A while back I briefly mentioned the state doing away with the Market Value Homestead Credit and replacing it with Homestead Market Value Exclusion and what that means to property tax payers. This is explained simply in the following manner assuming revenue raised by taxing organizations (cities, counties, school districts, special taxing districts) remains constant from one tax year to the next.
There was approximately $260,000,000 in state aid that was reduced from local taxing units of government. In order to maintain constant revenues, tax rates are raised. By implementing the Homestead Market Value Exclusion, 40% of the first $76,000 of market value of a home is eliminated on a sliding scale where the benefit is phased out based on the equation of 9% of Market Value minus $76,000. The total sum of the exclusions in the taxing district is eliminated from the tax base.
Since the tax base is now smaller, in order to maintain the same revenue, tax rates are raised to compensate for the loss in tax base. Ok, everyone on board with this so far? However, this increase is not necessarily distributed evenly across the board of taxable properties. There is no exclusion for agricultural land or business property; so naturally, these properties will take a bit of a higher hit from the agencies that apply taxes to them. I hope this helps explain this complicated change, and I am sure the next legislative session will have some conversation on this item.
Here’s wishing all your Holiday travels are safe and that the time spent with family and friends over the holidays is enjoyed. I hope you will be able to attend some events of our students in the future and know that they will be well worth the time spent. Have a wonderful New Year.