If you serve in the military or have served, it helps to know exactly how Indiana handles property taxes for veterans. Indiana does not erase a disabled veteran's whole tax bill the way some states do. Instead, it lowers the value the county can tax through property tax deductions. Indiana draws many military families after a PCS, which is short for Permanent Change of Station, the official military move from one duty station to another, with Grissom Air Reserve Base near Peru and Kokomo, Naval Support Activity Crane near Bloomington, and Camp Atterbury near Edinburgh and Indianapolis. This guide explains the main rules in plain language and points you to the state's own sources. Tax law changes, so treat these figures as a starting point and confirm the current rules before you file.
How Indiana Helps Disabled Veterans With Property Taxes
Indiana uses deductions rather than a single broad exemption. A deduction lowers your property's assessed value, which is the dollar figure your county uses to calculate the tax, before the rate is applied. The U.S. Department of Veterans Affairs, known as the VA, is the federal agency that rates service-connected disabilities, and your VA rating decides which deductions you can claim.
As the Indiana Department of Veterans Affairs explains, there are two main veteran deductions, set in Indiana Code 6-1.1-12, sections 13 and 14. They are different sizes and have different rules, and a veteran who qualifies for both can claim both.
The $24,960 Deduction (Section 13)
The larger deduction lowers your assessed value by $24,960. To claim it, the Department of Veterans Affairs says you must have served during a wartime period, received an honorable discharge, and have a service-connected disability rating of at least 10 percent from the VA. Importantly, there is no limit on the value of the home for this deduction, so a higher-value home can still claim the full $24,960.
The $14,000 Deduction (Section 14)
The second deduction lowers your assessed value by $14,000, but it comes with a home-value limit. To claim it, you must have served at least 90 days, received an honorable discharge, and either be totally disabled from service or be at least 62 years old with a service-connected disability rating of at least 10 percent. The catch is the cap: the Department of Veterans Affairs notes that the home's assessed value cannot be more than $200,000 to use this deduction.
A veteran who meets both sets of rules can stack the two deductions, lowering assessed value by up to $38,960. Because these figures and the home-value cap can be changed by the legislature, confirm the current amounts with the Department of Veterans Affairs and your county auditor before you count on them.
Surviving Spouses and Donated Homes
A surviving spouse may be able to continue a deduction the veteran was receiving. Indiana also has a separate benefit under section 14.5 for a home given to a veteran at no cost by a tax-exempt organization, which scales with the disability rating from 50 percent up to a full deduction at 100 percent. The Indiana Department of Local Government Finance publishes a veterans deduction guide that walks through the details. Confirm your path with your county auditor before you file.
How It Works With Your Local Tax Bill
Property tax in Indiana is administered locally. Your county assessor sets the assessed value, your county auditor applies your deductions, and the rate that turns value into a bill is set by the local taxing units where you live. Because rates differ from county to county, the dollars you save from a $24,960 or $14,000 deduction depend on your local rate. The deductions lower the taxable value; they do not cancel the entire bill.
Indiana also has a homestead standard deduction and a supplemental homestead deduction that most owner-occupants receive, and the veteran deductions sit on top of those. If you are weighing where to settle, our guide to the military bases in Indiana can help you picture the local cost of owning a home near Grissom, Crane, or Camp Atterbury.
Military Pay and Indiana State Income Tax
Indiana has a flat state income tax, and most Indiana counties add a local income tax on top of it. The state rate was 3.00 percent for 2025 and is set to keep stepping down in the years that follow, so check the current figure before you file. The good news for military families is how Indiana treats service pay.
As the Department of Revenue's military bulletin explains, for 2024 and later, Indiana resident members of an active component of the armed forces are exempt from state income tax on their military wages. Members of the reserve components and the National Guard can deduct the wages they earn for that service. Military retirement pay is fully deductible for Indiana residents, and that deduction also reaches a surviving spouse. Combat zone pay is already left out of taxable income, and VA disability compensation is not part of federal income, so Indiana does not tax it either. In short, active-duty wages, retirement pay, and disability pay all get strong protection from Indiana income tax.
A Note for Military Spouses: MSRRA
If you are a military spouse, the Military Spouse Residency Relief Act, known as MSRRA, may matter to you. MSRRA is a federal law that lets a military spouse keep a home state for tax and voting purposes even after moving on military orders. You do not automatically become an Indiana resident just because your service member got orders here.
