IN Lawmaker Proposes Plan to Completely Abolish Property Taxes
INDIANAPOLIS — A shift in how Indiana funds local government could be on the horizon. State Representative J.D. Prescott (R-Union City) joined WIBC’s Ethan Hatcher and Brian Baker to discuss his new legislative proposal: a complete, top-to-bottom elimination of the Hoosier state’s property tax system.
The proposal aims to dismantle a system that critics argue penalizes wealth and property ownership, replacing it entirely with a 7% sales tax on specific services. “It’s a complete repeal of the property tax system, including the assessments, all business personal property, property taxes across the board for homeowners, for businesses, for rental properties,” Prescott said.
By wiping out the property tax infrastructure, Prescott estimates the state would eliminate the need for county assessor offices, saving Indiana taxpayers between $150 million and $200 million annually in administrative overhead alone.
Under Prescott’s plan, the revenue loss from property taxes—roughly $10.6 billion annually—would be offset by expanding the state’s sales tax to services. Prescott projects the new service tax would generate between $13 billion and $15 billion a year.
While a multibillion-dollar tax revenue increase might trigger immediate alarm for taxpayers, Prescott insists the surplus is a vital mechanism designed to protect local governments, which rely entirely on property taxes to fund schools, public safety, and infrastructure.
Essential services would be explicitly exempt from the new 7% tax, including:
Medical and dental care
Nursing home care
Social services, such as daycare
Education
Additionally, anything currently exempt from the state’s traditional sales tax on goods would remain exempt under the service tax. To help fund the transition, Prescott revealed he plans to amend the bill to force large data centers to pay sales tax on both goods and services, eliminating their current special tax breaks.
The Break-Even Formula: Prescott offered a simple mathematical breakdown for anxious homeowners: For every $1,000 you currently pay in property taxes, you would need to spend $14,300 in taxable services under the new plan to face the same tax liability.
When pressed on whether this plan shifts the tax burden onto lower-income Hoosiers and renters who do not own land, Prescott argued that renters already pay property taxes indirectly through their rent. While he acknowledged there is “no perfect taxing system,” he believes the free market will eventually level out rental prices once landlords see their property tax bills vanish.
Taxpayers should also prepare for a temporary financial squeeze if the bill passes. Because property taxes are paid in arrears (for the previous year) and sales taxes are collected in advance, Hoosiers would experience a six-month overlap of double taxation in 2028.
If passed during the upcoming legislative session, property assessments would permanently end in 2027, with 2028 marking the final year of property tax payments. The service tax would begin collections on July 1, 2028, creating a six-month buffer period to build up local reserves before the new system fully takes over on January 1, 2029.
Prescott emphasized that this proposal is a work in progress and is actively inviting “the good, the bad, and the ugly” feedback from Hoosiers across the state. Taxpayers can directly share their thoughts on the proposal by emailing Representative Prescott’s office at H33@iga.in.gov.
