Indiana Over-65 Homestead Deduction and Credit

Quick Facts

• Dual relief mechanisms: Indiana offers both the Over-65 Deduction (a reduction in assessed value) and the Over-65 Circuit Breaker Credit (a cap on property taxes as a share of income). Claiming both can dramatically lower annual bills for seniors.
• Assessed value threshold: The property’s assessed value must not exceed $240,000 for the deduction and $240,000 for the credit. Assessed value is determined as of January 1 of the assessment year.
• Income limits: Combined adjusted gross income (for applicant and spouse) must be less than $32,610 for single filers or $43,480 for married couples filing jointly (2025 figures; indexed annually). Local auditors may require tax returns to verify.
• Stackable with other deductions: Eligible homeowners can layer the Over-65 Deduction with the Homestead Standard Deduction, Supplemental Homestead Deduction, and Mortgage Deduction, maximizing savings.

Program Overview

Indiana property tax relief for seniors is built on a layered framework. The Over-65 Deduction subtracts up to $14,000 or half of the home’s assessed value—whichever is less—from the taxable value after the Homestead Standard Deduction is applied. The companion Over-65 Circuit Breaker Credit caps the remaining tax bill, ensuring it does not exceed a fixed percentage of your gross income. Together, these benefits keep housing costs manageable for retirees confronting rising assessments.

Indiana reassesses property annually, but trending factors can raise assessments quickly, especially in urban counties like Marion, Hamilton, and Allen. The Over-65 Deduction provides a buffer by permanently reducing the base value as long as you remain eligible. Unlike temporary rebates, deductions appear directly on your tax statement, lowering both installments. The circuit breaker operates like an insurance policy: if property taxes after deductions surpass your income-based cap, the state issues a credit to bring the bill down to that ceiling.

Eligibility Requirements

To qualify for the deduction and credit:

1. Age: You must be at least 65 by December 31 immediately preceding the assessment date (January 1). Spouses under 65 can co-own the property as long as one owner meets the age requirement.
2. Ownership: You must own or be buying the property under a recorded contract (land contract) and occupy it as your principal residence. Co-ops and life estates qualify when the applicant is responsible for the taxes.
3. Assessed value limit: The property must have an assessed value of $240,000 or less. If the value rises above the limit due to reassessment, you may lose eligibility for the deduction but could retain the credit if the increase is temporary and appeals are pending.
4. Income limit: Total adjusted gross income of the applicant and spouse cannot exceed statutory limits ($32,610 single / $43,480 married for 2025). Income includes taxable Social Security, pensions, wages, and certain investment returns. Non-taxable Social Security is excluded, but auditors may request worksheets to verify.
5. Residency: The property must be your principal place of residence. You cannot claim multiple homestead deductions across properties.

Benefit Mechanics

• Over-65 Deduction: Reduces assessed value by the lesser of one-half of the gross assessed value or $14,000. Applied after the Homestead Standard Deduction. Example: A home assessed at $180,000 receives the Homestead Standard Deduction (the lesser of 60% or $48,000, capped at $45,000). Assume the standard deduction reduces value to $135,000. The Over-65 Deduction then subtracts $14,000, lowering taxable value to $121,000.
• Over-65 Circuit Breaker Credit: Caps property tax liability at the greater of 2% of gross assessed value or the property tax liability from the prior year, adjusted for any new improvements. Effectively, if your tax bill would exceed this cap, you receive a credit for the difference. Counties calculate the credit automatically once you qualify and file the appropriate form.
• Impact on tax bills: Both spring and fall installments reflect the deductions and credits. Review your TS-1 property tax bill to confirm the deduction codes (typically 1 for Homestead Standard, 45 for Over-65 Deduction, etc.).

Application Process

1. Obtain state Form 43708. Download from the Department of Local Government Finance (DLGF) website or pick up at your county auditor’s office. The same form is used for both the deduction and credit.
2. Gather documentation. Provide proof of age (driver’s license, birth certificate), proof of ownership (recorded deed, land contract), and copies of federal/state tax returns or SSA benefit statements for income verification. If you do not file taxes, prepare an affidavit of income with supporting documentation.
3. Complete the form. Indicate whether you are applying for the deduction, the credit, or both. Supply parcel number, legal description, and property address. Both spouses must sign if property is jointly owned.
4. File with the county auditor. Submit by December 31 to receive the deduction for taxes payable in the following year. Some counties accept in-person, mail, or scanned submissions; confirm local procedures.
5. Monitor approval. The auditor will mail confirmation or include the deduction on the next year’s tax bill. Check your property record card or the county’s online tax portal for updates.
6. Renewal. Unlike some exemptions, the Over-65 Deduction remains in place automatically unless your eligibility changes. However, auditors may request periodic income verification; respond promptly to maintain benefits.

Documentation Checklist

• Completed Form 43708 with notarized signatures if required
• Government-issued photo ID verifying age
• Recorded deed, contract, or life estate documentation
• Federal and state income tax returns (Form 1040, IT-40) or SSA-1099 for the prior year
• Proof of Social Security or pension income
• Evidence of residency (utility bills, voter registration)
• If claiming disability-based alternative programs, physician certification (for other deductions like disabled deduction)

Strategies to Maximize Savings

1. Coordinate appeals with deduction timing. If your assessed value nears $240,000, file an appeal before December 31 to keep value below the threshold. Successful appeals help maintain eligibility and increase the deduction’s impact.
2. Stack deductions. Combine the Over-65 Deduction with the Supplemental Homestead Deduction (35% of remaining assessed value up to $600,000, 25% thereafter) to compound savings. Ensure you file both forms if the supplemental deduction is not already applied.
3. Monitor income. Required minimum distributions from retirement accounts can push income above limits. Work with a tax advisor to time distributions or use Qualified Charitable Distributions to reduce AGI.
4. Use the circuit breaker strategically. For seniors whose property taxes are still high after deductions, the circuit breaker ensures bills do not jump dramatically from one year to the next. Track your prior-year liability to understand your cap.
5. Review mortgage escrow. If your mortgage lender escrows taxes, provide them with updated tax statements so escrow accounts adjust downward and monthly payments reflect savings.

Interaction with Other Indiana Programs

• Disabled Veteran deductions: If you are a veteran with disability, explore Deductions 37, 38, or 39 which can remove additional assessed value. These can coexist with the Over-65 Deduction if eligibility criteria are met.
• Property tax replacement credit: Indiana’s statewide tax credits may change each legislative session. Stay informed about credits that appear on your bill automatically.
• Senior citizen property tax deferral loan: Some counties partner with the Indiana Housing and Community Development Authority to offer low-interest deferral loans. Compare with the Over-65 Credit to decide which option better stabilizes cash flow.

Example Scenarios

• Homeowner in Hamilton County: Carol, age 68, owns a home assessed at $220,000. After the Homestead Standard Deduction, the value drops to $176,000. The Over-65 Deduction removes $14,000, resulting in $162,000 taxable. Her taxes fall by approximately $280 annually. Because her taxes would have increased 9% year over year, the Over-65 Circuit Breaker Credit caps the increase at 2%, saving an additional $350.
• Married couple in Allen County: Bill and Sharon have combined AGI of $42,000, below the married threshold. Their home assessment is $200,000. They claim the deduction and credit, reducing the tax bill from $2,900 to $2,100. They use the savings to fund long-term care insurance premiums.
• Widow in rural Dubois County: Evelyn’s home is assessed at $150,000. With limited Social Security income, the deduction and circuit breaker reduce her tax liability to $900. She coordinates with local energy assistance and a septic repair grant to keep total housing costs under control.

Maintaining Eligibility and Compliance

• Report changes: Notify the county auditor within 60 days if you move, sell the property, or experience a significant income increase. Failure to update can result in back taxes plus 10% penalty.
• Keep records: Retain copies of filed forms, tax returns, and approval letters. Auditors may conduct random reviews, especially when assessed values exceed $200,000.
• Monitor property records: Check the county GIS or tax portal annually to ensure deductions remain applied. If you notice removal, contact the auditor immediately and be prepared to provide updated documents.
• Estate planning: If you place the home in a trust, ensure the trust is structured so you retain equitable title and occupancy. Provide trust documents to the auditor to maintain the deduction.

Frequently Asked Questions

• Can I claim the deduction on a second home? No. It applies only to your principal residence where you claim the Homestead Deduction.
• What if my spouse is under 65? As long as one owner meets the age requirement and income limits, both can benefit. Both names should be on the application to protect eligibility for the survivor.
• Do I need to reapply every year? Generally no, but you must inform the auditor of changes. Some counties may send periodic verification requests.
• What happens if my income exceeds the limit temporarily? You must notify the auditor. They may suspend the deduction for the following year, but you can reapply when income drops.

Resources

• Indiana DLGF Over-65 Deduction Guidance
• County auditor offices (search “Indiana county auditor property tax deductions”)
• Area Agencies on Aging for application assistance
• Indiana Legal Services for low-income seniors needing representation

Key Takeaways

Indiana seniors can significantly reduce property taxes by layering the Over-65 Deduction, supplemental deductions, and the circuit breaker credit. Keep careful records, monitor income and assessed value thresholds, and coordinate with local officials to ensure benefits remain in place. The savings free up cash for healthcare, home maintenance, and retirement security, making it easier to age in place in communities across the Hoosier State.