Effective 7-1-2028.

1. (b) This subsection applies only to an ordinance adopted between January 1 and August 2 of a calendar year or October 2 and December 31 of a calendar year. If an adopting body adopts an ordinance to impose a local income tax under:

   1. (1) IC 6-3.6-6-2 (b)(1) through IC 6-3.6-6-2 (b)(4);
   2. (2) IC 6-3.6-6-22 ; or

   3. (3) IC 6-3.6-7 ;

      that exceeds the applicable maximum tax rate or applicable maximum aggregate tax rate allowable pursuant to IC 6-3.6-6-2 , IC 6-3.6-6-22 , or IC 6-3.6-7 , the department of local government finance shall notify the adopting body and county fiscal officer or municipal fiscal officer, as applicable, not later than thirty (30) days after the adopting body submits the ordinance and information required under IC 6-3.6-6-2 that one (1) or more tax rates exceed the maximum allowable tax rate.

2. (c) This subsection applies only to an ordinance adopted between January 1 and August 2 of a calendar year or October 2 and December 31 of a calendar year. Not later than thirty (30) days after receiving a notification under subsection (b) from the department of local government finance, the adopting body may adopt an ordinance correcting the applicable tax rate or tax rates. The following apply to an ordinance adopted under this subsection:

   1. (1) Any statutory requirements for an ordinance that otherwise apply to an ordinance adopted under this article to impose a local income tax rate also apply to an ordinance adopted under this subsection.
   2. (2) If the tax rate or tax rates adopted in an ordinance adopted under this subsection still exceed a maximum allowable tax rate or maximum allowable aggregate tax rate, the ordinance adopted under this subsection shall be considered void and treated as if the adopting body did not adopt any additional ordinance under this subsection.
   3. (3) An ordinance adopted under this subsection has the same effective date as the initial ordinance described in subsection (b).

3. (d) If an adopting body adopts an ordinance between August 3 and October 1 of a calendar year to impose a local income tax that exceeds a maximum allowable tax rate or rates, fails to adopt an ordinance correcting the applicable tax rate or tax rates under subsection (c), or, the ordinance is described in subsection (c)(2), the tax rate or rates will be reduced according to the following:

   1. (1) If a tax rate or tax rates imposed pursuant to IC 6-3.6-6-2 (b)(1) through IC 6-3.6-6-2 (b)(4), IC 6-3.6-6-22 , or IC 6-3.6-7 exceed the maximum allowable rate specified in IC 6-3.6-6-2 (b)(1) through IC 6-3.6-6-2 (b)(4), IC 6-3.6-6-22 , or IC 6-3.6-7 , the tax rate or tax rates that exceed the maximum allowable rate shall be reduced to the maximum allowable rate without further action by the adopting body.

   2. (2) If the aggregate tax rates imposed pursuant to IC 6-3.6-6-2 (b)(1) through IC 6-3.6-6-2 (b)(3) exceed the maximum allowable aggregate rate in IC 6-3.6-6-2 (c), the tax rates shall be reduced without any further action by the adopting body according to the following:

      1. (A) Any portion of the aggregate tax rate that exceeds the maximum allowable rate shall first be applied by reducing the tax rate imposed under IC 6-3.6-6-2 (b)(1), but may not reduce the rate below the tax rate otherwise required under this article.
      2. (B) Any remaining portion of the aggregate tax rate that exceeds the maximum allowable rate after the reduction in clause (A) shall be applied to reduce the tax rates imposed under IC 6-3.6-6-2 (b)(2) and IC 6-3.6-6-2 (b)(3) in proportion to the total rates imposed under IC 6-3.6-6-2 (b)(2) and IC 6-3.6-6-2 (b)(3).
   3. (3) If the tax rate or rates exceed both the maximum allowable rate specified in IC 6-3.6-6-2 (b)(1) through IC 6-3.6-6-2 (b)(3) and the maximum allowable aggregate tax rate in IC 6-3.6-6-2 (c), the tax rates shall first be reduced in the manner set forth in subdivision (1) before application of the reduction manner set forth in subdivision (2).
   4. (4) Any tax rate reduction under this subsection has the same effective date as the initial ordinance described in subsection (b).

Sec. 12. (a) This section applies to an ordinance adopted under this article after June 30, 2028.

As added by P.L.157-2026, SEC.121.