Property Taxes & Local Market

Indiana's New Property Tax Law: What South Bend and Notre Dame Area Homeowners Need to Know

Let me be real with you: property taxes around South Bend have been a source of frustration for years. I've had clients — some who've lived in their homes for decades — open their tax bills and do a double-take worthy of a Notre Dame fourth-quarter comeback. Assessments near the university have climbed sharply, driven by a hot real estate market and the "gentrification effect" of neighborhoods surrounding campus. I've watched it happen up close for 25 years.

So when Indiana Governor Mike Braun signed Senate Enrolled Act 1 (SEA 1) into law in April 2025, I paid close attention. And I can tell you — there's actual substance here. It's not a silver bullet, but it's meaningful, and you deserve to understand exactly what it means for your wallet. Let me break it down.

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What Is Indiana Senate Enrolled Act 1 (SEA 1)?

SEA 1 is a sweeping property tax reform package that phases in changes from 2025 through 2031. Governor Braun and the Indiana General Assembly wrapped up their 2025 legislative session on April 25, sending a $44 billion biennial budget alongside this landmark overhaul. The law touches homeowners, seniors, veterans, small businesses, and farmers — and its effects compound each year through the end of the decade.

The headline number: Hoosier homeowners are projected to save $1.3 billion in property taxes over the next three years, with two-thirds of homeowners expected to see a lower bill in 2026 than they paid in 2025.

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The $300 Property Tax Credit: Here's the Fast Answer

The credit is applied automatically by county auditors. For once, Indiana is doing something for you without requiring you to fill out a form first.

If you're a South Bend homeowner with your homestead deduction already filed — and if you're not sure, call the St. Joseph County Auditor's office or reach out to me directly — this credit kicks in without any action on your part.

One important exception: property owners who purchased a home in 2025, refinanced, or had a change in ownership or title should confirm their homestead deduction is still properly on file with the county auditor.

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The Expanded Homestead Deduction: The Bigger Long-Term Win

Beyond the $300 credit, SEA 1 is restructuring the homestead deduction itself — and this is where it gets interesting for anyone planning to stay in their home through the decade.

The standard homestead deduction (currently $48,000) phases out starting in 2027 and ends entirely after 2030. To offset this, the supplemental homestead deduction expands from 37.5% to 66.7% of assessed value over the same period — reaching 40% for 2026 tax bills and climbing from there.

Translation: the old flat deduction goes away, but the percentage-based deduction grows substantially. For homeowners with higher assessed values — which, if you live near Notre Dame, absolutely describes you — this shift works in your favor.

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What About Seniors? Extra $150 and a Deferral Option

Homeowners 65 and older receive an additional $150 credit on top of the standard $300, bringing the combined total up to $450 per year. Not life-changing, but not nothing either — especially when it's automatic.

There's also a deferral provision worth knowing: approved seniors can defer up to $500 of their tax bill annually, up to $10,000 total over several years. AARP Indiana supported this provision specifically as a tool to help seniors on fixed incomes stay in their homes.

Income limits apply: no more than $60,000 adjusted gross income for single filers, or $70,000 for joint filers. Those thresholds are not indexed to inflation, so keep that in mind as the years roll on.

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What This Means for South Bend and St. Joseph County

Here's the honest, local perspective — because the statewide headline doesn't always match what happens on the ground in our county.

St. Joseph County has historically carried some of the highest property tax rates in Indiana. South Bend's median tax rate sits at 1.13% — above the national median of 1.02%. And in the Notre Dame corridor, assessed values have been climbing hard for years.

Many property owners here have seen their assessments double or even triple in recent years, driven by COVID-era demand and the continued draw of neighborhoods around the university. Statewide, net tax on homesteads rose an average of 7.8% from 2024 to 2025, according to the Indiana Office of Fiscal and Management Analysis — with roughly two dozen counties seeing double-digit increases. As Purdue agricultural economist Larry DeBoer has observed: tax rates have fallen, but not as fast as assessed values have risen, so bills kept climbing anyway.

SEA 1 is designed to pump the brakes on that cycle. But there is a real trade-off worth understanding.

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The Honest Trade-Off: What Local Governments Are Giving Up

Some Indiana cities and towns have already responded with budget cuts — parks departments trimmed, fire department expansion plans scrapped, community pools closed. The law gives local governments new tools to adjust local income tax rates to compensate, but how communities use that lever — and how voters respond — is still being worked out.

As a buyer or seller in South Bend, this matters. The quality of local services, schools, and infrastructure shapes property values over time. I'll be watching this carefully in the years ahead.

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What About Business Personal Property Tax?

If you own a small business near Notre Dame — or a condo you use as a short-term rental or home office — this is worth knowing.

SEA 1 raises the personal property tax exemption for businesses from $80,000 to $2 million, effectively eliminating property tax filings for the vast majority of small businesses. In St. Joseph County alone, that wipes out nearly 9,600 of the roughly 10,000 business personal property filings the county previously processed. Real savings, significantly less paperwork.

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Key Dates at a Glance

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Frequently Asked Questions

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My Take as Your Local Expert

After 25 years helping buyers and sellers navigate South Bend and the Notre Dame area, I've learned that tax changes — like most things in real estate — need to be understood in the context of your specific situation, not just the statewide headlines.

For most homeowners near the university, SEA 1 is genuinely good news. The automatic $300 credit is real money. The expanded supplemental homestead deduction will compound meaningfully over the next five years. For seniors, the combined credits plus the deferral option provide real peace of mind.

For buyers: lower property tax bills in 2026 improve your total cost of ownership — and that matters for your monthly payment math. If you've been on the fence about buying near Notre Dame, this is one more reason to get off it.

For sellers: buyers who are paying attention to affordability will factor these credits into their numbers. It's a legitimate selling point worth knowing when your home hits the market.

Have questions about how these changes affect a specific property you're considering? I'm happy to walk through it with you. That's what I do.

Sources: Indiana General Assembly Senate Enrolled Act 1 (April 2025); AARP Indiana property tax analysis; Association of Indiana Counties 2025 legislative review; KSM (Katz, Sapper & Miller) 2025 Indiana Legislative Update; Baker Tilly Indiana property tax summary; WFYI Indianapolis statehouse reporting; WVPE local news; St. Joseph County Assessor's Office; Indiana Office of Fiscal and Management Analysis; Purdue University Extension (Larry DeBoer); Indiana Department of Local Government Finance.