Porter County explores local income tax options to bolster county revenue

Porter County commissioners and the county auditor’s office met in a workshop to review local income tax (LIT) options and their likely fiscal and distributional effects, consultant Jason Sendler of Baker Tilly said at the session.

Sendler told the commissioners the main LIT choices fall into three broad buckets: property-tax relief, expenditure-rate options (eight specific categories the county may adopt), and special-purpose rates for large projects. “There’s really kinda 3 different buckets of local income tax,” Sendler said, adding that LIT is charged on adjusted gross income for individuals who live in the county, not on where they work.

Why it matters: Porter County currently has one of the lowest LIT rates in the state, the workshop heard, and officials said revenue pressures mean the county needs to consider new or expanded LIT revenue to maintain services. Sendler and county staff emphasized that different LIT types have different limits on how revenue is shared with other local units, and that some options produce new operational revenue while others primarily shift funding from property taxes.

Key options and constraints discussed

- Property-tax relief: A property-tax-relief LIT does not generate net new county revenue; it shifts funding for budgets currently paid from property-tax levies to the income-tax levy. Sendler said the property-tax-relief cap is 1.25% and that this bucket “is just reducing our property taxes” rather than creating new revenue.

- Expenditure-rate buckets: The county may adopt any of several expenditure-rate options (public safety, certified shares, correctional/rehabilitation, EMS,…