
For the first time in its history, Fishers will have to decide whether to tax its residents’ income — and the answer will shape how the city pays for police, fire protection, roads and parks for years to come.
The decision stems from Senate Enrolled Act 1, the sweeping property tax relief law Governor Mike Braun signed in April 2025. The law delivers savings to homeowners — including a credit of 10 percent of a homeowner’s property tax bill, capped at $300, and a growing supplemental homestead deduction that shrinks the taxable value of homes over the next several years. Most Fishers homeowners qualify for the full $300 credit.
But the same law fundamentally rewires how Indiana communities fund local government, and that is where Fishers faces its biggest change.
The end of a 50-year-old system
For roughly half a century, income taxes in Indiana have been a county decision. Hamilton County levies a 1.1 percent local income tax, and the state distributes the money among the county, its cities and towns using a formula in state law. Fishers has never controlled that rate — it simply received its share.
That formula was a sore spot for years. Because it was tied in part to property tax levy growth rather than population, Carmel received nearly $77 million in income tax revenue in 2025 while Fishers received about $42.5 million — despite the two cities having nearly identical populations. A 2020 law that diverted some of Carmel’s growth to Fishers prompted Carmel to sue the state, and a Marion County judge ruled the diversion unconstitutional in 2024.
The General Assembly largely put that dispute to rest in 2025. Legislation championed by then-State Senator Kyle Walker adjusted the Hamilton County distribution, sending Fishers roughly $8 million more in 2026, with Carmel gaining about $1.5 million. More significantly, the new statewide system will end the practice of pooling county income tax revenue and redistributing it altogether.
What replaces it
Under SEA 1, existing countywide income tax rates will expire. In their place, cities with populations above 3,500 — including Fishers — may adopt their own municipal income tax of up to 1.2 percent. Counties may levy their own tax for county services, with the combined county-plus-city rate capped at 2.9 percent, down from the previous statewide maximum of 3.75 percent.
The changes were originally set to take effect in 2028, but legislation signed in March 2026 delayed implementation one year, to 2029. The same measure created a process for counties and municipalities to negotiate future revenue-sharing arrangements, with a report due to legislative leaders by December 1 — meaning lawmakers may fine-tune the system again in the 2027 session.
Why Fishers is considering an income tax
The arithmetic is direct: the tens of millions of dollars Fishers now receives each year from the county income tax distribution will disappear when the old system expires. Unless the city adopts its own income tax, that money is simply gone — at the same time property tax relief is shrinking the city’s other major revenue source.
Mayor Scott Fadness has said the new laws will not force cuts to current services, but will slow the city’s projected revenue growth by “low millions” in the coming years. He has indicated he favors a city income tax, though no rate has been proposed. Fadness has predicted the new system will leave Fishers drawing on property and income taxes in roughly equal measure, and has argued the change is ultimately healthy — tying tax decisions directly to the local government that provides the services.
Critics of the state overhaul argue it pressures cities to raise income taxes to backfill property tax relief, shifting the burden rather than reducing it. Supporters counter that the lower combined rate cap and local control add transparency and accountability.
The timeline
City officials have said income tax discussions will unfold through the current and upcoming budget cycles. Under the revised state schedule, the Fishers City Council is expected to set the city’s first municipal income tax rate during a window in 2028, taking effect in 2029, and would then set the rate annually. Any ordinance would require public hearings before the council votes.
For residents, the bottom line is this: property tax bills are getting state-mandated relief now, and the decision about whether — and how much — Fishers taxes income will be made not at the Statehouse or the county building, but by the nine members of the Fishers City Council, in public, over the next two years.