Dubois County officials recommend raising local income tax to 1.9 percent, up from 1.2 percent

Dubois County’s local governments have recommended raising the county’s local income tax rate from 1.2 percent to 1.9 percent, potentially starting in 2029.

The Municipal Unit Strategic Taskforce, or MUST, agreed to the recommendation at a meeting last Thursday.

State law passed in 2025 and 2026 lets counties form a MUST made up of the county council’s representative and the fiscal officer of each city and town. In Dubois County, the MUST was formed with County Auditor Sandy Morton serving as the county council’s representative along with the clerk-treasurers of Jasper (Kiersten Knies), Huntingburg (Tom Dippel), Ferdinand (Tammy Miller), Holland (Ray Schuetter) and Birdseye (Brittany Schepers).

The state has given counties until Dec. 1 to submit new income tax proposals through the special task forces. Morton explained that although Dubois County’s entities decided to cooperate, other counties in the state have not, as some haven’t agreed on how to move forward.

For example, municipalities with more than 3,500 residents can decide to forgo cooperating with the county and establish their own rates. However, Jasper and Huntingburg have decided to remain with the county in this case.

To facilitate the increase, the Dubois County MUST proposed these maximums:

• 0.65 percent for county services
• 0.65 percent to be split between municipalities
• 0.4 percent for fire and EMS
• 0.2 percent for non-municipal services, split at 0.05 percent among townships, libraries, the airport and, if the law allows, schools

Knies estimated that a person earning $50,000 would pay about $18 a week in local income tax at the proposed 1.9 percent, up from about $11.54 now.

Officials emphasized the recommendation is not binding. This was a recommendation the state is requiring. The actual rate would be set in 2028 for 2029, though whether that would happen depends on several unknowns at this time.

During Thursday’s meeting, Morton reviewed today’s 1.2 percent rate. It has three parts: 0.6 percent for certified shares, 0.4 percent for economic development, and 0.2 percent for the renovation of the security center and community corrections, adopted in 2019 through a Correctional and Rehabilitation (C&R) Facilities tax. She said the tax is estimated to bring in $24.71 million in 2027. Certified shares account for $12.36 million and economic development for $8.24 million. The remainder goes to pay down the bond for the renovation project.

Officials said property tax changes are behind the increase. The state’s 2025 property tax law, Senate Enrolled Act 1, phased out the standard homestead deduction and added new deductions and credits

Additionally, the state raised the business personal property tax threshold to $2 million from $80,000, which affects taxes paid on equipment. Morton said very little of that tax remains on the rolls.

Regarding the recommended income tax increase, Morton said the county has leaned on property taxes in the past and used income tax to fill budget gaps. Now, she said, the county and other taxing units must reverse that.

To arrive at the figure, Clerk-Treasurer Knies said the group first ensured each unit would get the same local income tax money it does now, then looked at making up for some of the property tax revenue units are losing.

She outlined what Jasper has experienced. The city lost $1.5 million to property tax circuit breaker caps this year and $1.3 million last year, she said. Before that, the loss hovered near $500,000. She said that without a change, the city could not keep offering its current services. Morton said the county had also lost about $1 million to the caps.

According to Knies, those losses are supposed to decrease now, but she also acknowledged that increasing the income tax does not necessarily cover all of the losses they have experienced.

Knies said 1.9 percent was the only way the group felt it could make every unit whole while bridging gaps.

Morton also said it is not yet clear whether lower property taxes and higher income taxes will offset each other.

The state also changed how it divides the money. Today, shares follow each unit’s property tax levy. Under the new law, they follow population. A slide at the meeting said the county total stays the same, but unit shares change. Units with a bigger share of residents than of levy could gain, and others could lose.

Schools have not traditionally taken part in Dubois County’s local income tax. But the plan proposes to split the schools’ share among four school corporations by student count. Officials said it is not settled which laws govern school eligibility, or whether schools would get any share.

Many unknowns remain, including future legislation, property tax cuts over the next five years, the effect of the population shift, school eligibility, and what the added income tax will cost taxpayers.

Officials want the public to understand that the decision is not yet binding and could change based on future state-level legislative decisions.

“We are simply laying out the groundwork to be prepared if this does need to increase,” Morton said in a phone interview after the meeting.