: At least 90 days in the U.S. military or naval forces.
    • Discharge status: Honorable discharge.
    • Disability or IU status: Either total disability, or for assessment dates from January 1, 2026 onward, identified by the VA as IU; or alternatively, the individual is at least 62 years old with at least 10% disability.
    • Evidence of disability: Either a VA pension certificate/award or an Indiana Department of Veterans' Affairs (IDVA) certificate of eligibility confirming qualification for the deduction.
    • Ownership: The individual must own the qualifying property or be buying under a contract that makes the individual responsible for property taxes, and the required statement must be filed on the specified date.

  • Surviving spouse (subsection b): The surviving spouse of an eligible veteran may claim the same deduction if the veteran met the eligibility requirements at the time of death (or under certain death scenarios such as KIA, or death while in service), and the surviving spouse meets the ownership/contract criteria. The deduction applies regardless of whether the property was owned by the veteran or the surviving spouse before death.

  • Limitations (subsections c–d):

    • The deduction is not available if the property's assessed value exceeds a limit (the value cap is defined in subsection d and subject to adjustments).
    • Historical value caps apply to earlier assessment dates (e.g., 2017–2019: $175,000; 2020–2023: $200,000; 2024 onward: $240,000), with adjustments potentially applying to current claims.
    • If the property was sold under a contract where the buyer pays the taxes, the deduction cannot be claimed for that property.

  • Valuation changes (subsection f): Increases in assessed value after the later of December 31, 2019, or the first year the deduction was received are generally excluded unless attributable to substantial renovations or improvements. The assessor must report such substantial renovations or improvements.

  • Legislative integration (Section 2): The Department of Local Government Finance (DLGF) will be required to display educational information about eligibility and procedures for the veteran-related deductions on the property tax coupon page starting with statements issued after December 31, 2025.

Who Is Affected

  • Eligible veterans rated as IU by the VA (and meeting the 90-day service and honorable discharge criteria).
  • The surviving spouses of those eligible veterans.
  • Property owners (real property, mobile homes, or manufactured homes not assessed as real property) who meet ownership/contract conditions.
  • Local taxing units (counties, municipalities) and school corporations, through the anticipated property tax shifts.

Procedural and Timeline Details

  • Effective date: July 1, 2026.
  • Implementation: DLGF must modify the veterans deduction application; no new appropriations are expected for implementation.
  • Education on tax statements: From 2026 tax statements onward, the DLGF will include educational information about several veteran-related deductions, including the IU-based deduction.

Estimated Fiscal Impact (as analyzed in the bill’s fiscal note)

  • State: No additional appropriations; administrative changes required for DLGF.
  • Local: The IU-based deduction is estimated to shift about $1.3 million in property tax burden from IU veterans to non-IU taxpayers, based on current estimates of IU-rated veterans and homeownership rates. Average annual savings per qualifying veteran’s property is approximately $300.
  • Local units may see a slight revenue reduction due to increased tax cap losses; impact is expected to be minimal.

This bill clarifies eligibility, establishes a $14,000 deduction limit for IU veterans (and certain surviving spouses), and requires educational information on tax statements to aid taxpayers.

Compiled from official sources — confirm details with the bill’s official record.

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