An Indiana property tax bill has a small box called Table 2. It doesn't get much attention, and it shows the cap on a homestead's regular taxes: 1 percent of the home's gross assessed value, adjusted upward for any referendum charges, which the cap doesn't cover. For buyers looking at homes from $1.5 million to $3 million inside the Bridlebourne gates off Shelborne Road, that box says more about future carrying costs than any headline about the 2025 property tax law. It also explains why the line to watch this fall is the school referendum on the Nov. 3 ballot.
A cap that already does most of the work
Indiana's Department of Local Government Finance describes the order of operations. The county takes deductions off gross assessed value to get net assessed value, then multiplies by the local rate. Local and state credits come off next. Then the cap applies: if the bill after credits is still above 1 percent of gross assessed value, the owner gets one more credit that brings it down to the cap.
In Carmel, that cap isn't a rare event. Current in Carmel reported in September 2026 that nearly 38 percent of Carmel properties have reached it. For those owners, the rate set by city hall or the school board decides how their capped amount gets split among local governments. It doesn't decide how much they pay.
The same report includes a sharp line from Carmel Clay Schools Associate Superintendent Roger McMichael. He explained why moving facility costs out of the regular rate and into a referendum would raise bills for capped households: "Your taxes would go up, and your buildings would go down." Under the cap, cutting a regular rate can leave a capped owner's bill unchanged. Adding a referendum rate raises it.
Why a higher school rate can leave a capped bill flat
The 2025 law, Senate Enrolled Act 1, works mostly by shrinking net assessed value. According to a November 2025 analysis by Purdue economist Larry DeBoer, for taxes payable in 2026 a homestead gets a $48,000 standard deduction plus a supplemental deduction of 40 percent of what remains. Each year after that, the standard deduction gets smaller and the supplemental percentage gets bigger.
| Taxes payable | Standard deduction | Supplemental deduction |
|---|---|---|
| 2026 | $48,000 | 40% |
| 2027 | $40,000 | 46% |
| 2028 | $30,000 | 52% |
| 2029 | $20,000 | 57% |
| 2030 | $10,000 | 62% |
| 2031 | $0 | 66.7% |
When net assessed value falls, local units raise their rates to collect the same levy. Carmel Clay Schools expects to set its 2027 property tax rate at 64.56 cents per $100, which is 4.31 cents higher than in 2026. "Because the 2027 NAV for both funds is lower than in 2026, a higher rate is required to generate the same levy," Emily Bauer, the district's director of community relations, told Current in Carmel.
For an uncapped home, the lower net value and the higher rate push against each other. For a home still sitting at 1 percent of gross value after both changes, neither one shows up in what the owner pays. The exception is the new SEA 1 homestead credit. It equals 10 percent of the bill, up to $300, and according to DeBoer's analysis it applies after circuit breaker credits, so it can still lower a bill that has hit the cap. For a capped home in the price range here, that $300 is about the full near-term SEA 1 benefit.
The one line the cap doesn't touch
Referendum taxes are the exception. DLGF says referendum-approved property taxes aren't subject to the caps, so a successful referendum can push a bill above 1 percent of gross assessed value. For a capped household, that makes the referendum the part of the bill that can actually change.
Carmel Clay Schools now levies two referendum rates: 19 cents per $100 for operations, a rate in place since 2017 that expires in 2031, and 5 cents for safety, which expires in 2027. The Nov. 3 question would combine and replace both for up to eight years. DLGF approved a maximum rate of $0.4274 and a maximum annual levy of $61,981,519. The district plans to phase the rate in. Its latest projection for 2027 is 30.39 cents, down from an earlier 31.94 cents because net assessed value came in higher than expected, with increases each year through 2031. The school board sets each year's rate during budgeting. It can go lower if assessed values are higher than expected, but it can't go above the maximum.
The ballot language is set by the state and includes a dollar figure:
"...for a median residence of $500,000 the property's annual property tax bill would increase by $1,062 per year."
That figure is the maximum rate applied to the full referendum amount. As Current in Carmel noted, it doesn't account for the referendums homeowners already pay, so the real difference would be smaller.
Running the county's formula at Bridlebourne values
The Hamilton County Auditor's certification for the ballot shows the math. Start with gross assessed value. Subtract the $40,000 standard deduction and the 46 percent supplemental deduction scheduled for 2027 to get net assessed value. Multiply that by the referendum rate and divide by 100. The county's median homestead gross value was $482,000, rounded up to $500,000 for the ballot. That works out to $248,400 in net value and $1,061.66 in tax.
The table below applies the same formula at higher values. These are illustrations, not estimates for any specific home. Gross assessed value isn't the same as a sale price, and every figure uses the 2027 deduction schedule.
| Gross assessed value | Net AV, 2027 deductions | Today's 24 cents | Projected 2027, 30.39 cents | Ceiling, 42.74 cents |
|---|---|---|---|---|
| $500,000 | $248,400 | $596 | $755 | $1,062 |
| $1,500,000 | $788,400 | $1,892 | $2,396 | $3,370 |
| $2,000,000 | $1,058,400 | $2,540 | $3,216 | $4,524 |
| $3,000,000 | $1,598,400 | $3,836 | $4,858 | $6,832 |
At the projected 2027 rate, the referendum line grows by about $504 a year on a $1.5 million assessment, $676 on $2 million, and $1,021 on $3 million, compared with what the current 24 cents would raise on the same net value. The district plans to reach the 42.74-cent maximum in 2031. By then the supplemental deduction will be 66.7 percent with no standard deduction, so net value at any given gross value will be lower than in this table. That makes the ceiling column an upper bound on 2027 values, not a forecast.
If the question fails, the 5-cent safety referendum ends in 2027 and the 19-cent operating referendum runs until it expires in 2031. District officials have said that outcome would mean cutting $10 million from the 2027 budget, with larger cuts in later years.
SEA 1 still reaches a $2 million home, just later
The phase-in builds toward a point where the cap stops binding. DeBoer's analysis shows that higher-value homes get proportionally larger reductions in net assessed value, approaching 40 percent once the law is fully phased in. For any home assessed above $102,740, the new deduction is worth more than the old one. His county estimates run up to a 40.4 percent drop in homestead net assessed value in Boone County, where the average homestead gross value is $450,691.
So each year of the schedule cuts a little more from a high-value home's taxable base. When that base gets small enough, the regular bill drops below 1 percent of gross value, and from then on the owner pays the rate rather than the cap. Rate increases like the district's 4.31 cents start to count once the home is under the cap. Carmel's combined district rate was $2.0167 per $100 for 2026, up from $1.9977 in 2025. When an individual home crosses below the cap depends on its own value and on future rates, and the bill itself is the only reliable place to see it.
What to pull before writing an offer
- The most recent tax bill, opened to Table 2. If the bill before the referendum line equals the cap, rate changes in the near term mostly change who gets paid, not what the owner pays.
- Gross assessed value next to the asking price. The formula uses assessed value, and in a high-end gated community the two can be far apart.
- The referendum line on its own. Since it sits outside the cap, it's the piece to model under both possible Nov. 3 outcomes.
- The 2027 bill when it arrives. According to a DLGF memo, HEA 1406 requires the county treasurer to show, for taxes payable in 2027 only, whether the bill is lower than in 2026 and by how much. A separate 2026 law, HEA 1210, pushed the SEA 1 local income tax overhaul back a year, so new ordinances take effect for 2029 collections, as another DLGF memo explains.
FAQ
When is the vote, and where can Carmel residents vote early? The general election is Nov. 3. Hamilton County's election office lists Carmel early voting sites set to open Oct. 21: Cool Creek Nature Center, Wilfong Pavilion at Founders Park, Jill Perelman Pavilion and the Carmel Library. Early voting at the Judicial Center and Fairgrounds in Noblesville began Oct. 6.
Does the $1,062 on the ballot mean a median bill rises by $1,062? No. It applies the maximum rate to the full referendum amount and doesn't subtract the 24 cents already being paid.
Where can the district's own materials be found? Carmel Clay Schools posts its referendum presentations on its school finance referendum page.
This post is general information, not legal, tax or financial advice. Please confirm how these rules apply to a specific property with a qualified tax professional or the Hamilton County Auditor.
When you weigh a Bridlebourne home, the cap status on its tax bill belongs in the price analysis next to the comparable sales. The team at Jennil Salazar Private Client Group can review a property's current bill and assessed value with you before you write an offer. Book a Consultation.
