A new law that could have sweeping impacts on Georgia school districts’ property tax revenue was passed earlier this year, but its implementation is conditioned upon the passing of a constitutional amendment by statewide referendum in November 2024 (see House Resolution 1022). School districts should be aware of the law’s requirements and ready in case of passage.
Georgia House Bill 581, among other changes, authorizes a single statewide local homestead exemption, which caps value increases of homestead property for maintenance and operation ad valorem tax purposes.
If the constitutional amendment passes, Georgia school districts will have until March 1, 2025, to opt out of the statewide local homestead exemption after completing specific requirements. School districts should analyze the impact of the statewide homestead exemption on the districts' anticipated revenues in preparation for passage.
How the Statewide Local Homestead Exemption Works
The exemption caps how much homestead property assessments can increase each year at the prior year’s inflation rate, unless substantial property changes occurred. A base year value is set and then the cap is applied. For existing homesteads, in the 2025 tax year the base year assessed value is the 2024 value. For new homesteads, the base year assessed value is the homestead’s assessed value for the year preceding the year the new homeowner is first granted the exemption.
For example, a homestead with a 2025 base year assessed value of $80,000 that actually increases to $100,000 in 2026 will be capped at the 2025 inflation rate. Assuming the 2025 inflation rate is 3.5% then the increase is capped at $2,800, resulting in a 2026 assessed value of $82,800. The difference between the actual assessed value and the capped value is the exempted amount.
The homestead exemption is in addition to other non-floating homestead exemptions such as senior, veteran, and disability, among others. Additionally, if the local taxing jurisdiction applies a more favorable base year homestead exemption, the homeowner gets the higher exemption.
Opting Out
If passed, the law will cap the homestead values for local school district tax purposes unless the school district opts-out by March 1, 2025, after completing specific requirements. School districts may not begin the opt-out process until January 1, 2025, and may not opt out after March 1, 2025.
To opt out, the school board must adopt a resolution after advertising the intent to opt out, posting the advertisement on its website, releasing a press release, and holding three public hearings, with at least one hearing held on a business weekday between the hours of 6 and 7 p.m. The adopted board resolution must be filed with the Secretary of State’s office by March 1, 2025.
Key Takeaway for School Districts
School districts should analyze the impact of the statewide local homestead exemption on the district’s revenues now in advance of the referendum and determine whether the district will opt out if the referendum passes.
If the district determines opting out is best, then make sure the school board is informed and compile a timeline now by placing advertising and public hearing dates tentatively on the calendar. Be sure to add placeholders to the pre-March 1 board meetings.
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