U.S. Sen. Evan Bayh on Tuesday introduced a bill to expand property tax relief for homeowners, including 900,000 in Indiana, who do not itemize their federal tax deductions.

"With property taxes on the rise and the dream of homeownership threatened in many Hoosier communities, middle-class families should not be penalized simply because they do not itemize their tax returns," Bayh said.

His proposal would allow more than 30 million homeowners across the country to deduct the full value of their state and local property tax bills from their federal taxes.

Joe Gomeztagle, a local property tax expert and executive director of the Midwest Business Economic Research center, said Bayh's proposal offers homeowners the economic help they need.

"I'm overwhelmed," Gomeztagle said about the tax proposal. "It would help many homeowners during a time of crisis that we're all going through."

Prior to 2008, only taxpayers who itemized their deductions could claim property tax deductions.

That changed last year when Congress adopted a bill Bayh drafted that allowed non-itemizers to take a deduction for property taxes for the first time.

The legislation, scheduled to expire next year, limited the deduction to $500 for individuals and $1,000 for families.

Bayh's new proposal lifts the caps and makes the property tax relief permanent.

The benefit of the new legislation to Hoosiers will vary according to the value of their home and their tax rate. For example, under Bayh's proposal:

A non-itemizing family with $75,000 of taxable income and a $3,000 property tax bill would receive a $750 tax cut this year--$500 more than under current law.

A non-itemizing single taxpayer with $50,000 of taxable income and a $2,000 property tax bill would receive a $300 tax cut--$225 more than under current law.

A non-itemizing senior citizen on a fixed income of $35,000 per year and a $1,500 property tax bill would see a $225 tax cut -- $150 more than under current law.

Taxpayers who do not itemize will be eligible for the enhanced deduction starting this year.

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