Indiana counties would renew local income tax rates regularly

Counties would have to pass an ordinance to renew their local income tax spending rates. This covers county local income tax rates used for spending. If a county misses renewal and has tax-backed bonds or leases, a minimum rate would apply to help cover them. For later cycles, the fallback would end after four years or when the debt matures, whichever comes first. That rate must raise 1.25 times the highest annual payments and required reserves. The first renewal is due by October 1, 2027, for 2028. County rates would expire December 31, 2029, and every four years afterward unless renewed.

Eligible cities and towns could adopt an added local income tax rate by ordinance. Cities and towns generally need at least 3,500 residents, though some may use an earlier population count. Those choosing small-town tax treatment before 2033 are excluded. The added tax applies only in districts where the city or town also charges property tax. The city or town must impose a 1.2% municipal rate, and its county must set a lower general-purpose rate for the same year. The added rate cannot exceed the gap between the county rate and 1.2%. For a city or town in multiple counties, the smallest available gap applies. The city or town could not use or promise the added revenue for debt payments. An added rate would expire on December 31 each year.

Counties could set fire and emergency care tax shares while giving required recipients a share. This covers counties and fire and emergency care providers serving people within them. A county's service area counts only where it provides the service. The county, fire districts, fire territories, and city or town fire departments serving the county must receive shares. Counties must consider each provider's service area and the people living there. A township fire department must receive a share if full-time firefighters paid at least $30,000 made at least half its fire runs in the year used for the test. The township staffing test uses fire runs from two calendar years before the distribution amounts are set.

Counties could set aside part of their general local income tax rate for school districts. School districts with territory in the county could receive the money. A county must adopt the rate by ordinance within its general-purpose rate limit. Each district's share would use its student count, excluding students who receive mostly virtual instruction or live in another county. The maximum school rate would fall from 0.12% in 2028 to 0.03% in 2031.