03/04/2025

House Bill 61

Lead Sponsors: Representative Dave Thomas and Representative Jack Daniels

Status: First hearing in House Ways and Means (February 19, 2025)

Description: The bill makes a number of changes to property tax rollbacks and the homestead exemption. Generally, these changes will likely increase in greater exemptions and credits for residential property taxpayers. These changes are summarized below.

Of particular note to counties is that the bill reduces the reimbursement to local governments for foregone revenue from the owner occupancy credit (altered to a flat $750 credit, see below for more details) and the homestead credit from 100% of lost revenue to 50% of lost revenue. The 10% nonbusiness rollback would continue to be fully reimbursed.

The Legislative Service Commission has not completed its Fiscal Note for the bill, so the exact impact on county finances is not clear. However, the changes to the rollbacks and credits, paired with the reduction of reimbursement to 50%, will likely cost counties money.

CCAO is working on gathering information on the potential impact on individual counties.

Summary of Rollback and Homestead Changes
10% Nonbusiness Rollback
Currently, residential property (one-, two-, or three-family dwellings and nontimber agricultural land) receive a 10% property tax reduction on taxes approved by voters prior to November 2013. The bill would expand this rollback to all voted levies.

2.5% Owner Occupancy Rollback
Currently, homeowners receive a 2.5% tax reduction on their primary residence. This only applies to taxes approved by voters prior to November 2013. The bill eliminates this rollback and replaces it with a flat $750 credit, indexed to inflation (rounded to the nearest $10).

Homestead Exemption
The homestead exemption functions by reducing the true value of a home by $28,000 if the homeowner is 65 years of age or older, if they are permanently or totally disabled, or if they are 59 years of age and the surviving spouse of an individual who had previously received the exemption. Additionally, there is a household income threshold above which the individual is not eligible for the exemption.

A special "enhanced" exemption is available for the homestead of an honorably discharged veteran of the armed forces with a total disability or their spouse, or the surviving spouse of an emergency responder who died in the law of duty. This exemption reduces the true value of the home by $56,000.

The bill alters these exemptions. The regular homestead exemption is changed to a flat credit equal to the lesser of $750 or the total amount of taxes levied on the property by school districts, county school financing districts, and career-technical cooperative education districts. The enhanced exemption is changed to a flat $1,500 credit. Both of these credits are indexed to inflation (rounded to the nearest $10).

CCAO Position: No position (as of March 2025)