Indiana Circuit Breaker Tax Caps Explained

No — and assuming so is the most common mistake commercial owners make in Indiana. The cap limits your bill to 3% of gross assessed value, but if the assessed value is inflated, you are paying 3% on the wrong number. A successful appeal that reduces your AV reduces the 3% ceiling proportionally, dollar for dollar, which directly cuts your bill in the current year and lowers the baseline for every year after. We routinely see owners hit the cap every year and still recover six-figure savings after a successful PTABOA hearing or IBTR appeal. Start with a free property tax review so we can tell you whether your AV is defensible.

Indiana applies three cap tiers based on classification. The 1% tier covers the qualifying owner-occupied homestead portion of a primary residence only. The 2% tier covers other residential property (rentals up to two-family, second homes, residential land outside a homestead) and agricultural land. The 3% tier covers commercial real property — office, retail, hospitality, mixed-use, and most income-producing CRE — along with industrial real property like manufacturing, warehouse, and distribution facilities, plus business personal property such as equipment and fixtures. Owners of mixed portfolios — say, an industrial property tax appeal paired with a retail property tax appeals portfolio — should expect the 3% tier across the board.

Yes. Voter-approved referendum levies sit outside the circuit breaker calculation and ride on top of the cap. That includes school operating referenda, school capital referenda, and certain controlled-project levies — all of which can push the actual bill above 3% of gross assessed value in commercial-heavy districts where local services are increasingly funded by referendum. Because referendum levies multiply against the AV the same way regular levies do, an inflated AV makes those above-the-cap dollars inflated as well. This is one of the structural reasons we recommend an appeal even when the regular bill appears to be capped, and it is also why property taxes still rise in cap-protected counties.

Indiana commercial owners have 45 days from the mailing date of the Form 11 notice of assessment, or until June 15 of the assessment year, whichever is later. The appeal is filed on Form 130 with the county assessor and is heard by the county PTABOA. If PTABOA does not act within 180 days, the case can be escalated to the Indiana Board of Tax Review (IBTR), and an unfavorable IBTR decision can be appealed further to the Indiana Tax Court. The cap does not change any of this — the 45-day window applies even if you are already at the cap, because preserving your appeal rights now protects every future year. Confirm your deadlines in our Indiana property tax deadlines guide before the window closes.

When circuit breaker credits wipe out levy revenue, the hit lands on the taxing units that issued those levies — schools, libraries, fire districts, and townships disproportionately. To make up the gap, many districts push referendum questions onto the ballot, which is why referendum levies have grown so quickly across Indiana since the caps fully phased in. From an owner's perspective, this matters for two reasons: referendum levies sit outside the cap and pierce it, and the referendum dollar amount runs against your assessed value — so an inflated AV inflates the referendum bill too. The DLGF tracks the cumulative impact through its Department of Local Government Finance public reports, but the practical answer for owners is to make sure the AV is right.

When you are at the 3% cap, your bill is exactly 3% of gross assessed value. Cut the AV by 20% through a successful appeal, and your capped bill drops by 20% — because the cap is a percentage of the AV, not a flat dollar ceiling. So a $10 million commercial AV at the 3% cap produces a $300,000 capped bill; reduce that AV to $8 million through a Form 130 appeal and the capped bill falls to $240,000 in the current year, and the lower AV becomes the baseline against which next year's trending is applied. Across high-referendum districts in counties like Marion County and Lake County, the recurring annual savings often exceed the appeal investment in the first year alone. See real recovery examples in our 2026 Indiana assessment trending breakdown, or browse Hamilton County commercial appeals results.