New Tax Plan Details
Expand Sales tax to include Services
Repeal Property Tax
Simple Fair Tax
A 7% sales tax would generate more than enough revenue to completely replace the revenue from the property tax system. By moving to a fair, consumption-based tax, it spreads the tax burden more fairly across all citizens based on what they can afford to spend. If we keep the exemption list broad, the sales tax rate could end up even lower than 7%.
The plan eliminates property taxes for homestead properties first. 2027 would be the last year for property tax assessments for homesteads, and 2028 would be the last year those taxes are payable. Due to outstanding bond obligations, we would keep the property tax system in place on the 2% and 3% tax cap properties until the debt is paid off or can be refinanced into the new system.
A simple 7% or lower sales tax on services is easy to understand and administer, ensuring transparency and fairness for taxpayers.
FAQ
What is the Fair Tax?
A fair tax system is one where people pay based on what they can afford to spend, where everyone contributes through a broad tax base at a low rate, and where the rules are simple and clear so citizens are never surprised by their tax bill.
Why repeal property taxes?
The property tax system is broken. It taxes unrealized gains and is even forcing some people out of their homes. The system lets government pick winners and losers by handing out deductions, credits, and abatements to certain property owners, while everyone else ends up paying more and more each year.
Why a 7% sales tax on services?
Indiana currently does not charge sales tax on services. By adding a 7% sales tax on services, we can generate more than enough revenue to replace the entire property tax system and still create a healthy surplus account. If we don’t add too many exemptions and keep the tax base broad, we may even be able to use a lower rate while still fully funding essential services.
Who benefits from this change?
Under this plan, most taxpayers would see their total tax bill go down. Local governments would receive stable, additional revenue through the new funding formula, while also saving money by eliminating the property tax collection system and the assessor’s office. As a rule of thumb, for every $1,000 you currently pay in property taxes, you would need to spend about $14,300 on taxable services to owe that same $1,000 under the sales tax on services—so you can quickly see whether you’d pay more or less.
Which services would be exempt from the 7% sales tax?
This plan keeps exemptions very narrow so we can maintain a low, fair rate while still fully funding essential services. Healthcare and social services would be exempt from the sales tax, including things like doctor visits, dental care, nursing homes, and day care. Education would also be exempt. In addition, any area that is currently sales tax exempt on goods would remain sales tax exempt on services—for example, nonprofits and churches. Under the updated proposal, there is also a temporary sales tax exemption for business-to-business service transactions during the transition period while businesses are still paying property taxes. Once the property tax system is fully repealed for the 2% and 3% properties, this business-to-business exemption will end, and businesses will pay sales tax on services when they are the final point of sale.
How do we ensure the property tax system is not reinstated in the future?
The best protection is a full repeal of the current property tax system, including the elimination of the county assessors’ offices that administer it. Once the entire structure is removed, it would be extremely difficult to reinstate.  That said, we should follow up the initial legislation with a constitutional amendment to permanently prohibit a property tax in Indiana. This would provide the strongest long-term safeguard for Hoosier homeowners and ensure that true property ownership is protected for future generations.