Summary
City staff outlined how changes made in Indiana's 2025 legislative session—centered on the adopted Senate Bill 1 package and a new state property-tax credit—will reduce assessed value for many property categories, shift some tax burden toward income tax, and require Fishers to consider adopting a local income tax rate for 2028. Officials said the
City of Fishers staff presented an overview of statewide tax changes and the city’s preliminary 2026 budget, saying the new state property-tax credit and related reforms will reduce local assessed values and shift parts of revenue collection toward local option income tax.
At a work session presentation, staff described the key legislative change as a state credit applied after property tax bills are computed: a credit of up to 10% or a $300 maximum that takes effect in 2026. Staff said that credit creates an immediate revenue loss local governments must absorb, and that the enacted package also raised or expanded several deductions and exemptions that will reduce assessed valuations over time.
Why it matters: City staff said the combined changes can lower assessed values (which can push tax rates up) while also reducing how much revenue flows through the existing property-tax system. To compensate, Fishers will have the explicit ability to set a local option income tax (LIT) rate for the city for 2028; staff urged beginning deliberations on a local rate well before the 2027 deadlines.
Key points presented - New state property-credit: The credit is described as “up to 10% or $300 maximum,” applied after a taxpayer’s bill is computed. Staff said that a $300,000 house that hit the 1% circuit-breaker cap ($3,000 liability) would have its liability further reduced by $300 under the new credit, creating a direct local revenue loss. - Supplemental homestead deduction: Staff said the supplemental homestead deduction, which was 37.5% in 2025, is scheduled to increase to about 66.7% between 2026 and 2031, reducing taxable assessed value for many owner-occupied homes. - Rental and farm changes: A new deduction for properties in the 2% (residential rental/farm) category begins at 6% in 2026 and phases to 33% by the end of the multiyear schedule. Separately, staff said farmers received a lower capitalization rate this year (about a 7% reduction), retroactive to 2025. - Business personal property reporting threshold: The presenter reported the current threshold of $80,000 remains for 2026 but will rise in 2027 to $2,000,000, meaning businesses with personal property below that amount will no longer report in 2027. - Local option income tax (LIT): Under the enacted changes, county and municipal governments will adopt their own LIT rates between mid-2027 and fall 2027 for distribution starting in 2028. Staff urged Fishers to develop a local-rate plan so income-tax dollars generated in Fishers can be retained locally. Staff said county-to-municipal shares and population-based allocations will change how libraries, townships and other entities are funded. - Fishers-specific adjustment to maximum levy: Because of special legislation negotiated for Fishers, staff said the city received a one-time increase to its maximum levy of $30,000,007.16; staff said that adjustment will enlarge the base that is then subject to the statutory 4% levy-growth limit going forward. - Annexation and assessed valuation: Staff reported an annexation effective Jan. 1, 2026 (Flat Fork and Vermilion areas) that will increase the city's certified assessed valuation and produce a roughly 2.59% one-time adjustment to Fishers’ maximum levy for 2027 revenue calculations. - Short-term picture vs. 2027: Staff emphasized 2026 will not be a complete break point for the city—some values and caps phase in later years—while 2027 and 2028 are likely to be when budget conversations shift from “tax rate” to “levy” and when local income-tax decisions take center stage.
Distributional impacts and local effects City staff said homeowners with rising assessments may still see larger bills even after the $300 credit if their assessed value increases enough; conversely, owners whose assessed valuations fall or remain flat should see the credit’s effect more directly. Staff warned that traditional commercial office properties (not including apartments or properties with sizable personal property) are the category that likely will see the least relief and therefore may face higher effective tax rates over the next several years.
Fishers’ budget picture and reserves Staff said the draft 2026 budget presented to council staff is balanced and carries an undesignated cash position the presentation described as nearly $40 million in the general fund that the city is not proposing to spend in 2026. The presentation also shows that several debt levies will be consolidated into the general fund going forward, a change the city negotiated with legislators to avoid outside-maximum levies for 2026. Staff said that practice reduces reliance on 1-year bond issuances for capital but requires new lines for capital items previously funded with short-term debt (for example, a new road-fleet capital line and a community-capital line).
Next steps Staff asked the council to begin preparing for formal LIT discussions and to expect department-level budget briefings at the next meeting. The presenters said the city will continue refining assumptions for 2027–28 as county distributions, certified income collections and state guidance are finalized.
Ending Staff closed by repeating that the 2026 budget as presented is balanced and that more detailed departmental expense briefings will be scheduled in the next meeting cycle to refine capital and operating assumptions.
