Halftime Report: Key Legislative Moves in Indiana’s 2025 General Assembly
The first half of the 2025 Indiana General Assembly session has concluded, with lawmakers taking a weeklong break before returning on March 3 for the second half.
Only 25% of House bills and 30% of Senate bills survived. Any bill not passed in its original chamber is considered dead, though some provisions may reappear in other legislation through amendments.
Aspire actively engaged in the legislative process, supporting key issues and pushing back against harmful bills. We’ve seen promising movement on two priorities: road funding and childcare. These issues are crucial for economic development, workforce participation, and quality of life in our communities.
Childcare Support
Aspire strongly supports increasing childcare access and affordability to boost labor participation and kindergarten readiness. When parents have access to reliable and affordable childcare, more can enter or remain in the workforce, and children are better prepared for their educational journey. Two key bills advanced:
- SB 463 – Expands the employer childcare tax credit, allowing funds to be used for employee training, scholarships, and wage enhancements for highly trained staff. It also modifies staff ratios and group size requirements in licensed childcare centers, aiming to improve care quality while maintaining affordability.
- HB 1253 – Streamlines licensing for childcare providers by allowing single-owner childcare companies and nonprofits, including YMCAs and school-affiliated organizations, to open multiple locations under one license. This reduces regulatory burdens and encourages expansion.
The Governor’s budget proposed an additional $350M for the Child Care Development Fund (CCDF) to eliminate the current waitlist and expand services. However, the House budget (HB 1001) only includes $155M to maintain existing support, with no additional funds for reducing the waitlist. It also holds the On My Way Pre-K appropriation flat and does not include the Local Childcare Assistance Program (a matching grant fund for local governments) that Governor Braun proposed. Aspire will urge the Senate to increase funding and ensure broader access.
Supporting Equitable Road Funding for Growing Communities
Aspire has prioritized advocating for a fairer road funding model that distributes funds based on lane miles rather than linear miles. The costs of maintaining multi-lane roads are significantly higher than two-lane roads, and current funding models do not adequately account for this. HB 1461 now includes this adjustment after a stand-alone bill failed to get a hearing. Aspire will continue working to ensure this language remains in the final legislation.
The bill also modifies the Community Crossings Grant Program, setting a $200M limit split between two tiers, with excess funds directed toward local projects. A controversial provision requires local governments to adopt a wheel tax to qualify for these grants. While Johnson County has already enacted this tax and qualifies for higher-tier funding, none of its municipalities have done so. This provision has sparked debate, as many local officials prefer alternative funding solutions.
A broader theme emerging from the legislature this year is the push for local governments to implement existing taxation authority before seeking additional state funds. While this makes sense for some user-based fees, it overlooks cases where state policies create funding shortfalls for local communities.
Which brings us to property tax.
Taxes and Spending
Property tax reform, largely addressed in SB 1, continues to suck all the oxygen out of the room at the Statehouse. The bill has received pushback from school officials, municipal leaders, and emergency service providers due to its projected $687M revenue impact by year three. Key provisions include:
- A first-time homebuyer tax credit with a $75K income cap.
- Expanded deductions for disabled veterans and seniors.
- New maximum levy growth quotients (MLGQ), capping revenue growth for local governments to reduce property tax burdens.
- A three-year freeze on MLGQ growth, limiting local funding increases.
- Restrictions on school referendums, allowing them only in even-numbered years and imposing cooling-off periods between attempts.
If enacted in its current form, SB 1 could eliminate hundreds of millions of dollars in local government revenue, affecting essential services like education, public safety, and infrastructure. While this is less than the Governor’s initial proposal which would have wiped out billions for local services, it still raises significant concerns. The bill now moves to the House for further consideration. After issuing tepid support of the bill as it passed committee, Governor Braun shifted his views, even threatening a veto, which is ineffectual given a healthy supermajority in both chambers.
Aspire supports tax policies that attract top talent and investment in high-wage industries. While competitive tax rates help, lawmakers must also consider their impact on local revenue. Cuts that weaken community services can undermine economic growth. We believe any state-driven reductions should be balanced with alternative funding sources to prevent shifting the burden onto businesses.
Of course, reducing property tax collection does not reduce the state budget, driven by income and other taxes.
Last week saw a big step for Indiana’s next biennial budget, HB 1001, when House Ways and Means Chair Jeff Thompson unveiled his proposed $46.7B state budget for the next two years, which prioritizes tax cuts while allocating funds toward education, Medicaid, and economic development. Key elements include:
- A 4.1% increase in K-12 funding ($520M), and triples allocations for state academic improvement initiatives.
- Increased funding for Career Scholarship Accounts to enhance work-based learning and Education Scholarship Accounts for students with special needs.
- A shift in economic development priorities, cutting $2M from the Indiana Economic Development Corporation (IEDC) in favor of incentivizing new direct flights and industrial growth.
- Continued funding for the 21st Century Research and Technology Fund and Manufacturing Readiness Grants to support innovation and advanced manufacturing.
- Enables the state to continue cutting the personal income tax rate to 2.95% in 2026 and to 2.9% in 2027 as originally planned last budget cycle.
Notably, neither the House nor the Governor’s budget included an increase in the cigarette tax. Aspire and other business advocacy groups continue to push for this increase, citing its effectiveness as a smoking cessation tool and a strategy for improving workforce health and reducing healthcare costs.
Small Business Support
Aspire supports HB 1172, which establishes the Office of Small Business and Innovation to provide resources and support for entrepreneurs. The bill passed the House and now moves to the Senate, where a companion bill (SB 516) has also gained traction.
We also worked to refine HB 1531, an immigration bill that initially included vague and potentially burdensome business regulations. We supported key amendments, including the removal of a 3-year lookback on hiring practices and inclusion of the provision to narrow employer damages to those “knowingly or intentionally” disregarding the law. Additional changes on the House floor further refined the definition of “employer” to apply only to those with 10 or more employees, shielding the smallest businesses from undue regulatory burdens.
Looking Ahead
The General Assembly has made progress on childcare, workforce development, economic growth, and road funding. However, tax policy and the state budget remain unresolved.
Aspire will continue advocating for your business and our community needs when the session reconvenes March 3. Please contact us with questions and concerns.