Quick recap of how we got here
If you've been following our coverage, you already know the legislative path. Senate Enrolled Act 1 raised the exemption and began phasing out the 30% depreciation floor (we covered the original bill here:
Indiana Increases Business Personal Property Tax Exemption). The $1 million exemption for 2025 was later repealed, leaving 2025 at the original $80,000 threshold and pushing the $2 million exemption to 2026 (full update here:
Indiana Business Property Tax Reform: Critical Update for 2025).
Now that the 2026 returns are in front of us, the practical impact is coming into focus. And it's not what most filers are expecting.
The exemption increase is the good news.
The exemption from assessment has jumped from $80,000 to $2 million. That's a meaningful threshold change that will take a lot of smaller filers off the rolls entirely. A few things to keep in mind:
The exemption applies per taxpayer per county, so multiple locations within the same county must be aggregated when determining whether you qualify. And even if you do qualify, you still have to file a 2026 return to claim exempt status. No filing, no exemption.
The floor elimination is where it gets expensive.
This year's forms look different because the 30% floor has been eliminated for assets placed in service after January 1, 2025. That single change is going to drive assessments up for most taxpayers with meaningful post 2025 capital investment.
Yes, you read that correctly. A tax law change designed to reduce taxes is going to increase what most filers owe. The mechanics are counterintuitive, and the impact varies based on the age and composition of your asset base, but the bottom line is that most taxpayers with meaningful post 2025 capital investment will see assessments go up, not down.
The forms are also genuinely more complicated this year, and most internal tax and accounting teams are going to spend more time on the 2026 return than they did on the 2025 one.
