New Proposal Would Dissolve Some Rural Townships in Indiana
Published: Friday, January 16, 2026
According to Ryan Hoff, INFB senior director of government affairs, "eligible counties will be dissolved" beginning in 2028, if Rep. Alaina Shonkwiler's (R-District 29) House Bill 1315, this year's township reorganization bill, is passed by Indiana lawmakers.
Eligible townships include those that have less than 6,700 residents, don't operate a fire department and have service expenses below the threshold determined by the salaries paid by the township.
"If you are delivering service that is less than 200% of the salaries paid to township officials, you would be eligible for dissolution," Hoff said. "So, it's not just population or just whether you have an operating fire department."
Also, townships with 80% of its lines shared with a municipality, no operating fire department, and half of the population residing in the municipality are counted as eligible for dissolution.
The INFB's 2026 policy states that the Farm Bureau "will collaborate with township officials to evaluate necessity, effectiveness and efficiency of township government relative to tax burdens with focus on fire protection, emergency services and township services."
Previously it had stated that the Farm Bureau supports township government "as it exists today."
"Concerning to us is that as we read the bill today, it would require that if those townships dissolve and merge with the municipality within that township. And to us that looks like a really big annexation, because that's how it would function," Hoff said. "So, that's super concerning because you'd be applying that municipal rate now, township wide."
If township consolidation occurs, more farmers and rural landowners would be subject to the municipal tax in addition to the county tax. Under the law passed last year, taxes are already set to rise due to changes in the homestead taxes. The municipal tax rate, as defined by Senate Act 1, is 1.5%. The county rate is 1.2%. Those in the city will pay a combined rate of 2.9%.
Larry DeBoer, retired Purdue University Extension economist, gave an overview of the tax law, stating that the share of business-real property will rise, but the homestead and non-homestead farmland share of taxes will fall.
"Farmland does not pay the city or town tax rates, so rates are lower and the tax share is smaller," he said. "By 2031 the share of agriculture in the net assessed value will be the lowest it has been in years."
DeBoer also addressed the 3% rate, stating that although taxes will still rise, this rate will ensure taxes are lower than they would have been without the change. However, the $48,000 homestead deduction has been eliminated, so he warned that the tax rates may not seem lower.
Tax relief for farmland is among the INFB's top priorities. Other priorities for the 2026 legislative session include: creating incentives for rural entrepreneurship and agricultural diversification; improving the economic outlook for farms, investing in education, healthcare and emergency services; building infrastructure for local food production and value-added development; effective and efficient local government services; protecting prime farmland and natural resources; water policy; energy affordability; and drone laws.
Among other legislative bills that are especially of interest to INFB include:
• Senate Bill (SB) 7: Carbon sequestration, penned by Sens. Rick Niemeyer (R-District 6) and Spencer Deery (R-District 23)
• SB 55: Soybean market development, penned by Sen. Jean Leising (R-District 42)
• SB 278: Tax increment financing, penned by Sen. Scott Baldwin (R-District 20)
• House Bill (HB) 1064: Unmanned aerial vehicles, penned by Rep. Kendell Culp (R-District 16)
• HB 1342: County commissioner districts, penned by Rep. Tim Yocum (R-District 42)
• HB 1259: Local income tax reform, penned by Rep. Jeffrey Thompson (R-District 28)
• HB 1210: Department of local government finance, penned by Rep. Craig Snow (R- District 22)
• HB 1315: Township reorganization, penned by Rep. Alaina Shonkwiler (R-District 29)
• HB 1251: Emergency ambulance services, penned by Rep. Timothy O'Brien (R-District 78)
• HB 1058: Annexation, penned by Rep. Gregory Steuerwald (R-District 40)
• HB 1424: Farm and homestead food sales, penned by Rep. Hunter Smith (R-District 24)
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