HB 1284

                                                           Introduced Version
          HOUSE BILL No. 1284
                _____
              DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.6.
Synopsis: Local income taxes. Provides that within a county's total
expenditure rate, the county may adopt: (1) up to a 0.7% rate (instead
of a 1.2% rate) for county general purpose revenue; (2) up to a 0.2%
rate (instead of a 0.4% rate) for fire protection and emergency medical
services; (3) up to a 0.2% rate for nonmunicipal civil taxing unit
general purpose revenue; and (4) up to a 1.9% rate (instead of a 1.2%
rate) for certain cities and towns that are not eligible to adopt a
municipal LIT rate. Eliminates provisions that expire local income tax
rates each year. Authorizes a city or town to impose a municipal LIT
rate up to 1.9% (instead of 1.2%). Modifies the population threshold
required for a city or town to impose a municipal LIT rate. Modifies the
formula used to determine distribution amounts of revenue from a tax
rate imposed for fire protection and emergency medical services.
Effective: July 1, 2027.
                        Zimmerman
   January 6, 2026, read first time and referred to Committee on Ways and Means.
2026  IN 1284—LS 6836/DI 125
                                                                                       Introduced
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
 Constitution) is being amended, the text of the existing provision will appear in this style type,
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  Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
 between statutes enacted by the 2025 Regular Session of the General Assembly.
                   HOUSE BILL No. 1284
    A BILL FOR AN ACT to amend the Indiana Code concerning
 taxation.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 6-3.6-3-4, AS AMENDED BY P.L.68-2025,
2 SECTION 105, IS REPEALED [EFFECTIVE JULY 1, 2027]. Sec. 4.
3 (a) Except for a tax rate that has an expiration date, and except as
4 provided in section 3(f) of this chapter (before its expiration), a tax rate
5 remains in effect until the effective date of an ordinance that increases,
6 decreases, or rescinds that tax rate.
7    (b) A tax rate may not be changed more than once each year under
8 this article.
9    (c) A local income tax expenditure tax rate that is imposed in a
10 county under IC 6-3.6-6 continues in effect after December 31, 2027,
11 only if the adopting body adopts an ordinance to renew the expenditure
12 tax rate beginning January 1, 2028. An ordinance under this subsection
13 must be adopted by the adopting body on or before October 1, 2027, as
14 set forth in section 3(b)(1) of this chapter. However, this subsection
15 shall not be construed to prohibit an adopting body that fails to adopt
16 an ordinance to continue an expenditure tax rate after December 31,
17 2027, from adopting an ordinance under this article to impose, renew,
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1 or modify an expenditure tax rate under IC 6-3.6-6 beginning January
2 1, 2029, or any year thereafter.
3     SECTION 2. IC 6-3.6-6-2, AS AMENDED BY P.L.68-2025,
4 SECTION 118, IS AMENDED TO READ AS FOLLOWS
5 [EFFECTIVE JULY 1, 2027]: Sec. 2. (a) This section applies to all
6 counties.
7     (b) The adopting body may by ordinance and subject to subsections
8 (c) through (e) (d) impose one (1) or more of the following component
9 rates not to exceed a total expenditure tax rate under this chapter of two
10 and nine-tenths percent (2.9%) on the adjusted gross income of
11 taxpayers who reside in the county:
12(1) A tax rate not to exceed one and two-tenths percent (1.2%)
13seven-tenths of one percent (0.7%) for general purpose revenue
14for county services (as provided in section 4 of this chapter),
15subject to subsection (c).
16(2) A tax rate not to exceed four-tenths of one percent (0.4%)
17two-tenths of one percent (0.2%) for providers of fire protection
18and emergency medical services located within the county (as
19provided in section 4.3 of this chapter), subject to subsection (c).
20(3) A tax rate not to exceed two-tenths of one percent (0.2%) for
21general purpose revenue for distribution to nonmunicipal civil
22taxing units (excluding fire protection districts) located within the
23county (as provided in section 4.5 of this chapter), subject to
24subsection (c).
25(4) A tax rate not to exceed one and two-tenths percent (1.2%)
26one and nine-tenths percent (1.9%) for general purpose revenue
27for municipal services for distribution to municipalities located
28within the county that are not eligible to adopt a municipal tax
29rate under section 22 of this chapter or that have made an election
30under section 23(b)(3) of this chapter to be treated as such.
31     (c) The combined component rates imposed by an adopting body
32 under subsection (b)(1) through (b)(3) shall not exceed one and
33 seven-tenths percent (1.7%). one percent (1%).
34     (d) A tax rate adopted under subsection (b)(4) may only be imposed
35 on taxpayers who do not reside in a municipality that is eligible to
36 adopt a municipal tax rate under section 22 of this chapter.
37     (e) Beginning after December 31, 2030, a tax rate imposed under
38 subsection (b) shall expire on December 31 of each calendar year. An
39 adopting body wishing to continue, increase, or decrease a tax rate in
40 the succeeding year must pass an ordinance to readopt a tax rate in
41 accordance with IC 6-3.6-3-3. This subsection applies regardless of
42 whether there is a modification in the tax rate or the component rates
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1 or the rates are unchanged from the previous year.
2     SECTION 3. IC 6-3.6-6-4.3, AS ADDED BY P.L.68-2025,
3 SECTION 127, IS AMENDED TO READ AS FOLLOWS
4 [EFFECTIVE JULY 1, 2027]: Sec. 4.3. (a) Revenue raised from a tax
5 rate for fire protection and emergency medical services under section
6 2(b)(2) of this chapter shall be distributed by the county to each fire
7 protection district and fire protection territory and municipal fire
8 department located within the county. At the discretion of the county
9 council, the county may distribute revenue raised from a tax rate for
10 fire protection and emergency medical services under section 2(b)(2)
11 of this chapter to municipal fire departments, township fire
12 departments, and volunteer fire departments.
13     (b) Revenue raised from a tax rate for fire protection and emergency
14 medical services under section 2(b)(2) of this chapter shall be allocated
15 to each fire protection district and fire protection territory, municipal
16 fire department, and, if applicable, municipal fire departments,
17 township fire departments, and volunteer fire departments, based on the
18 following formula:
19STEP ONE: For each provider of fire protection and emergency
20medical services located within the county that is eligible to
21receive revenue under this section, determine the population
22living within the service boundaries of the provider using the
23most recent federal decennial census.
24STEP TWO: For each provider of fire protection and emergency
25medical services located within the county that is eligible to
26receive revenue under this section, determine the number of
27square miles within the service boundaries of the provider.
28STEP THREE: For each provider of fire protection and
29emergency medical services located within the county that is
30eligible to receive revenue under this section, determine the
31product of:
32(A) the STEP TWO amount; multiplied by
33(B) twenty (20).
34STEP FOUR: THREE: For each provider of fire protection and
35emergency medical services located within the county that is
36eligible to receive revenue under this section, determine the sum
37of:
38(A) the STEP ONE result; plus
39(B) the STEP THREE TWO result.
40STEP FIVE: FOUR: Determine the sum total of the STEP FOUR
41THREE results for each provider of fire protection and
42emergency medical services located within the county that is
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1eligible to receive revenue under this section.
2STEP SIX: FIVE: The percentage of revenue that shall be
3distributed to each provider of fire protection and emergency
4medical services located within the county that is eligible to
5receive revenue under this section is equal to:
6(A) the STEP FOUR THREE result for the provider; divided
7by
8(B) the STEP FIVE FOUR result.
9     SECTION 4. IC 6-3.6-6-4.5, AS AMENDED BY THE
10 TECHNICAL CORRECTIONS BILL OF THE 2026 GENERAL
11 ASSEMBLY, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
12 JULY 1, 2027]: Sec. 4.5. (a) Revenue raised from a tax rate for
13 nonmunicipal civil taxing units under section 2(b)(3) of this chapter
14 may be distributed by the county to nonmunicipal civil taxing units
15 subject to the provisions of this section.
16     (b) Subject to the maximum aggregate tax rate of not more than
17 two-tenths of one percent (0.2%) under section 2(b)(3) of this chapter,
18 the adopting body may adopt a tax rate for each type of nonmunicipal
19 civil taxing unit. which may not exceed more than five-hundredths of
20 one percent (0.05%) for any given unit type. The revenue raised from
21 a tax rate for a specific type of nonmunicipal civil taxing unit shall be
22 allocated to all nonmunicipal civil taxing units of that same type
23 located within the county on a pro rata per capita basis, subject to
24 subsection (e).
25     (c) A county solid waste management district (as defined in
26 IC 13-11-2-47) or a joint solid waste management district (as defined
27 in IC 13-11-2-113) is not an eligible nonmunicipal civil taxing unit for
28 the purpose of receiving an allocation of general purpose revenue under
29 this chapter unless a majority of the members of each of the county
30 fiscal bodies of the counties within the district passes a resolution
31 approving the distribution.
32     (d) A resolution passed by a county fiscal body under subsection (c)
33 may:
34(1) expire on a date specified in the resolution; or
35(2) remain in effect until the county fiscal body revokes or
36rescinds the resolution.
37     (e) A nonmunicipal civil taxing unit wishing to receive a share of
38 revenue under this section in a year must adopt a resolution requesting
39 the distribution from the county and must provide a certified copy of
40 the resolution to the adopting body not later than July 1 of the year
41 immediately preceding the distribution year. Not later than August 1 of
42 the year immediately preceding the distribution year, the adopting body
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1 shall hold a public hearing on the resolution requesting the distribution
2 and provide the public with notice of the time and place where the
3 public hearing will be held. The notice must be given in accordance
4 with IC 5-3-1 and include a description of the resolution requesting the
5 distribution from the county.
6     (f) If a nonmunicipal civil taxing unit adopts a resolution under this
7 subsection subsection (e) and provides the resolution to the adopting
8 body as set forth in this that subsection, the county shall distribute to
9 the nonmunicipal civil taxing unit an amount of revenue raised from
10 the tax rate under section 2(b)(3) of this chapter for the distribution
11 year as set forth in subsection (f). (g).
12     (g) If one (1) or more, but not all, nonmunicipal civil taxing units
13 adopt a resolution under subsection (e) requesting a distribution in a
14 given year, the county may either distribute the total amount of revenue
15 raised from the tax rate under section 2(b)(3) of this chapter to only
16 those nonmunicipal civil taxing units that have provided a resolution
17 request, or the county may distribute the total amount of revenue raised
18 from a tax rate under section 2(b)(3) of this chapter to all nonmunicipal
19 civil taxing units as set forth in this section. If no nonmunicipal civil
20 taxing units adopt a resolution to request a distribution in a given year,
21 the county may retain the revenue raised from a tax rate for
22 nonmunicipal civil taxing units for that year and use the revenue as
23 general purpose revenue for the county under section 4 of this chapter.
24     SECTION 5. IC 6-3.6-6-6.1, AS AMENDED BY THE
25 TECHNICAL CORRECTIONS BILL OF THE 2026 GENERAL
26 ASSEMBLY, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
27 JULY 1, 2027]: Sec. 6.1. (a) Revenue raised from a tax rate for certain
28 cities and towns under section 2(b)(4) of this chapter may be
29 distributed by the county to those cities and towns subject to the
30 provisions of this section.
31     (b) Subject to subsection (g), the revenue raised from a tax rate
32 under section 2(b)(4) of this chapter shall be allocated to the cities and
33 towns based on the population of the city or the population of the town,
34 whichever is applicable, compared to the population of all the cities or
35 the population of all the towns, whichever is applicable, that are
36 eligible for a distribution, subject to subsection (d). For purposes of this
37 determination, if the boundaries of a city or town are located in more
38 than one (1) county, only the portion of the population of the city or
39 town that is located within the county imposing the tax rate under
40 section 2(b)(4) of this chapter shall be considered.
41     (c) The money may be used by the city or town fiscal body for any
42 of the purposes of the city or town, including public safety (as defined
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1 in IC 6-3.6-2-14) and economic development purposes described in
2 IC 6-3.6-10. The city or town fiscal body may pledge its general
3 purpose revenue to the payment of bonds or to lease payments as set
4 forth in this chapter.
5     (d) An eligible city or town wishing to receive a share of revenue
6 under this section in a year must adopt a resolution requesting the
7 distribution from the county and must provide a certified copy of the
8 resolution to the adopting body not later than July 1 of the year
9 immediately preceding the distribution year. Not later than August 1 of
10 the year immediately preceding the distribution year, the adopting body
11 shall hold a public hearing on the resolution requesting the distribution
12 and provide the public with notice of the time and place where the
13 public hearing will be held. The notice must be given in accordance
14 with IC 5-3-1 and include a description of the resolution requesting the
15 distribution from the county.
16     (e) Subject to subsection (g), if an eligible city or town adopts a
17 resolution under this subsection subsection (d) and provides the
18 resolution to the adopting body as set forth in this that subsection, the
19 county shall distribute to the eligible city or town unit an amount of
20 revenue raised from the tax rate under section 2(b)(4) of this chapter
21 for the distribution year as set forth in subsection (f).
22     (f) Subject to subsection (g), if one (1) or more, but not all, eligible
23 cities or towns adopt a resolution under subsection (d) requesting a
24 distribution in a given year, the county may either distribute the total
25 amount of revenue raised from the tax rate under section 2(b)(4) of this
26 chapter to only those eligible cities or towns that have provided a
27 resolution request, or the county may distribute the total amount of
28 revenue raised from a tax rate under section 2(b)(4) of this chapter to
29 all eligible cities or towns as set forth in this section. If no eligible city
30 or town adopts a resolution to request a distribution in a given year, the
31 county may retain the revenue raised from a tax rate for the eligible city
32 or town for that year and use the revenue as general purpose revenue
33 for the county under section 4 of this chapter.
34     (g) Notwithstanding any provision to the contrary in this section, if
35 an adopting body that imposes a tax rate of one and two-tenths percent
36 (1.2%) seven-tenths of one percent (0.7%) under section 2(b)(1) of
37 this chapter subsequently adopts an ordinance to concurrently impose
38 a tax rate under section 2(b)(4) of this chapter:
39(1) seventy-five percent (75%) of the revenue received from the
40tax rate imposed under section 2(b)(4) of this chapter shall be
41retained by the county and may be used for the purposes
42described in section 4 of this chapter; and
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1(2) twenty-five percent (25%) of the revenue received from the
2tax rate imposed under section 2(b)(4) of this chapter shall be
3distributed among the eligible cities and towns as set forth in this
4section and may be used for the purposes set forth in this section.
5 However, the adopting body may, by ordinance, determine to allocate
6 any percentage of the revenue that would otherwise be retained by the
7 county under subdivision (1) to instead be allocated among the eligible
8 cities and towns under subdivision (2).
9     SECTION 6. IC 6-3.6-6-22, AS ADDED BY P.L.68-2025,
10 SECTION 147, IS AMENDED TO READ AS FOLLOWS
11 [EFFECTIVE JULY 1, 2027]: Sec. 22. (a) As used in this section,
12 "municipality" means only a city or town that:
13(1) has a population of three thousand five hundred (3,500) two
14thousand (2,000) or more; and
15(2) in the case of a city or town whose population decreased in the
16most recent federal decennial census from three thousand five
17hundred (3,500) two thousand (2,000) or more to less than three
18thousand five hundred (3,500), two thousand (2,000), has elected
19by ordinance to continue to use its previous population of three
20thousand five hundred (3,500) two thousand (2,000) or more as
21set forth in section 23(b)(2) of this chapter for purposes of the
22allocation determination under section 6.1 of this chapter.
23 The term does not include a city or town that has made an election
24 under section 23(b)(3) of this chapter.
25     (b) Beginning after December 31, 2027, the fiscal body of a
26 municipality may by ordinance and subject to subsection (e), impose
27 a local income tax rate on the adjusted gross income of local taxpayers
28 in the municipality that does not exceed one and two-tenths percent
29 (1.2%). one and nine-tenths percent (1.9%).
30     (c) The following apply if a municipality imposes a local income tax
31 rate under this section:
32(1) A local income tax rate imposed by a municipality under this
33section applies only to local taxpayers within the territory of the
34municipality.
35(2) The local income tax is imposed in addition to a tax imposed
36by the county in which the municipality is located in accordance
37with IC 6-3.6-4-1(a) and IC 6-3.6-4-1(c).
38(3) The following provisions of this article apply to a local income
39tax rate imposed by a municipality under subsection (b):
40(A) IC 6-3.6-3 (adoption of the tax), including the effective
41date of an ordinance under IC 6-3.6-3-3.3.
42(B) IC 6-3.6-4 (imposition of the tax), except that IC 6-3.6-4-2
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1and IC 6-3.6-4-3 do not apply.
2(C) IC 6-3.6-8 (administration of the tax).
3(4) A local income tax rate imposed by a municipality shall apply
4to professional athletes who compete in the municipality, unless
5exempted under IC 6-3-2-27.5 or other provision of law.
6     (d) The amount of the tax revenue that is from the local income tax
7 rate imposed under this section and that is collected for a calendar year
8 shall be treated as general purpose revenue and must be distributed to
9 the fiscal officer of the municipality that imposed the tax before July 1
10 of the next calendar year.
11     (e) Beginning after December 31, 2030, a tax rate imposed under
12 subsection (b) shall expire on December 31 of each calendar year. A
13 municipality wishing to continue, increase, or decrease a tax rate in the
14 succeeding year must pass an ordinance to readopt a tax rate in
15 accordance with IC 6-3.6-3-3.3. This subsection applies regardless of
16 whether there is a modification in the tax rate or the rate is unchanged
17 from the previous year.
18     SECTION 7. IC 6-3.6-6-23, AS ADDED BY P.L.68-2025,
19 SECTION 148, IS AMENDED TO READ AS FOLLOWS
20 [EFFECTIVE JULY 1, 2027]: Sec. 23. (a) This section applies in
21 determining the population of a city or town for the purposes of this
22 chapter.
23     (b) The following apply:
24(1) Except as provided in subdivisions (2) and (3), the population
25of a city or town is the population of the city or town that is
26reported by the 2020 federal decennial census. most recent
27distribution factors report prepared by the state comptroller.
28(2) Beginning after 2030, if the population of a city or town:
29(A) increases from a population of less than three thousand
30five hundred (3,500), two thousand (2,000), as reported by
31the distribution factors report prepared by the state
32comptroller for the immediately preceding federal decennial
33census, year, to a population of three thousand five hundred
34(3,500) two thousand (2,000) or more, as reported by the most
35recent federal decennial census, distribution factors report
36prepared by the state comptroller, or, if applicable, any
37corrected population count (as defined in IC 1-1-3.5-1.5)
38issued for the city or town in the year succeeding the most
39recent federal decennial census; distribution factors report
40prepared by the state comptroller; or
41(B) decreases from a population of three thousand five
42hundred (3,500) two thousand (2,000) or more, as reported by
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1the distribution factors report prepared by the state
2comptroller for the immediately preceding federal decennial
3census, year, to a population of less than three thousand five
4hundred (3,500), two thousand (2,000), as reported by the
5most recent federal decennial census, distribution factors
6report prepared by the state comptroller, or, if applicable,
7any corrected population count (as defined in IC 1-1-3.5-1.5)
8issued for the city or town in the year succeeding the most
9recent federal decennial census; distribution factors report
10prepared by the state comptroller;
11the fiscal body of the city or town may adopt an ordinance on or
12before September 1 of the calendar year immediately succeeding
13the most recent federal decennial census distribution factors
14report prepared by the state comptroller to continue to use the
15population of the city or town as reported by the distribution
16factors report prepared by the state comptroller for the
17immediately preceding federal decennial census year and the
18resulting determination for the city or town under section 22 of
19this chapter, notwithstanding the increase or decrease in its
20population as reported by the most recent federal decennial
21census distribution factors report prepared by the state
22comptroller as described in this subdivision. An ordinance
23adopted under this subdivision shall take effect on January 1 of
24the calendar year that immediately succeeds the year in which the
25ordinance is adopted. The fiscal officer of the city or town shall
26provide a certified copy of an ordinance adopted under this
27subdivision to the department of local government finance.
28(3) This subdivision applies only to cities and towns with a
29population of more than three thousand five hundred (3,500) two
30thousand (2,000) but less than seven thousand (7,000).
31thirty-four thousand (34,000). Notwithstanding any other
32provision, a fiscal body of a city or town may adopt an ordinance
33to elect to be treated as if the city's or town's population is less
34than three thousand five hundred (3,500) two thousand (2,000)
35for purposes of a county local income tax rate and distribution
36under this chapter. An ordinance adopted under this subdivision
37shall take effect on January 1 of the calendar year that
38immediately succeeds the year in which the ordinance is adopted.
39The fiscal officer of the city or town shall provide a certified copy
40of an ordinance adopted under this subdivision to the department
41of local government finance. An ordinance adopted by a city or
42town under this subdivision is not revocable and shall not expire
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1following the next federal decennial census. distribution factors
2report prepared by the state comptroller.
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