Indiana homeowners no longer file the former mortgage deduction after a refinance or purchase. The repeal was followed by changes to homestead deductions and credits, making the assessment year important when reviewing a bill.
What replaced the mortgage deduction
Indiana's mortgage deduction was worth $3,000 off the assessed value of the property. House Enrolled Act 1260 of 2022 repealed it in its entirety, effective January 1, 2023, and the state told county auditors that "the 2023 tax bill cycle will be the last time the mortgage deduction is available." The same legislation raised the standard homestead deduction by the same $3,000, to the lesser of 60% of assessed value or $48,000, for assessment dates after December 31, 2022.
So for an owner-occupant the repeal was close to a wash. For a landlord or a second home owner, who could take the mortgage deduction but not the homestead deduction, it was not.
What the state actually told the counties
The instruction was blunt. Auditors were told they could keep the filed mortgage forms as public records and write to taxpayers about the change, or publish a notice in the county newspaper instead, or give no separate notice at all and simply "add the $3,000 to the homestead deduction for 2024 bills." In every case the direction was the same sentence: "Do not apply any deduction for a mortgage in any amount." That is why nobody wrote to you. Two of the three options the state offered involved not writing to you.
Why it was repealed in the first place
The state's memo does not argue the policy. What changed for an owner is mechanical: the mortgage deduction needed a fresh application whenever the mortgage changed, and the same $3,000 now arrives with the homestead deduction, with no second form, and keeps arriving without reapplying.
Then 2025 happened, and this is the part that matters
Senate Enrolled Act 1 of 2025, signed April 15, 2025, did something far larger than the 2022 repeal. The standard homestead deduction, the one that absorbed the mortgage deduction, is now being phased out. The scheduled amounts run by assessment date: $48,000 for 2025, $40,000 for 2026, $30,000 for 2027, $20,000 for 2028, $10,000 for 2029, and $0 for 2030 and after. The 2026 assessment date is the bill paid in 2027.
In its place the supplemental homestead deduction grows. It is now a share of the assessed value remaining after the standard deduction, and the scheduled rates run by the year the taxes are due: 40% for taxes due in 2026, 46% in 2027, 52% in 2028, 57% in 2029, 62% in 2030, and 66.7% in 2031 and each year after. It may not exceed 75% of the gross assessed value of the property.
The state's 2026 guidance confirms both schedules are still on track, describing them as continuing "according to the amounts listed" in the statutes.
There is also a new supplemental homestead credit, applying to taxes first due and payable after December 31, 2025, equal to the lesser of 10% of the property tax liability on the homestead or $300, with voter-approved referendum taxes excluded. The state's note on it is worth repeating because it is the opposite of the old mortgage deduction habit: "Taxpayers are not required to file an application to receive this credit."
What a seller should take from the schedule
The structure is moving from a flat dollar amount off every homestead to a percentage of each home's own assessed value. A flat $48,000 is proportionally enormous on a $180,000 house and small on a $900,000 one. A percentage is not. Which direction any individual bill moves depends on that parcel's assessed value, that year's rate, and the local tax caps, and it is not something to predict from a schedule alone.
What is safe to say is that the thing being phased out favored lower assessed values and the thing replacing it does not, and that the transition runs through 2031.
For an owner budgeting to remain in the home, the schedules show why a current bill cannot simply be carried forward to 2030. Review the parcel's assessment, deductions and credits with the relevant offices before estimating the future amount.
What your bill will be in any future year, what your assessed value will do, and whether a deduction or credit applies to your parcel are not mine to say. The county auditor has the authority on your deductions and credits, the county assessor has the assessed value, and your CPA has what any of it means against your income taxes.
The homestead deduction when you move covers that filing, and Indiana property taxes are paid in arrears covers why the bill at your closing is for a year you have already lived.
Sources, read October 13, 2026: Indiana Department of Local Government Finance memorandum of April 29, 2022 from Commissioner Wes Bennett, "Legislative Changes Concerning Mortgage Deduction Repeal," for the $3,000 amount, HEA 1260-2022 section 12, the January 1, 2023 effective date, the last bill cycle, the auditor instructions and the $48,000 homestead figure; DLGF memorandum of June 12, 2025 from Commissioner Jason Cockerill for the SEA 1-2025 standard and supplemental homestead schedules, the 75% cap and the supplemental homestead credit; DLGF memorandum of May 27, 2026 for confirmation that both schedules continue; and IC 6-1.1-12-1 (repealed by P.L.174-2022, SEC.12), IC 6-1.1-12-37 and IC 6-1.1-12-37.5 as reproduced on law.justia.com.
This note is general information, not legal or tax advice. Property tax law in Indiana has changed in each of the last three legislative sessions. Confirm anything you plan to rely on with the county auditor.