Proposed Budget - Fiscal Years 2026-2027
On January 16, Indiana Governor Mike Braun proposed a two-year budget for fiscal 2026 and fiscal 2027. The budget recommends $53.70 billion in total spending in fiscal 2026, a 0.3 percent increase from the current estimate for fiscal 2025, and $54.94 billion in fiscal 2027, a 2.3 percent increase from fiscal 2026’s recommended level. General fund spending is recommended at $23.03 billion in fiscal 2026, a 2.5 percent increase from fiscal 2025’s current estimate, and $23.42 billion in fiscal 2027, a 1.7 percent increase from fiscal 2026’s recommended level. General fund revenues are projected to be $23.19 billion in fiscal 2026, a 3.3 percent increase year-over-year, and $23.26 billion in fiscal 2027, a 0.3 percent increase. The budget forecasts total combined balances of $2.97 billion in fiscal 2026 (13.0 percent of expenditures) and $2.93 billion in fiscal 2027 (12.6 percent of expenditures). In addition, the recommended budget projects an annual surplus of $519 million in fiscal 2026 and $28 million in fiscal 2027.
Proposed Budget Highlights
The governor’s two-year budget proposal is focused on the priorities of reducing the size of government, tax relief, education, public safety, and health and family services. The recommended budget is balanced and measured in the face of unprecedented growth in Medicaid obligations and cooling economic growth. Additionally, the recommendation provides a structural surplus each year, ensures the state’s AAA credit rating, and maintains healthy reserve levels. Highlights of the budget include:
Funding Commitments
- Fully funds the actuarial determined contribution (ADC) rates for state funded plans
- Appropriates required annual amounts to cover appropriation-backed debt
Reducing the Size of Government
- Contains reduced government spending over the biennium through both targeted reductions in spending and administrative reductions
Hoosier Tax Relief
- Provides inflation adjusted income tax deductions
- Stops the tax on tips
- Eliminates the tax on retirement income
- Enhances the farm safety net
- Calls for Young Beginning Farmer Tax Credit
- Includes sales tax holidays
Education
- Funds increases to K-12 tuition support in both years of the budget
- Calls for universal school choice
- Increases investments in Career Scholarship Accounts and Education Scholarship Accounts
- Provides additional support for other education initiatives
Public Safety
- Allocates funding for local prosecutors to the Indiana Prosecuting Attorneys Council
- Includes one-time funding to the Indiana National Guard to fund readiness initiatives
- Provides additional funding for Secured Schools Safety
- Contains one-time funding to restore the Indiana Law Enforcement and Firefighters Memorial
Health and Family Services
- Eliminates the waitlist for childcare subsidies
- Creates the Local Child Care Assistance Fund
- Fully funds the Medicaid forecast