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Legislative updates: Key changes in HEA 1210

Understanding the latest adjustments to local income tax, fire/EMS funding, and more

May 13, 2026

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  • Government Services
  • Municipal Advisory Services for Local Governments
  • Public Sector Advisory
  • Public Sector Financial Management Advisory

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Local income tax
local governments
HEA 1210
Indiana legislation
House Enrolled Act 1210

House Enrolled Act 1210 (HEA 1210) introduces several important legislative updates that will impact local income tax (LIT) structures, fire and EMS funding, and broader local government operations across Indiana. 

Here’s a breakdown of the most significant changes and what they mean for local officials.  

Local income tax (LIT) structure: Extended and enhanced

HEA 1210 provides greater stability and planning flexibility for local governments by extending and refining the local income tax framework. 

Key updates include: 

  • Implementation of new LIT structure delayed until 2029  

The introduction of the updated local income tax (LIT) framework will now take effect in 2029, giving local governments additional time to prepare for the transition.  

  • Shift to annual adoption cycles 
    Initial adoption of LIT will last for three years, after which jurisdictions will move to annual adoption cycles.  
  • Expanded participation for municipalities 
    All cities and towns can now opt into the county wide municipal services rate, creating opportunities for more coordinated funding approaches.  
  • Creation of municipal unit strategic taskforces 
    Counties may establish a local strategic task force

Related sections

  • Government Services
  • Municipal Advisory Services for Local Governments
  • Public Sector Advisory
  • Public Sector Financial Management Advisory

Article Tags

Local income tax local governmentsHEA 1210Indiana legislationHouse Enrolled Act 1210

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Indiana local income tax reform: Municipal Unit Strategic Taskforce (MUST) explained

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made up of one representative from the county council and the fiscal officer of each municipality for collaborative long-term planning. These groups will: 
  • Develop a county-wide LIT strategy  
  • Submit a non-binding report to the General Assembly outlining recommended distribution approaches  
  • Debt service safeguard requirement 
    Even if a county or municipality does not renew its LIT rate, it must still be set at a level sufficient to generate at least 1.25x the amount required for LIT-backed debt service and lease payments. 

    • This helps increase lender confidence and may lead to more favorable borrowing terms.

    Fire and EMS funding: Allocation and eligibility changes 

     HEA 1210 also reshapes how fire/EMS local income tax funding is allocated and distributed. 

     How funding decisions will be made 

    • County level control 
      Counties are now responsible for determining fire/EMS LIT allocations, taking into account service boundaries and population served by each provider. 
    • Broader distribution of funds 
      Funding may be distributed to county units, municipalities, fire territories and districts and eligible townships. 

     Township funding criteria 

    • Guaranteed funding eligibility 
      Townships will only receive guaranteed funding if:  
    • At least 50% of fire runs (measured two years prior to the distribution year)  
    • Were handled by full time firefighters earning at least $30,000 annually.  
    • Discretionary funding for others 
      Townships and departments that do not meet this threshold, including volunteer fire departments, may still receive funding, but it is not guaranteed.  

     Local leaders should review staffing models and service data now to assess funding eligibility and prepare for the future.  

    Additional legislative provisions to note 

     HEA 1210 includes several other changes that may affect budgeting, compliance, and long-term planning: 

    • Maximum levy growth quotient adjustment 
      The calculation reverts to a six-year average of non-farm personal income, with projections for 2027 estimated at approximately 5.6%.  
    • Digital public notices permitted (starting July 1, 2027) 
      Public notice requirements can be satisfied by posting on local government websites, reducing reliance on traditional publishing methods.  
    • Equipment replacement fund limitations 
      Fire protection territory equipment replacement funds are now subject to the maximum permissible levy limit.  
    • Repeal of population-based levy increase petitions 
      Fire districts and territories can no longer petition for maximum levy increases based on 10-year population growth.  
    • Township levy increase provisions 
      Certain townships may still petition for increases to the maximum property tax levy specifically for fire protection and EMS services.  
    • Tax rate cap for new fire districts 
      Fire districts established after Dec. 31, 2025, may not impose a tax rate exceeding $0.40.  

    What this means for local officials 

     HEA 1210 introduces a more structured and collaborative approach to local income tax planning and emergency services funding, whilst tightening certain fiscal controls. 

    To stay ahead, local governments should: 

    • Evaluate current and future LIT strategies  
    • Participate in or establish strategic taskforces  
    • Review fire/EMS staffing and service data  
    • Prepare for changes in funding eligibility and levy limits  
    • Plan for digital compliance requirements ahead of 2027  

     This is where Baker Tilly can help, supporting you to understand these changes now, to ensure local officials can better position their communities for financial stability, improved service delivery, and stronger long-term planning under the updated legislative framework.  

    Contact us to discuss how these changes may impact your community. 

    Contact us